Quality and value appeal to mom

DSN Retailing Today, Feb 28, 2005 by Debbie Howell

When Wal-Mart added its exclusive Child of Mine brand by Carter's to infantwear in 2003, the retailer made clear its desire to grow its baby department business. Not only did this raise the bar in quality for the mass channel, but it also became the latest volley in a strategy to offer a broad and distinctive assortment of baby goods at a value.

With the birth rate holding steady at about 4 million a year, new parents are a critical target market for Wal-Mart--especially customers on limited incomes shopping for basics.

"They needed to focus on that department in order to help drive the value mother-consumer into their stores," said Eric Martin, director of investor relations at Carter's. "That customer on the apparel side is very price-sensitive. They're looking for good quality and good value."

The Child of Mine brand has been a strong performer, Martin said. In fact, mass channel sales for Carter's rose 74% in the first nine months of fiscal 2004, reflecting strong sales at Wal-Mart, as well as at Target, which sells an exclusive Tykes label by Carter's. The slightly upscale but affordable Child of Mine Wal-Mart brand has resonated with shoppers, with attractive price points such as an infant sleepwear two-pack for $6.82.

Wal-Mart's heavy reliance on private labels or exclusive brands in infant apparel relates directly to the retailer's desire to offer great values. Interspersed are many popular licensed lines, though house brands received prime positioning at one store in Garland, Texas. Among Wal-Mart's house brands in baby are Kid Connection, Baby Connection, George Baby, Athletic Works and Faded Glory. Exclusive brands are Child of Mine and mary-kate-andashley. National brands include Wrangler, Riders by Lee, Gerber and Sand N Sun.

Wal-Mart spokeswoman Suzanne Haney said the private brands are offered as a "complement to our national brands, which remain a strength for us in the hardgoods area."

Though Haney added that Wal-Mart does not have an overall stronger reliance on its own brands in baby, an estimated 75% or more of the apparel goods seen at the Garland store were either house brands or exclusives. Wal-Mart's brands received the strongest floor play, with hanging racks calling out George Baby, Athletic Works, Kid Connection and mary-kate-andashley. In most cases, attention was given to calling out singular price points by rack, such as $11.94 three-piece infant and toddler boys playwear sets.

Besides marketing to its customers with sharp prices, Wal-Mart has also tested micromarketing by neighborhood in baby. An example of this is the test Hola Bebe infantwear line by Three Amigas and Mayfair Company, which targets the Hispanic consumer. This exclusive line of fiesta-themed apparel tied to actress Sonia Manzano of "Sesame Street" is offered in a limited number of Wal-Mart stores with heavy Hispanic customer bases.

"It launched last year and was a big hit," said Jeanne Taylor Hard, a partner in Three Amigas. "They [Wal-Mart] have aligned themselves with someone that is known in the Hispanic community and is well liked and trusted, and that is important to that demographic."

With Wal-Mart's vast geographic reach, baby product sales translate into big business. Wal-Mart sales in infant and toddler apparel were estimated at $3 billion in 2003, exceeding the $1.76 billion overall sales of top specialist Babies "R" Us that year. The $3 billion figure doesn't include Wal-Mart sales of baby gear, diapers, food and toys, all of which are brought together in the retailer's one-stop "infants & toddlers" department.

While Wal-Mart's evolving private brands appear to be expanding into more baby categories--such as infant toys, rattles, teethers, crib mirrors, plush blankets and crib sheets--in segments such as car seats, strollers, cribs and swings the reliance continues to be on well-known national brands such as Graco, Fisher-Price, Safety 1st, Cosco, Kolcraft and Jeep.

Whether it's a national brand or a private label, the key to Wal-Mart's growing success in baby is offering a complete assortment of the highest-demand products at the best value.