Retailers Turn Stores Into Hangouts to Attract Teens.

In the old days, retailers discouraged teenagers from hanging out in their stores -- they were a nuisance and they could scare away potential paying customers.

But in an era when the Internet and other entertainment choices are pulling kids away from malls, merchants have developed

The teen spending market in 1999 was estimated at $129.6 billion, according to the Rand Youth Poll. That's more than double the $58.2 billion the teen retail market represented in 1989, thanks to the "echo boom" (the increase in youth population as children of the baby boomers hit their teen years) and a booming economy that is seeing parents give their children larger allowances.

According to Lester Rand, who has been conducting his poll of youth trends for 47 years, teenage girls outspend teenage boys by a range of $10 to $15 weekly.

"They (girls) do more shopping," said Rand. "They are in the malls and interested in clothing and cosmetics."

More than just videos

While most of the major retailers selling to teens have responded by upgrading their teen departments or adding TV screens with music videos on a loop, Skinmarket founder Tony Hirsch, who runs the company with his wife Patsy, believes his company's concept is unique.

It is a single-brand retailer similar to Mac Cosmetics, Bath and Body Works and The Body Shop, but is specifically geared toward a younger market and has branched into fashion accessories.

The stores have an unusual design, set up to mimic a girl's bedroom. They are decorated with funky colors and contain makeup-application stations and seating areas where the girls can gossip, read magazines or listen to music for as long as they want -- without buying a thing. They also host parties; the Beverly Center store has held about 20 birthday parties, in which a girl and her friends can enjoy makeovers and chat.

Meanwhile, the product mix includes marketing ploys like "break-up kits," containing water-resistant makeup that will not smear in case of tears and a voodoo doll, all packaged together.

Another key to the concept is to keep the stores staffed with girls who are as young as the teen customers.

"A lot of them aren't secure in their life and maybe they feel intimidated in going in a Macy's and seeing someone who is very made up and looks intimidating," said Hirsch, 44.

Hirsch, a former executive with the HMV music-store chain who was responsible for launching new stores in Canada and the Eastern United States, hit on the concept after he counted 70 different nail polishes in his teenage stepdaughter's medicine cabinet. He coupled her interest in cosmetics with the way she socialized, and he worked on the concept for several years with his wife Patsy.

Considered the backbone of the business, the Skinmarket line of products has expanded quickly to more than 600 items. Most are moderately priced; lipstick sells for between $7 and $8. The line is manufactured in Simi Valley, and the makeup is similar to that produced by Los Angeles-based Hard Candy, which sells through other retailers -- meaning lots of glitter, funky colors and marketing tactics that appeal to teens.

"There is certainly a market for their product. Whether the concept will meet with success, only time will tell," said Richard Giss, a partner in the retail services group at Deloitte & Touche.

Rapid expansion

There are currently nine Skiamarket stores in the chain, with four in the Los Angeles area. Another seven stores throughout the country, including Las Vegas, are slated for next year. The chain's first store was launched a year and a half ago in Los Angeles' Beverly Center, and while the newer stores have been updated slightly, the basic concept remains the same.

By comparison, The Body Shop, another single-brand retailer targeting women and teens, has 300 stores in the United States and 1,700 worldwide, and sells several thousand products. Body Shop officials don't seem threatened by the upstart competitor.

"I have not heard of them, but that doesn't mean our company hasn't, said Body Shop spokesman Chad Little.

Like The Body Shop, the Skinmarket concept is to sell its products solely through the company's retail stores. Hirsch says department stores have requested Skinmarket products but he has resisted, citing concerns over control and the absence of a unique atmosphere.

The major challenge, meanwhile, is to keep the products at an affordable price for teenagers while making enough profit to maintain quality. While some of the younger customers have to save up to buy the products, Hirsch notes that the cosmetic products have found a market in older woman who consider them a bargain.

Even the low-income teens are not likely to go away, because Rand points out that teenage girls are saying more money than ever before.

"Some of the items are too costly, so they save for a couple of months," he said.