Financial crisis fails to stop teenagers spending: report

The global financial crisis appears to have passed Australia’s teenagers by without denting their spending power, according to a report from business research firm IBISWorld.

According to IBISWorld, 47.3% of 15 to 19-year-olds are employed, with 76% of those working part-time and largely living with their parents while they attend school or tertiary education. IBISWorld general manager Robert Bryant said the figure is most likely significantly higher taking into account young people working for cash in hand.

Bryant believes the highly-subsidised lifestyle enjoyed by many teenagers means they have been able to keep spending regardless of the economic downturn.

“Many young people work part-time in the retail sector, which has held up remarkably well throughout the economic downturn, boosted by Government stimulus handouts, lower interest rates and reasonable petrol prices,” Bryant says.

“So unless their parents have been made redundant, lost a business or had to sell the family pad, it’s little wonder the younger generation’s impression of the global financial crisis is distinctly indifferent.”

He argues that the competition amongst their peers for the latest and greatest item is driving spending amongst teenagers, leading them to what he calls “aspiration spending” on designer labels, the latest gadgets and overseas holidays. “This is something which previously occurred in the 20s, rather than the teen years.”

A few sectors will really benefit from the resilience of these young consumers, including:

• Fashion. Clothing is always high on the list of must-have items for teenagers and IBISWorld predicts the clothing retail industry will continue to grow 1.9% in this financial year despite the economic downturn.
• Entertainment. IBISWorld estimates 11% of customers are aged between 14 and 17, compared to this age group’s overall 5.4% of the population. “This figure is particularly relevant because before reaching the legal drinking age, going to the movies is one of the few public social activities available to teenagers, particularly after dark,” Bryant says. But while this demographic will prop up the industry to some extent, it will not prevent its revenue from falling by 2.5% this fiscal year.
• Online shopping. Teenagers are completely at home buying on the internet and IBISWorld expects this industry will grow by around 3.7% per annum for the next five years – that’s growth of about 20% between now and mid-2014.
• Fast food. According to IBISWorld, teenagers account for 22% of the takeaway food market, which is impressive given they represent just 5% of the overall population. The fast food sector will also grow despite the GFC, partly underpinned by these teens and also helped by consumers generally trading down from dining at full-service restaurants.