Baby business booms - infants' clothing - Special Supplement: AM Apparel Merchandising

Discount Store News, March 1, 1993

Mass market retailers are taking action to maintain their infant and toddler apparel market share as competition from specialty stores and department stores intensifies.

Although it is estimated that discounters control as much as 40% of the infant and toddler apparel market, mass marketers have taken note of stepped up efforts on the part of retailers such as Baby Gap and Kids |R' Us.

"There's definitely more people in the game," says George Needleman, senior vice president for Venture.

The infant and toddler portion of the $10 billion children's apparel business - estimated at 20% - is crucial because it has a halo effect on the entire store.

"We paid a lot of attention to this area. We have fashion even in infants and toddlers," Kmart chairman Joseph Antonini remarked during a tour of the chain's new prototype in Auburn Hills, Mich. He added that he hopes that mothers' confidence in childrens' apparel will translate into higher sales of ladies' career and casual apparel. In its new look, Kmart has adopted a "Gap style" of presentation of items such as fleece.

The efforts in infants and toddlers has paid off for Kmart, according to a study conducted last Christmas by the Skaggs Institute of Retail Management at Brigham Young University. Infants and toddler apparel scored among the highest ratings for Kmart based on consumer perceptions about its performance.

Sears is attempting to keep the infants and toddler business booming by adopting a micromarketing approach while also adding more brand names.

"From an industry standpoint, the next five years will show a slight decrease in business because of a slowdown in the birth rate," predicts David R. Fielding, national product manager, children's for Sears. "From our standpoint, we're expecting growth because we see opportunities in areas such as the Bible Belt and Hispanic markets by offering a customized mix," explains Fielding.

Suppliers such as Spencer's are reacting to these new needs with expanded offerings of products, such as knit dresses. Since 1989, according to company executives, dress sales have doubled at Spencer's.

Sears is also expanding its selection of Lee products, continuing a test of HealthTex and adding Cherokee labels to the infants and toddler selection. Sears will also identify 250 stores that can support a larger, more fashion-oriented selection of the Osh-Kosh line. About 600 stores currently have a basic assortment of Osh-Kosh.

In just the past few years, Sears' space commitment to the department has expanded 10% to 15%, according to Fielding.

In addition to brand names, buyers are seeing tremendous growth in licensed character and sports names. "The general trend is to licensed characters and we have them ... Barney, Mickey, Looney Tunes, " says Needleman at Venture. The other major trend he has noticed is to sports logos, even on infant and toddler merchandise. Steve Katkin, executive vice president at Prange Way, agreed that sports licensing is just as big in infants and toddlers as in other areas. "We especially have a lot of interest in Green Bay Packers' merchandise," he says. Not surprising, given Prange Way's location, near the team's home town.

Prange Way has been boosting productivity by narrowing its list of suppliers. By working with fewer resources and skus, the chain has been able to make the department cleaner and easier to shop, according to Katkin. Among the major suppliers are Spencer's and Gerber.

Three years ago, Jamesway also decided to focus more attention on the burgeoning infants and toddler business via a remodeling program. The decision was made to merge infant and toddler softlines with hardlines such as toys and furniture. The department, in remodeled units such as Matawan, N.J., now have infants and toddlers in a prime spot adjacent to ladies apparel.

"We pulled it together so shoppers could see what's new in toys, infant furniture and apparel," says Gail Lindenman, divisional merchandise manager for childrens at Jamesway. She says the remodeled units produce sales that are 2.5 to 3 times that of the chain's older layout, which separated the two areas.

Pulling hardlines and softlines together enhances sales of licensed goods, says Lindenman. She considers licenses such as Aladdin, Barney, The Little Mermaid and Mickey Mouse a hot growth area.

Both Needleman of Venture and Katkin at Prange Way also say they prefer a combined merchandising approach of hardlines and softlines for infants and childrens. "You can have a Barney plush animal near Barney clothing," says Needleman.

Michael Setola, president of Obion Denton Co., a division of Salant Corp., said licensed items are also growing because they spur more impulse sales. "There are two needs: basics that you have to have and that's a planned purchase, and fashions or characters that are impulse sales." Setola suggests a mix that is 60% or 65% basics, sprinkled with higher gross margin licensed items.

The infant and toddler market used to lag a season behind larger sizes in fashion. According to buyers and manufacturers, that's no longer the case. "We're seeing it is just as fashionable. We're looking at a |grunge' look with lots of flannel and corduroy and denim and fleece sets for fall," observes Leslie Hirschfield, market coordinator for French Toast. Fielding at Sears also characterizes denim, twills and rugby looks as growing in popularity.