"Retailing Sweet Spot: Stores Look to Lure Millennial Generation"

As the Millennials continue staking their claim on the fashion and retail landscape, the Baby Boomers are no longer in control. Numbering 64 million nationwide, these savvy and hard-to-please consumers between the ages of 14 and 29 have lots of buying power. They are eager to try what's new and trendy, and although price-conscious, they idolize status brands and are hooked on technology. Females between the ages of 13 and 24 spent $33.7 billion on clothing in the 12 months through April, according to The NPD Group, a Port Washington, N.Y.-based market research firm. That compares with $16.9 billion purchased by 25- to 34-year-old women, including some older members of the Millennials, and $29.8 billion by Baby Boomers between the ages of 45 and 64.

While the struggles of the U.S. economy continue, retailers and fashion brands with California-based companies such as American Apparel that are helping to lead the way, are focused more than ever on the Millennials. The poster girl for the group is Miley Cyrus, the 16-year-old star of the Disney Channel's hit series Hannah Montana. The character she portrays has created a brand empire estimated to reach $1 billion this year through sales of everything from $6 shampoo to $29.50 jeans embellished with antique copper studs.

Companies are changing long used ways of manufacturing and marketing clothing as the Millenials flex their purchasing muscle. “This is the generation that is rethinking everything”, said Debra Stevenson, who tracks fashion and retail at her consulting firm Skyline Studios in Los Angeles. “Fast-moving trends are key because they are changing their minds quickly about things. Tried and true is not the way with this age group, as they have a big interest in discovery and newness”. Fast-fashion firms like Forever 21, Hennes & Mauritz and Zara get it. But more conventional merchants and brands, including Old Navy, appeared to be slower to absorb this message.

The Millennials are even compelling established brands to adjust. Warner Bros., which is home to iconic characters such as Wonder Woman, Bugs Bunny and Superman, acknowledged that unlike previous generations, the Millennials didn't grow up watching its cartoons on TV. That's why the Burbank, Calif.-based movie studio said it must sharpen its strategy for licensing and merchandising through collaborations with retailers and designers that are popular with young women. Among Warner Brothers efforts: teaming up with celebrity-centric boutique Intuition to sell apparel and accessories decorated with the Supergirl S-shield, convincing Diane von Furstenberg to design a capsule collection that is inspired by Wonder Woman for the coming holiday season and jumping into action sports with S3 Supergirl Jam, an annual Southern California festival highlighting female athletes who ride on waves, asphalt, and snow.
To learn more about their preferences, American Apparel began allowing shoppers to write reviews of products on its Web site. Marsha Brady, who oversees creative direction and business strategy at American Apparel, said it “was so logical to ask customers for their opinions on products”. “This Millennial customer, and our customer, wants to tell us what they're thinking about everything”, she said. “They're into self-expression and it's important & it's more than just business…. It's something that is being felt.”

Hot Topic has realized that the way to Millennials' wallets is through their ears. After appointing music industry veteran John Kirkpatrick as its chief music officer last year, the chain revamped its Web site to let customers discover new music via song snippets and band-related merchandise. Millennials also like a good deal. At BB Dakota, a young contemporary brand based in Irvine, Calif., the strategy is to try to look upscale because the Millennials take their cues from the runways, celebrities and magazines. For instance, BB Dakota has upgraded from polyester to silk for frocks that retail for $130. In BB Dakota's fall lineup, the top-selling color for winter coats was a bright orange. “People are trying to be individuals”, said BB Dakota president Gloria Brandes. She also stated: “There are kids who don't have a lot of money but expect to look as if they do”.

The Millennials are forcing companies to reexamine their strategies. “You can't just slap logos on T-shirts”, said Justin Watson, marketing manager at Los Angeles based Mighty Fine Inc., which produces apparel for entertainment brands like Walt Disney Co. Instead, Mighty Fine starts developing a line by identifying the fashion trend before deciding which character would best suit the theme. “We need to keep being innovative”, Watson said.

The Millennials love for quick-turning trends compelled Miss Chievous, a Los Angeles-based company that specializes in tops for 15- to 18-year-olds, to shorten its production schedule so it can deliver goods faster to retailers such as Nordstrom, Macy's, Dillard's and J.C. Penney. Miss Chievous said it goes into production 50 to 70 days before making a delivery, in comparison with previous years when the schedule ran 60 to 90 days. It also ships products to the U.S. from factories in Asia by air, narrowing its profit margins. “It's extremely tough”, said Miss Chievous president Chance Owen. “The Millennial's are causing us to be a lot more aggressive and take gambles on trends. Don't get me wrong. We like her. We're also trying to figure her out”.

To be successful in the apparel retail sector, one must understand consumer behavior and the trends that affect buying behavior of the consumer.