Discounters claim up to 40% of '89 children's wear market - Discount Industry Annual Report: part 2: Merchandising and Productivity Analysis

Discount Store News, July 16, 1990

Discounters Claim Up to 40% Of '89 Children's Wear Market

From bike shorts to big shirts, children's wear departments often resemble mom and dad's closets in miniature.

Discounters are the dominant outlet for children's apparel, garnered anywhere from 30 percent to 40 percent of total children's wear sales.

However, the business got tougher for discounters in 1989. Heavy markdowns at department stores and the growth of mail order and other non-traditional distribution channels created a challenge for the established discounters in children's wear.

As in other markets, specialty stores are gaining ground in children's wear. Kids "R" Us, the apparel arm of Toys "R" Us, added 25 stores in 1989, ending the year with 137.

Montgomery Ward was also lured by this market. The chain has expanded its Kids Store specialty concept to seven units. In the next two years, 18 more are expected to open. While the original seven are freestanding stores, the retailer plans to open an adjacent Kids Store next to all future full-line Montgomery Ward units. This presents the best of both worlds--an established full-line discount department store name and the cachet of a contemporary specialty store.

Discounters without the advantage of freestanding units are trying to update the children's area in more modest way most noticeably through brands and better presentation.

Prange Way added four to eight rounders in 19 of its 25 stores for its children's wear merchandise. Caldor, though not changing the initial square footage, did use its space more effectively, adding a three-tier display in some cases where there was only one tier. Ames and Jamesway both created more distinct children's departments.

In most of these stores, Brittania and E.J. Gitano are leaders in boys' and girls' wear, respectively. Brands in general became more important measures of the children's department success. Lightning Bolt, French Toast and others found a home in discount stores. Even OshKosh B'Gosh, a formidable brand at the upper-end department store, realized the importance of the mass market, and finally began merchandising its products to Sears and JCPenney.

It may be a sign of things to come. Many retailers are increasing their price points for the children's area noting that higher-income shoppers that may have a stigma about shopping for themselves at K mart are more than willing to dress the kids there. Bradlees and Burlington Coat Factory both reported that a larger percentage of brands, and sometimes in a broader range of price points, were now the norm at their stores.

Quality and Fashion Expectations

Brands by definition tend toward higher price points, but retailers reported higher expectations of quality and fashion as well. Even a six-year-old can tell you what Gitano is.

Trends in children's wear mirror what is going on in junior and adult apparel. Beach lifestyle clothing, including jams, tanks and bike shorts created bright displays in sunny colors. Casual looks still dominate the market. This real thrust toward comfortable clothing has given new impetus to knitwear. Sweaters, leggings, sweatshirts and T-shirts are especially good sellers for discounters and are prime product targets for licensing. If there is a six-year-old that doesn't recognize the Gitano label, he will know each of the Teenage Mutant Ninja Turtles by their first names.

Interestingly enough, the solid, reliable blue jean was perhaps the worst performer in this market. Knit leggings, which have been the favorite in girls' bottoms for the last five years were the biggest culprits. In boys' wear, it was casual trouser styles, as well as sweatpants, that put a damper on jean sales.

One research firm reported a 2 percent decrease in children's jean sales. Girls' jeans did better. Thanks to MTV, singer Madonna has helped the blue jeans image by wearing them at a capri length. Discounters remain the leading distributor of children's jeans.