The Recession’s Impact
Baby means big business for gift store retailers like you. With grandparents and Gen Y-ers ready to spend on the category, find out what products you need to stock to cash in.
Amy Chezem points out a simple fact of life that helps keep the baby business on an even keel: People always have babies. “Despite the economic climate, it is still a great time for the baby business because there are so many choices available to fit any budget and any lifestyle,” says the communications director for the Juvenile Products Manufacturers Association.
Chezem says that the recession has put a damper on discretionary spending and purchases of “higher-end juvenile products.”
Kelly Neal Mariotti, board member of ABC Kids Expo—a trade show for the juvenile products industry—agrees. “Spending for baby is never off as much as the economy-at-large with the consumer segment. However, the purchases are getting a little more practical,” she says. Value matters. Consumers are buying accent pieces that can grow with the child. “People also no longer feel like there’s a certain divided line between the kids’ room and the rest of the house,” Mariotti says.
“There’s less of the ‘money is no object’ attitude. It’s not that shoppers are no longer splurging on the things that they really love or want, they’re just doing more picking and choosing,” Mariotti adds.
Woo your target audience
If there is one demographic of shoppers doing more splurging than others, it may be grandparents. According to the April 2009 Grandparents.com report, The Grandparent Economy, grandparents are living and working longer, increasing their earning potential and accumulating significantly more savings than consumers under 45. The latter is especially true of grandparents under 64 years of age who have not yet retired. “Grandparents in general are less price-sensitive and have more disposable income. They are more willing to buy things that are special, rather than just functional,” says Jerry Sheresheewsky, CEO of Grandparents.com.
The report says that grandparents spend about $23 billion dollars on gifts for their grandchildren each year and contribute to 42% of the overall gift market. Sheresheewsky suggests that to attract this market, retailers should get to know today’s new grandparents and realize that they’re relatively young, vibrant and still working full-time.
Gen Y customers—those born between 1978 and 2000—are at the other end of the spectrum. According to Kit Yarrow, Ph.D, consumer psychologist and co-author of Gen BuY: How Tweens, Teens, and Twenty-Somethings are Revolutionizing Retail, Gen Y-ers are just now moving into the house-car-baby part of their lives and will have more spending power than any other age group by the year 2017. Dr. Yarrow, a professor of psychology and business at Golden Gate University in San Francisco, says that an important characteristic of this generation is that they are very team oriented.
“Shopping for them has been a social occasion all of their lives. The Gen Y moms are into communication and checking with each other and getting advice,” says Yarrow.
He suggests that retailers make their stores a place where Gen Y customers can find out what other people are buying. Have staff picks or suggestions from local pediatricians; share customer recommendations. Yarrow also says that an online presence is important and retailers who want to attract this generation should get active in social networking. “Gen Y-ers write most of the online reviews and the mommy blogs are enormous,” says Yarrow. “They like reading objective opinions about what to buy.”
By all indications, personalized gifts, classic toys, themes, and characters, and interactive gifts that promote play and learning, are selling well in the baby product category. “Music, sound, lights, and movement are all hot trends for juvenile products,” Chezem says.
Market sales of play and discovery toys reached $343 million in 2007 and are projected to reach $542 million in 2012 according to a March 2008 report published by Packaged Facts, a division of MarketResearch.com.
Perhaps these are some of the reasons why HABA’s waddling Ducky Duck and crawling Cory Caterpillar pull toys were the company’s top sellers in 2009—they are classic, timeless toys. Lisa Orman, public relations representative for the 70 year-old company based in Germany says that these interactive toys are selling well because they are made of wood and have a visually appealing European design.
One of Stephan Baby’s best sellers is the Boo Bunnie Ice Pack, a kid-friendly version of an ice pack. The Boo Bunnie retails for less than $10. Jan Campbell, owner of the Pierceton, IN company, says that the majority of the products the company wholesales retail for less than $20 and that there are many new introductions every year.
Functional can be fun
All little ones wear diapers and their parents can’t take baby anywhere without them, making diaper bags a practical and functional gift. Korie Conant, chief marketing officer at Petunia Pickle Bottom in Ventura, CA, says the company’s top-selling product is the Boxy Backpack. “It has all the fashion and functionality a modern mother needs,” she adds. The company provides retailers with tools such as PPB logo stuffing paper to help display their bags. “We also suggest grouping Petunia bags together with like colors and styles. This gives the customer the advantage of seeing everything at once and knowing that there are options when they are deciding on their diaper bag needs,” Conant says.
Baby socks sell well for Bibi & Mimi’s retail customers. “We have several styles of three and six piece sock sets that are doing really well right now,” says CG Gurkan, vice-president of sales and marketing at the Long Island, NY vendor. Their high-top sneaker-looking socks are new and display a timely peace sign.
Other baby basics
Stocking for baby includes buying for a layette—products bought for a baby shower. Blankets, onesies and other baby basics qualify.
Alessandra Mayer, founder and president of Ambajam, says the company has three sizes of ultra-soft blankets for babies: mini, cuddle-up, and jumbo. The mini-sized blanket is ideal for newborns and can also be used to tuck around baby inside a car seat. The Denver, CO company also wholesales onesies which are designed with silhouette-shaped appliqués.
Mayer says that Ambajam has had a positive response to their gift line launched in August. Combinations of blankets, burp cloths, onesies, and T-shirts make up part of this line. One such combination includes a burp cloth and onesie with matching appliqués. They’re put together in clear bags with matching ribbons and look like sweets.
Kate Feinsod, owner of Pome, a gift shop in Denver, CO says the products are easy to sell because they’re priced just right for a shower gift. Feinsod pairs Ambajam products with other baby gift items in the store, like lullaby books and baby cream, for example. “It makes shopping easier for customers because they don’t have to put a lot of thought into something that’s already packaged and ready to give as a gift. It looks great, and the customer looks good too,” Feinsod says.
Facilitating baby gift registries is a great way to sell baby products in your store. Mariotti of ABC Kids Expo says that when a new parent has a gift registry, about 90 percent of all gifts purchased will come from the registry.
Chezem suggests that retailers offer tools and resources—such as checklists and product suggestions—to help guide parents through a sometimes overwhelming process. Retailers can purchase software programs that operate gift registries, or it could even be as simple as putting together an Excel sheet.
Practical, functional, soft, and cuddly are a few adjectives to remember when choosing baby products to place on your store shelves. Considering its size and potential, the baby market has plenty for you to coo over.
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