Mass readies for 'Echo' boom

Discount Store News, May 3, 1999 by Mike Duff

Retailers are coming to realize that kids are key shoppers, not only as a group that affords many sales opportunities but as potential long-term customers. This is especially true at the mid-tier, where merchandisers are taking youth more seriously than in the past to compensate for a trend established by chains such as JCPenney and Sears in which customer bases have gradually grown old, according to industry observers.

As executives have discussed JCPenney's recently announced revitalization efforts, they have emphasized the youth market's importance to the company, particularly teens and young adults who are just starting out on independent lives. Marilee Cummin, president of merchandising, store and catalog, noted that her company also has its eye on even younger consumers. "Ages 5 to 15 will be an important part of our customer base for the future," she said. "Generation Y will have as big an impact as Generation X."

In fact, many are predicting that the impact of Generation Y could be bigger. The group, also known as Echo Boomers or children of Baby Boomers, is about three times the size of Generation X. More than 60 million children were born in the United States between 1979 and 1994, and they are expected to have buying power of roughly $156 billion by 2002.

What's more, they've grown up with computers, cable television and cell phones, which means they are remarkably sophisticated when it comes to the media.

Many retailers contend that the best way to win kids as consumers is to begin serving them as soon as possible. That's one reason discounters have baby clubs. Kmart's emphasis on toddlers through Sesame Street, for instance, has been followed by efforts to boost transitional items that puts kids on the road to becoming lifelong customers.

Still, to build business in children's wear means hooking into trends that can act as a basis for a growing business. Many elements are likely to have a great effect on children's apparel this year.

Today's kids know a lot more about fashion than most adults knew when they were coming out of toddlerhood, according to Don Smith, general manager for brand management at Zellers. And even when they are too young to have developed their own style, they have one imposed upon them, he said. The key is to keep your look consistent through the men's and ladies' departments but adjust it for kids'.

Smith added: "Kids are more trendy, so Zellers has more cargos, carpenters and utility pants. Remember, today's kids act older than we did when we were the same age."

Zellers is among the most diligent in its attempts to capture customers as kids. ClubZ (pronounced "zed" in Canada) is a loyalty program that kids can participate in from a very early age--with the permission of parents, of course. Club points lead to reward purchases, and Zellers hopes that will lead to an abiding affinity. But Zellers doesn't market to kids based on ClubZ alone; it integrates children's wear into its key brands to ensure the stores can satisfy the various tastes kids demonstrate and the demands of their parents as well. Cherokee has become a key brand for Zellers and has been developed a kids' dimension.

"We're the biggest kids retailers in Canada, and a critical part of our business with Cherokee is in kids'," Smith said. "We find that our Cherokee clothing is our leading initiative in kids because of its fashionability for kids and its wearability, which is popular with mom."

At Ames, Sandy Sansavera, senior vp, gmm, soft lines, said that on-fashion clothes are a big hit with the kids in his stores. "Trend fashion is strong," he said. "In girls', it's the strappy tanks. In boys', it's baseball looks. Trend-right coordinates are having an impact--ensembles, the red denim look and activewear for the athletically inclined."

Sansavera noted that big things should happen in kids' after May 16, the preview day for the new Star Wars film. Naturally, toys are taking off, but the impact is being felt in apparel as well. "In most categories, Star Wars has an impact, from boys' fleece sets to underwear. The truth be told, the graphics alone are worth it even without the movie," he said.

The uniform business continues to grow with the advance of school dress codes across the United States. With its retail partners, French Toast works to educate school districts about the pros and cons of school uniforms, and in those cases where dress codes are favored, it helps to develop a program that satisfies the established requirements. French Toast includes about 5,000 items in its school uniform program so that it can provide affordable choices under a variety of circumstances.

According to Beth Stein, brand manager of school apparel, French Toast, parents spend about $100 per year for school uniforms on average. They are likely to spend a lot more on "street" clothes these days, as they usually come with upscale designer labels. Thus, money spent on street clothes is unlikely to be spent in discounters.