Piper Jaffray Completes 25th Semi-Annual "Taking Stock with Teens" Market Research Project

  Piper Jaffray Completes 25th Semi-Annual "Taking Stock with Teens" Market
  Research Project

Business Wire

MINNEAPOLIS -- April 10, 2013

Piper Jaffray (NYSE: PJC) has completed its 25th semi-annual "Taking Stock
With Teens" market research project, which points to a seasonal pause in
discretionary spending contrasted by strong intent to spend across multiple
categories and household income levels.

"Our spring 2013 survey results suggest teens have a heightened sense of
awareness surrounding seasonal spending fluctuations and broader macroeconomic
sensitivities,” said Steph Wissink, co-director of research and senior
research analyst at Piper Jaffray. “Spending has moderated across
discretionary categories for both upper-income and average-income teens when
compared to the prior year and prior season. Yet nearly two-thirds of
respondents view the economy as consistent to improving, and just over half
signaled an intent to spend ‘more’ on key categories of interest, particularly
fashion and status brand merchandise."

Key findings from the survey in fashion, beauty and personal care,
restaurants, digital media, gaming, and wireless communication include the

  *The fashion category accounts for roughly 40% of teen budgets, consistent
    with prior survey cycles. Spending among upper-income teens was down
    modestly to the prior year and season while average-income teens indicated
    a slight increase. Implying the pause in spending may be temporary,
    approximately 53% of upper-income teens plan to spend more on fashion
    apparel in the coming periods. Parent contribution to teen spending
    contracted by nearly 10 percentage points in our spring survey, with
    55-60% of teens indicating their parents contribute more than half of
    their spending. Within the fashion category specifically, insights into
    key trend changes include a basing in action sports mindshare, declining
    demand for fast fashion, emergence of a refined classic or preppy
    aesthetic, and preference for fashion athletic wear.
  *Teens are exhibiting changes in shopping behaviors that will likely
    reshape the way brands target this demographic including shopping less
    frequently and shopping online instead of in specialty and department
    stores. Approximately 79% of females and 76% of males shop online, and
    respondents indicated that roughly 18% of their spending is online. Nearly
    70% of teens indicate they prefer to shop the Web sites of their favorite
    stores-based retailers. In addition, teens prefer labels to logos and seek
    value in their purchases, owing to the rise of spending in the outlet and
    off-price channels. Approximately 70% of teen girls and 55% of teen boys
    shop at off-price stores and 55% and 42%, respectively, indicated it is
    popular to do so. The shift toward digital is proliferating softlines,
    hardlines and media purchases. Streaming accounts for 46% of movie rentals
    and online music provider Pandora accounts for 22% of preferred music
  *Teens have cited "friends" as the strongest influence over their purchase
    decisions for the duration of our survey history, but "Internet" is
    quickly rising in profile. Approximately 53% of females and 52% of males
    indicate that social media impacts their purchases with Facebook being the
    most important, followed closely by Twitter and Instagram. But the
    popularity of Facebook is waning among teens with 33% citing it as the
    most important, down from 42% six months ago.
  *Beauty spending among upper-income teens declined 3% year-over-year and
    increased 2% sequentially. For average-income teens, beauty spending
    increased 1% year-over-year and 4% sequentially. For the second
    consecutive survey, average-income beauty spend is now at parity with
    upper-income spending. MAC was cited as the No. 1 cosmetics brand for
    upper-income teens for the fifth survey in a row and Cover Girl ranks at
    the top of the list for average-income teens. Teens continue to demand
    greater diversity of cosmetics offerings, likely spurred by several
    emerging cosmetics brands coming to market with new and superior
  *Teens are increasingly choosing organic food options, with 42% eating
    organics versus just 33% two years ago. This trend is likely to support
    ongoing demand for natural and organic grocery, as teens age into young
    adults and establish independent households. When eating out, 57% of teens
    prefer limited service restaurants, up steadily from 43% four years ago.
    When identifying their preferred dining segment, 41% select quick service,
    36% casual dining and 15% fast casual options. In addition to classifying
    by segment, preferred restaurant brands also provide insight into various
    cuisine profiles—for American Cuisine, teens favor Cheesecake Factory; for
    Italian, teens favor Olive Garden; and for Mexican-inspired fare, teens
    favor Chipotle Mexican Grill.
  *Mobility and connectedness are driving nearly 91% of teens to purchase a
    smartphone for their next wireless device, with approximately 60% biased
    toward Apple and 21% likely to buy an Android device, consistent with our
    prior survey cycle. Survey results point to teens prioritizing unlimited
    data plans as the most important service plan feature when choosing a
    carrier, with Verizon and AT&T identified as having the "best" networks.
    Approximately 48% of teens own an iPhone, up from 40% six months ago.
    Tablet ownership also continues to grow, with 51% of teens owning a tablet
    computer, up from 44% in fall 2012, with 68% of teens identifying Apple's
    iPad as their owned device.
  *Teens represent more than one-third of video game players and gaming
    accounts for 6% of teen spending. Interest in traditional gaming consoles
    remains strong entering a new console cycle. Awareness of next generation
    consoles was 73% among teens that play video games at least monthly.
    Approximately 52% of teens intend to purchase a next generation console.
    Buying and selling used video games remains a critical component of the
    gaming industry, with 63% of gamers buying used games and 29% of teens
    trading in old games to fund new software and hardware purchases.

The "Taking Stock With Teens" survey is a semi-annual research project
comprised of gathering input from approximately 5,200 teens with an average
age of 16.3 years. Teen spending patterns, fashion trends, and brand and media
preferences were assessed through visits to a geographically diverse subset of
high schools in 10 U.S. states and through a national online survey of a wider
group of teens from 37 different states. The survey is conducted in
partnership with DECA, an international association of high school students.
The spring survey was completed March 1–April 3, 2013.

About Piper Jaffray

Piper Jaffray is a leading investment bank and asset management firm serving
clients in the U.S. and internationally. Our proven advisory teams combine
deep industry, product and sector expertise with ready access to capital.
Founded in 1895, the firm is headquartered in Minneapolis and has offices
across the United States and in London and Zurich. www.piperjaffray.com

Piper Jaffray & Co.does and seeks to do business with companies covered in
its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their
investment decisions. This report should be read in conjunction with important
disclosure information, including an attestation under Regulation Analyst
Certification, found at:www.piperjaffray.com/researchdisclosures.

Since 1895. MemberSIPCandNYSE. © 2013 Piper Jaffray Companies, 800 Nicollet
Mall, Suite 800, Minneapolis, Minnesota 55402-7020


Piper Jaffray Companies
Pamela Steensland, 612-303-8184
Press spacebar to pause and continue. Press esc to stop.