Rhonda Bagby remembers her senior prom in Fort Worth, Texas well. It was 1981. She had carefully selected the pattern and black material for an asymmetrical halter dress with a Marion sash belt, which her grandmother then sewed for the occasion.
This spring, her daughter Randi will attend prom, but the business has changed a lot in 30 years. The mother-daughter duo worked and saved to buy a dress from WhatchamaCallit, a popular fashion boutique in North Texas, for $800. Adding shoes, jewelry, a limousine rental, ticket, hair-do and her date's boutonierre, the total expense comes to just over $1,000.
"Since we aren't rich, Randi truly appreciates all of this and the sacrifice made for her," Rhonda said. "Her 18th birthday was a couple of weeks ago, and she said she didn't want anything because she had already received the prom dress of her dreams."
American high school seniors and their parents spent increasingly more on prom from 2011 to 2013, but this year they are spending slightly less, indicating what analysts are calling a new frugality in how teens shop as well as a falling interest in the glitzy rite of passage.
The average family with a high school senior in the U.S. will spend $978 on prom this spring, down 14 percent from last year’s average $1,139, according to a nationwide survey by Visa Inc. (NYSE: V) released Wednesday.
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Despite the drop in spending, Americans still spend 25 percent more on the teen ritual than their Canadian neighbors. Prom spending includes everything from this year’s popular beaded and embroidered dresses to tuxes, Hummer limousines, tulips and dinner.
“They’re spending less and spending wiser,” Marshal Cohen, chief industry analyst of The NPD Group, Inc., said Thursday. “They’re not in the stores looking … and instead of buying [attire] direct some of them are renting, buying from thrift ships, buying from less expensive places.”
Parents told Visa they plan to cover on average 56 percent of the costs this year, with teens picking up the remaining 44 percent, a slightly bigger share than last year.
Another explanation, Cohen says, is that more seniors and their classes are opting out of prom altogether. More shoppers he talked to this year say they’re not going to prom or their schools are not hosting the dance.
“Last year was pretty much on par with the year before,” he said. “This year was very evident that many kids are planning on not participating, and some schools are not even having them.”
Cohen says teens are more and more interested in hanging out with their small circle of friends over a school-wide event, and prom venues are not the only places teens are shunning.
Department stores are having a harder time luring millennials inside their doors.
“It’s not cool to shop at department stores, where you’re shopping with old people,” Daniel Toubian, principal consultant of U.S. retail and consumer brands at Maxymiser, a customer experience optimization company, said.
Instead, teens are shopping at trend-shuffling outlets like Forever 21, Hennes & Maruitz AB (STO:HM-B) and The Wet Seal, Inc. (Nasdaq: WTSL) where dresses and menswear items cost less on average.
“The millennial generation may be cost-conscious because they don’t have their own money, but they’re very trend-focused,” Toubian said.
Though overall American retail spending dipped early this year, macroeconomists say they expect spending to bounce back regardless of the shift in prom shopping.
“There’s nothing that’s happened that’s driven students and parents off a financial cliff” this year, Mark Hamrick, Washington Bureau Chief of Bankrate.com, said. He thinks changing values may explain the shift. “There might be a group of people that have decided $1,100 is too much to spend on one event.”
Analysts have noted that retail spending in generally down at the moment. Paul Dales, chief U.S. economist at London-based Capital Economics, said bad weather caused retail sales to sink the first few months of this year, but he expects people to start spending again with warmer weather.
“Probably they will spend the money they would have spent earlier,” he said. “I would expect retail to pick up this year from last year. The bigger point is the economy is stronger now than it was last year.”