Business
Teenage consumers are setting new trends, while spending more
Piper Sandler on Tuesday released the results of its semi-annual survey of Gen-Z teenagers, with bullish implications for a number of club holdings. We believe this survey is important because it provides important insight into an important trend-setting demographic. If a brand or retailer can capture the attention of a consumer while they are still young, there is an opportunity to create a sense of customer loyalty and increase lifetime value. Attracting consumers while they are young is crucial, with younger customers more likely than their parents to walk away from a company if they have a negative experience, according to a 2022 customer loyalty survey by PwC. For its latest report, Piper Sandler surveyed 5,690 American teenagers between February 1[ads1]3 and March 21, with an average age of 16.2 years in 47 states. 53 percent of respondents identified as male, 45% as female and 2% as non-binary. The average household income of the respondents was $67,691 and 40% of the teenagers had part-time jobs. Beauty Spending on “core beauty” such as cosmetics (up 32% year-on-year), skin care (up 11% year-on-year) and fragrances (up 12% year-on-year) increased by a combined 19% year-on-year. Cosmetics overtook skincare spending for the first time since 2020, the survey showed, with Club holding Estee Lauder ( EL ) as a key beneficiary of that increase. Haircare had a marginal increase of 1% year-over-year, but that worries us little given Estee Lauder’s minimal exposure to the haircare market, a dynamic highlighted by Piper Sandler. Equally important, 45% of respondents identified themselves as “everyday make-up wearers”, up from 37% last year. This figure is even higher in the youth cohort with higher incomes. Retail The club’s off-price retail holding, TJX Companies (TJX), could benefit from what the survey found to be a 500 basis point annual increase in teen preferences for off-price shopping channels. Internet On the e-commerce front, 57% of respondents named club name Amazon (AMZ) as their favorite online store. That’s up from 52% in Piper Sandler’s fall teen survey. Meanwhile, Club holding Meta Platforms (META) has screened well, with Instagram’s monthly usage in line with fall survey results – at about 80% of teenagers – making it the most used social media application. Rival TikTok saw its engagement among teens decline over the same period, to 72% from 76%, although it still emerged as teens’ favorite social app. In terms of popularity, it was followed by Snap’s ( SNAP ) Snapchat app and then Instagram, which continued to gain traction. Meanwhile, usage of Meta’s Facebook increased by 100 basis points in the same period. We believe that usage is a more important metric than popularity, given that advertisers are more concerned with engagement – which leads to more sales opportunities. As Piper Sandler noted, these are encouraging results that highlight Meta’s ongoing product improvement initiatives. Payments So, how do teenagers actually pay for all these purchases? Apple’s ( AAPL ) Apple Pay took the top spot, with 39% of respondents ranking it as the number one payment app used in the past month, according to the survey. It follows survey data showing that 87% of teenagers own an iPhone, while 88% said they intended to buy one. Apple Pay came in well ahead of Block’s ( SQ ) Cash app, which saw 25% of teens rank it as their best for payments. But Cash App dominated for peer-to-peer money transfers, closely followed by PayPal’s ( PYPL ) Venmo. The club’s take on Piper Sandler’s survey is of course aimed at a cohort with a limited budget. Nonetheless, the responses from American teenagers highlight which companies are winning share of this increasingly important demographic. Today’s teenagers will only see their spending increase as they enter the workforce, driving growth at the brands best able to attract loyalty now. At the same time, the survey shows that teenagers increasingly focus on environmental, social and governance (ESG) issues in the companies they shop at, with the environment and racial equality as the most important topics for the group. It is a trend that is likely to accelerate further in the coming years. (See here for a complete list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable fund’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE INVESTMENT CLUB INFORMATION ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION EXISTS OR IS CREATED BY YOUR ACKNOWLEDGMENT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR REWARDS ARE GUARANTEED.
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Piper Sandler on Tuesday released the results of its semi-annual survey of Gen-Z teenagers, with bullish implications for a number of club holdings.
