Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Secret Behind the Best Teen Brands

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

When your boss tells you that you're not making yourself stand out, we aren't usually excited. That's because, as adults, we don't get much out of being part of the pack. That's not true for teenagers, new studies have suggested. Instead, research has shown that teens get a bigger fun-boost -- that's a technical term -- from the brain's pleasure center when they're liked by others.

That basic biological point drives a lot of business, especially among apparel retailers. Companies chase each other to get the current hot trends on shelves as quickly as possible. Even companies that have a very clear design direction end up falling in line when major fashion shifts drive teenage shoppers to the mall.

The complex web of fashion
One of the most important things to remember is that the term "peer" is incredibly loose. Just as the peers that show up in the jury box may or may not resemble you, teens are selecting peers from an incredibly broad set. While the other kids at school make up the day-to-day social jury, there's an unseen jury sitting just out of reach.

Studies have shown that teens' fashion choices are also influenced by actors and the media. As much as magazines and models can have an impact on a teen's body image, they can also affect their views on fashion. The complexity of the peer pressure system means that retailers can't just sit back and wait for teens to line up around the block. Instead, they have to take new approaches to bringing in teen cash -- more on this in later.

Wait -- teens have cash?
When I was a young man, shopkeepers didn't get overly excited when I walked, penniless, into the store. Those days are gone. This year, back-to-school shoppers brought the credit card along, and the average family was looking at a back-to-school apparel bill around $350.

Once you throw in all the other supplies and electronics that send kids back to school, you're looking at a market that spends more than $70 billion. For contrast's sake, last year's Black Friday weekends brought in around $60 billion for retailers.

This year has been less successful for apparel retailers, with many companies offering weak outlooks for the end of the year. While parents and teens spent plenty last year, 2013 has been less successful. That's meant that the end of the year has seen a rash of bad earnings, and companies scrambling to get back into the trends.

Companies that are doing it well
Good retailers need to either set new trends or be good at chasing existing trends. Both plans can work well, but neither is easy to pull off. In setting trends, it's been a good year for aspirational brands. Companies such as VF (NYSE: VFC  ) have seen excellent success from the adoption of its North Face brand. The brand has worked its way into college campuses and onto celebrities, and even politicians have picked up on it. VF's outdoor division, which includes North Face, has seen revenue rise by 7.3% year to date. That's helped push the company's stock up 47% over the past 12 months, and set the company up for a strong run in 2014.

Instead of setting the trend, some companies are happy to chase what's popular. Urban Outfitters (NASDAQ: URBN  ) has had a good year of getting trendy items into stores. The company has increased its comparable-store sales, with especially strong gains in its Free People and Anthropologie brands.

While Urban Outfitters has proved itself a trend champion, other trend chasers haven't done so well. Abercrombie & Fitch (NYSE: ANF  ) has been hammered this year, with comparable sales dropping and margins shrinking. While the company used to be able to command top price based on its name alone, a shift in teen sentiment has pushed it down the brand strength list, forcing the company to discount its merchandise to make a sale.

The secret to teen retail
More important than anything else is that companies need to remain flexible. Whether setting a teen trend or chasing existing trends, companies need to be able to shift as the market shifts. That means keeping abreast of who's popular in teen culture and understanding what trends teens are trying to jump onboard with.

Companies such as VF and Urban Outfitters are succeeding because they've found a way to keep themselves on step ahead of their customers. Abercrombie, meanwhile, rested on its mid-2000s laurels, and now it's paying the price for its failure to innovate. If there's one rule in teen apparel retail, it's this: When in doubt, don't stand out. Companies that understand the delicate social and psychological balance that teens strike have a much better chance of success.

Trending in 2014
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal-finance experts show you why investing right now is still a good idea and what you need to do to get started. Click here to get your free guide today.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2747431, ~/Articles/ArticleHandler.aspx, 5/31/2016 12:22:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,778.50 -94.72 -0.53%
S&P 500 2,093.68 -5.38 -0.26%
NASD 4,934.79 1.29 0.03%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/31/2016 12:06 PM
ANF $19.86 Down -0.34 -1.66%
Abercrombie & Fitc… CAPS Rating: *
URBN $28.49 Down -0.43 -1.49%
Urban Outfitters CAPS Rating: ****
VFC $61.99 Down -0.42 -0.67%
VF Corp CAPS Rating: *****