(Guest bloggers Darrell Rigby, head of global retail, and Kris Miller, head of North American retail, at consulting firm Bain & Co., weigh in on how teen’s shop.)

Teens and young adults account for nearly 51 million US holiday shoppers. Bain recently conducted panel research with Communispace to understand how this segment shops during the holidays. Panel participants (aged 16 to 24) expected to spend almost 18% of their money on apparel and almost 16% on electronics.

We also found that teens plan to spend about a third of their holiday funds onlinefive times more than the average 6% to 7% for the general population. Even with most of their holiday shopping in stores, over 90% of teens research products online at least occasionally, with more than a third saying they do so for most of their purchases. In other words, teens are quite comfortable with multichannel shopping.

As for retail formats, research from Piper Jaffray has shown that about 40% of younger shoppers prefer specialty stores. They also allocate a higher share of their spending to discount supercenters such as Wal-Mart and Target than the average household (21% versus 12%). In the Bain research, although some respondents raised concerns about crowds and prices, others cited product selection and convenience as reasons to shop at department stores, notably JCPenney and Kohls. No single format has a clear upper hand.
Knowing what teens buy and where is critical for retailers to attract a segment whose loyalty is hard to guarantee. Almost half of our respondents (46%) said they prefer brands and products that reflect their individuality, rather than brands that are tried and trusted or simply new. Peer groups and online communities like MySpace make them harder to influence through traditional marketing. To cite just one example of successful teen marketing, however, American Eagle Outfitters (AEO) has one of the highest scores in apparel in Bains loyalty surveys. And the company has shown year-to-date same-store sales growth of 11% over 2005. Although targeting teens with the right product selection and marketing is a challenge, it is critical to attracting and retaining this high-value segment.