Competition escalates in kids'; robust sales, flat margins mark category - children's wear at discount stores

Discount Store News, Nov 13, 1989

Competition Escalates in Kids'

The important infants' and toddlers', boys' and girls' wear categories at the nation's discounters are continuing to contribute strong sales dollars as a percentage of total sales compared to many other categories. However, price competitiveness is keeping gross margins relatively flat.

Most discounters already have their holiday product in the stores and are expecting strong seasonal-themed item business in the infants' and toddlers' and younger children's wear categories. However, discounters, like most retailers, are bracing for what many expect to be a highly promotional holiday season at retail.

General demographics - with baby boomers now having babies of their own - and budget-minded mothers have for the last several years made infants' and children's wear a particularly strong discounter category. A study of 22 discount retailers conducted over the summer by the International Mass Retailers Association revealed that competition among discounters and other retailers in infants', boys' and girls' wear heated up during the 1988 to 1989 period.

In boys' wear, gross margins as a percentage of total sales were down - from 34.1 percent in 1987 to 1988 to 32.7 percent in 1988 to 1989. Infants' was also down - from 23.9 percent in 1987 to 1988 to 20.1 percent in 1988 to 1989. Girls' saw a slight rise to 35.0 percent from 34.5 percent, according to the study conducted by Cornell University.

Twenty-two retailers with aggregate sales of $30.5 billion from 2,713 stores participated in the 1989 edition of the "Operating Results in Mass Retail Stores" study.

As a percentage of total sales, the girls' (2.1 percent to 1.9 percent) and boys' wear (2.3 percent to 2.1 percent) categories were both slightly down, while infants' was flat (3.1 percent).

Stock turns, however, were up, reflecting the overall health of these categories: girls' from 3.7 to 4.5 turns, boys' from 3.3 to 3.8 turns and infants' up substantially from 4.2 turns in 1987 to 1988 to 5.3 turns in 1988 to 1989.

Cumulative mark-up was basically flat in boys' - 41.8 percent to 41.7 percent - up slightly in girls' - 44.7 percent to 45.1 percent - and down three percentage points in infants' - from 31.7 percent to 28.7 percent.

Total markdowns at retail as a percentage of sales in the 1988 to 1989 period were slightly down in girls' (17.4 percent to 17.0 percent), up more than a point in boys' (13.0 percent to 14.3 percent) and slightly up in infants' (10.9 percent to 11.0 percent).

Sales per square foot numbers also tell a mixed story, with boys' wear up a healthy $7 nicely to $141 65 in 1988 to 1989 from $134.63 in the 1987 to 1988 period.

Girls' wear, however, has remained flat at around $116 per square foot. Infants' dropped by more than $3 to $143.29 from $146.72.

PHOTO : Many discounters are counting on strong seasonal-themed item business in the infants' and toddlers' and younger children's wear categories. However, they also expect a highly promotional holiday season at retail.