The insight: Inflation is beginning to weigh on Gen Z teens’ spending. Self-reported spending among the cohort fell 1% year-over-year (YoY) in September, and was down 4% compared with the spring, per Piper Sandler’s semiannual Gen Z survey. That’s the first decrease since before the pandemic.

Trends to watch: Teens are gravitating toward off-price and ecommerce retailers, which gained 545 and 121 basis points respectively YoY at the expense of discount, specialty, and outlet operators.

• Amazon continues to be the ecommerce site of choice for the majority—55%—of teens, despite the best efforts of Shein and Temu to undercut the former’s dominance with ultralow prices.
• Similarly, companies are having a difficult time knocking Nike off its perch as teens’ favorite footwear and apparel brand, although lululemon athletica and buzzy sneaker brands On Running and Hoka are making inroads, especially among wealthier shoppers.
• And as in the broader market, teen beauty spending is proving resilient. Spending on cosmetics, skincare, and fragrance rose 23% YoY, while specialty retailers like Sephora and Ulta increased their share of wallet to 79%.

The big takeaway: Teen consumption is proving to be just as vulnerable to the effects of inflation and economic uncertainty, likely because the vast majority of their spending (62%) is funded by their parents.

• Even so, there are areas of strength—most notably beauty, ecommerce, and off-price retail—where teens remain happy to spend.