Retailers reaching out to capture kids' clout

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With the biological clock ticking for Gen Xers and Yers, along with some older baby boomers, retailers and apparel manufacturers are birthing a flurry of stores and products to capture some of the $150 billion spent every year on babies and children.

Later this month, Eddie Bauer Inc. launches its first kids' store, an e-commerce site selling trendy items, outerwear, accessories and some basics. Other marketers, ranging from Pottery Barn to Fubu to Tommy Hilfiger and Nautica, have launched lines aimed at kids, expanding their product lines to tap into the vast potential of America's newest generation.

Patricia Cameron, exec VP-director of strategic planning at Campbell Mithun, Minneapolis, developed some insight into the segment while doing research for the launch of Kmart Corp.'s Sesame Street line of kids clothes and the Route 66 collection for teens. She said that for the past six to eight years, birth rates have averaged 4 million annually, comparable to the yearly growth at the height of the baby boom. "This millennium generation is going to have an impact as much as the boomers did," she said.

And these kids have bigger piggy banks than ever. Six- to 11-year-olds wield $17 million in spending money, albeit primarily their parents' cash, four times more than was available to them a decade ago, said Kim Ferguson, general merchandise manager for Eddie Bauer.


Overall, they influence the purchase of $150 billion worth of goods, ranging from groceries and games to minivans, she said. "Kids are not a market that has been [fully] exploited at this time," said Ms. Ferguson, noting the specialty retailer is hoping to do so with, an e-commerce Web site targeting kids and their parents.

She noted, however, other competitors long have claimed a stake in the sandbox, among them GapKids, babyGap, Old Navy and the Limited Too.

Sheer numbers aside, Patrick Wynhoff, VP-general merchandise manger, Pottery Barn Kids, said an underlying cultural shift has occurred which makes the kids' market lucrative. With older parents and even younger professionals getting their finances in order before they have children, families are better prepared to spend on kids.

"There has been a shift in thinking," he said, "from having kids wear hand-me-downs to getting the best for them." Many of today's parents -- some aging baby boomers on their second families, and some younger parents who both work -- can afford to be lavish with their young because "they have set out their life plans and are financially ready," he said.

The pampering begins at home, he said, where the juvenile furniture business alone more than doubled from $2 billion in 1995 to $4.5 billion in 1999.


Younger kids -- as young as 2 or 3 years old -- influence the choices by refusing to wear some items, mostly based on their comfort, said Ms. Cameron. Once they turn 8, kids steer their parents' shopping by asking for specific items and brands, more influenced by what they think is cool and by peer pressure, she added.

A recent survey of mothers with kids under 10 from consultancy NPD Group found 71% said their children's wishes were very influential in clothing purchases. By contrast, only 37% of mothers said they were influenced by ads when shopping for kids' clothes.

The product has to appeal to kids, but the marketing has to appeal -- or at least not turn off -- the parents who will foot the bill, said Ms. Cameron.

Kids also have an influence on big-ticket items such as furniture for their room, and are often the primary shoppers for electronics and computers in the household, said Ms. Cameron. "They have an immense impact on things that are important to them," she said.

For the retailers, kids' lines are an opportunity to rope in young consumers and develop a relationship early, said Bob Reid, president of Hampton Industries, which manufactures Nautica's lines for boys, girls and infants.

"You get them in the younger clothes, and you've captured them for the lifelong shopping experience," said Mr. Reid.

Hampton launched its first Nautica Girls collection this summer, just in time for back-to-school shopping. The line launched with a joint promotion with Girls' Life magazine which included a 10-city mall tour with music and gift giveaways. Renegade Marketing, New York, handled.

Status brands such as Nautica give the kids a reason to come to the department store, which is not one of their most popular mall destinations, said Mr. Reid. He noted Nautica Girls was successful with its mall tour, which featured musical performances and a fashion show.


Eddie Bauer also discovered it needed to give kids a reason to shop at its site. The specialty retailer, known for its suburban style standards, some eight years ago tested a children's clothing line in its catalog and in stores, featuring primarily downsized versions of its adult clothes, said Ms. Ferguson. A second test in last year's winter/holiday catalogs and online at proved more successful because it shifted to styles kids would consider cooler, such as flare jeans for girls with fringe, velvet trim and embroidery. The new dot-com effort, with 80 items priced from $18 to $38, also includes basics such as five-pocket jeans and shirts, as well as accessories such as backpacks, some footwear, belts and baseball caps. The Eddie Bauer home stores also offer infant and juvenile furniture and have a link to the Web site.


The site will be marketed with a two-page spread from agency Lowe Lintas & Partners Worldwide, San Francisco, in November issues of Disney magazine, Family PC, Family Fun and Working Mother. In addition, the site will be promoted through Eddie Bauer's catalogs, in-store, and through online banner ads. An online promotion also is planned with KB Kids.

Pottery Barn launched its kids catalog in January 1999 and by fall 2000 had opened two stores in California. A total of nine stores will be in operation this year, with a larger number set to open next year. The catalog will be the prime marketing vehicle, with page ads in local newspapers announcing openings. E-mail notices will also constitute a major marketing element. In addition, an e-commerce site, will open next spring. Advertising is being handled in-house.

Pottery Barn's Mr. Wynhoff said up until a few years ago, kids products were limited to either very low-end or boutique lines. "There was such a void in the marketplace for great kids stuff," he said. Not any more.

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