The baby clothing market - United States

1.2 The booming global market

The global market for baby clothing was valued at $**.** billion in **** and is expected to reach $**.** billion by the end of ****, corresponding to a CAGR of *.*%. The main drivers of this market include an increase in the demand for branded clothing among the population, rising overall income and a change in parental lifestyles, which are increasingly influenced by fashion effects.

Retail value of baby and toddler clothing World, ****-****, billions of dollars Source: ****

Indeed, there has been a shift in recent years, leading parents to give more and more importance to brands. This shift is influenced by the investments of major brands in media and visual merchandising but also results from the increase in parents' disposable income. Nevertheless, these investments generate higher production costs, which may favour local producers who have direct access to raw materials and are able to moderate costs.

In addition, companies in the sector are investing in product innovation and launching products with increasing frequency. This trend goes hand in hand with the increasing adoption of the latest fashion trends by new parents. The popularisation of graphic clothing The "cartoon heroes", representing cartoon heroes, characters from the entertainment industry (***) for example, is one of the greatest opportunities ...

1.3 A promising market in the United States

The value of sales in the US baby and toddler clothing market has been growing steadily over the period ****-**** (***)

Sales of clothing for babies and toddlers United States, ****-****, billions of dollars Source Euromonitor  

The American market is characterized by the presence of several actors of the distribution, who are able to offer many products of different brands in the same store, thus increasing competition between products as it allows the customer to quickly compare prices and products. In this context, most US baby clothes are mainly sold through retail chains such as department stores and supermarkets. Nevertheless, the high costs of raw materials and the overall manufacturing process represent a great challenge in a highly competitive market where players have to give up their profit margins to gain market share

In addition, a combination of two factors is fuelling the US market:

the influence of fashion and the penchant for branded clothing is also evident in the United States the recent trend among Americans to decide to delay the birth of their children and to choose to work and raise their children at the same time has a clear positive effect on the amount of disposable income: new generations ...

1.4 The covid effect

Social distancing measures have pushed parents to buy clothes online. This shift from physical sales to e-commerce has put some players, having difficulty managing the closure of physical stores, in difficulty. However, this is encouraging players in the sector to invest not only in warehouses, but also in better online platforms and innovative logistics delivery processes. [***]

While environmental, social and governance (***) issues were increasingly important to businesses and consumers prior to the pandemic, the coronavirus acted as a wake-up call, with deforestation, biodiversity loss and climate change making pandemics more likely. [***]

2.1 Demographics and income effects

As a market historically affected by demographic characteristics, it becomes essential to analyse certain characteristics of the US population. For example, it is clear from the graph below that the birth rate in the United States has been declining over the last ten years. However, it is important to note that between **** and ****, the United States ranks sixth in terms of the number of births, with more than **,*** new babies. [ United Nations This may be the reason why many of the world's baby clothing markets are running out of steam while the U.S. market is still not showing signs of exhaustion.

Annual birth rate United States, ****-****, per thousand inhabitants Source: ****

Nevertheless, the average birth rate hides interesting information. For example, while the rate in **** has decreased for women under **, it has increased for those over **. Much of this may be related to improvements in fertility technologies (***), which allow women to postpone childbirth into their late **s and early **s. [***]

Household income has a significant impact on the amount parents spend each month on clothing. Indeed, as can be seen in the chart below, low-income families spend, on average, half as much on baby clothes compared to the upper ...

2.2 The different trends influencing purchasing

Social networks

The purchase of baby clothes is strongly influenced by fashion effects, which pushes parents to buy clothes more frequently. In addition, the new generation of parents is characterized by an intensive use of social networks. Companies have identified this trend as an opportunity, investing heavily in social networks that not only allow direct connection with their target customers, but also because they serve as free merchandising for their products. Investments are made not only through direct advertising, but also through promotional campaigns aimed at influencers, fashion celebrities and child artists.

Breaking free from the grip of gender

Non-generated clothing has been gaining ground for some time. Indeed, by ****, ** percent of American parents who have purchased children's clothing for children under the age of ** want to break free from the gender hold. Unsurprisingly, support for non-gen apparel is highest among Millenial parents (***) [***]

There is a growing interest in clothing that is more free of stereotypes, with many colours and styles that are not defined by gender. Some actors have responded to this new trend by offering different coloured labels. To replace the classic differentiation of blue and pink, they present different shades depending on the age of the child. Others ...

2.3 Purchasing habits over the millennia

The demand for baby clothing is very much influenced by the buying habits of the new generation of parents. Given that one million Generation Y women give birth to children each year in the United States (***) and has a higher average disposable income, which certainly affects their level of consumption.

In addition, about **% of Gen Y parents use their smartphone to search for products (***). As a result, they are also more likely to be loyal to companies that provide pleasant service. Indeed, ** per cent of Gen Y American parents buy only brands that reflect their social or political values, compared to only ** per cent of parents in other generations.

Companies must therefore focus their efforts on after-sales service and customer relations, as Generation Y customers tend to be loyal to the same brand. Indeed, **% of them claim to remain loyal to a brand despite lower prices from a competitor (***). This is therefore a loyal target group, a loyalty that is not necessarily found in other age groups. [***]

3.1 Distribution

As can be seen below, there is a clear domination of the physical distribution (***), fuelled by an increasing allocation of space dedicated to children's clothing in supermarkets and department stores

Baby clothing distribution channels World, ****, % of

Despite the obvious dominance of the physical channel, online distribution is expected to grow faster in the next five years. This is because it is more convenient for customers, it offers a wider range of products and an easier return policy. In a context where free home deliveries are becoming increasingly common, the e-commerce is in an ideal position to prosper.

3.2 Value chain

3.3 The emergence of rental

Subscriptions to boxes are becoming more and more frequent. Parents can choose between monthly rental of a set of baby clothes at a fixed price or monthly rental of individual items at a fixed price. This trend stems from the short use of an item as well as the growing awareness of the amount of waste generated by this consumer society

These subscriptions are becoming increasingly popular with parents as they save them from having to make frequent trips to the shops to buy their children's clothes. Rental services also meet the demand for luxury, as they allow the use of high-end brands, given their higher prices

In April ****, the popular online rental platform, Rent the Runway has launched RTR Kids, a new collection of children's clothing. The collection includes designer brands such as Chloé, Fendi, Stella McCartney and Marc Jacobs. Cat and Stitch Fix also launched subscription services in ****. Nike also launched in **** a children's shoe subscription called Nike Adventure Club . [***]

4.1 Products, materials and prices

The most popular products for infants are the following: - the bodies - pajamas - pants - peaks - outerwear - baby shoes - the bibs

Cotton is the world's most widely used fabric for baby's clothing, as it is non-irritating to the skin, yet insulating and absorbent. In fact, **% of American parents prefer their children to be dressed in cotton. [***] Wool and silk are also used for children's underwear and socks. Linen is now quite luxurious, but its resistance made it a favourite material for children's clothing before linen cultivation became rare.

Many garments are made from synthetic materials and artificial fibres, such as nylon, acrylic, polyester.

But there is a renewed interest in organic hemp or cotton and recycled materials. Among all-natural fabrics, bamboo is becoming an increasingly popular choice because of its thermoregulatory properties, in addition to being hypoallergenic and antibacterial.

In the table below, we show a simplified price range for each type of garment:

Source: ****

4.2 Luxury and second-hand products

Luxury

Since ****, the market for luxury children's clothing has been booming. Social networks also have a role to play, with the children of stars serving as an influence and dictating fashion in the children's clothing segment. One example is the son of Prince William and Kate Middleton, whose white diaper that surrounded him at birth was ordered more than **,*** times in the hours following his first appearance. According to fashion historian and sociologist Frédéric Godart, brands must find new sources of growth: "New brands must be able to find new sources of growth. After the development of men's fashion, brands must conquer new customers [***] and that only leaves children. "

Second-hand products

Reuse trends and changes in consumer behaviour have occurred in many goods sectors, including the clothing market. In fact, resale is expected to overtake the traditional thrift store and donation segment by ****, and if only the online used segment is considered, it is expected to grow by **% between **** and ****. The children's sector is of course at the forefront as the life span of products is reduced due to frequent size changes [***]

4.3 Market share

Market shares of children's clothing companies United States, ****, % of sales Source: ****

Carter's and Gap are ahead of the rest of the industry with **% and *% of the market share in value terms in ****, respectively. Today's major market players are focusing on expanding their product portfolios to include baby and children's clothing. Most of them are trying to build on their existing brand image while targeting young parents.

  Market shares of children's clothing brands    

As far as brand market shares are concerned, we find that distribution does not change much compared to the distribution of company market shares. Carter's, Gap, and Walmart still occupy the top three positions, with the brands of the same six companies capturing the largest market shares.

5.1 Regulations

The Consumer Product Safety Improvement Act (***)

All children's products in the United States, including children's clothing, are subject to CPSIA regulations. A children's product is defined by the U.S. Consumer Product Safety Commission as any "consumer product designed or intended primarily for children ** years of age or younger". The law requires that, in order to sell their products, baby apparel manufacturers must fully comply with all applicable CPSIA standards American Society for Testing and Materials (***) standards Not to mention restrictions on substances and other rules that may apply to different products

Tests

In order to assess whether the product complies with all standards and requirements, the company must call upon a third party laboratory that will perform several tests to verify whether the children's or baby clothing complies with the applicable ASTM standards and substance restrictions. These tests must be performed by pre-approved laboratories under the supervision of the United States Consumer Product Safety Commission.

The cost of these tests may vary depending on applicable standards, materials and colours. On average, it starts at about $*** per model of children's clothing, and increases significantly if the garments are made from a variety of fabrics, colours, buttons, zippers, velcro and other materials. ...

6.1 Positioning of the players

• Carter's
• Walmart
• The Children's place
• Target
• Gymboree
• Benetton
• GAP