Baby boomlet gives birth to new products, services

Discount Store News, March 4, 1996 by Arthur Goldgaber

NATIONWIDE DSN REPORT -- The U.S. birth rate has been relatively stable at 4 million over the past-few years. However, space devoted to infant and toddler products and accessories has been booming as retailers look-for hot category niches to mine. This translates into robust price competition-for consumer dollars at discount chains and category killers, and it also forces retailers to develop innovative marketing techniques. Vendors are also introducing more creative and multifunctional products for value-conscious parents and grandparents.

Category-killer Baby Superstore, based in Duncan, S.C., devotes an average of 35,000 sq. ft. to each of its 63 stores for infant and toddler accessories, from diapers and formulas to large-ticket items like furniture and strollers. The chain carries 25,000 skus of merchandise, and its sales on a per-store basis increased 16% from last year to $291.2 million for its fiscal year ended January 1996.

What is driving the demand? Baby Superstore chief financial officer Jodi Taylor attributed the chain's success to three factors. "We keep the stores fresh and innovative, our prices are competitive and sales associates are very knowledgeable," Taylor said. The chain plans to have 80 stores nationwide by the end of its current fiscal year.

Wal-Mart, Venture, Target and Kmart all have large toddler and infant departments in prominent sections of their stores. Each offers a variety of goods such as strollers car seats, diapers, formulas, accessories and clothing, as well as regular specials on staples and prominent signage that features large portraits of children.

Taylor acknowledges that there is a lot of competition in the category from the major discounters like Toys "R" Us and regional chains such as 1/2 Price Stores, LiL' Things and Burlington Coat Factory, as well as mom and pop stores.

The competition will heat up further this year as TRU readies the launch of its Babies "R" Us baby superstore, set for May in the hustling metro New York town of Westbury. The 42,000-sq.-ft. store, like the other 11 planned for '96, will include a gigantic juvenile products area that is slated to feature 60 strollers and 40 high chairs in its mix.

TRU also will make customer service a priority at Babies "R" Us and in its much awaited megastore, which will combine a new TRU toy store prototype with a BRU and a Kids "R" Us children's apparel outlet. These-units will include a hair salon and photo studio.

Target has tapped the services portion of the business with its new Lullaby Club, a baby registry, which debuted lust year. Target has been advertising the registry on television and has prominent signs about the program-in its infant and toddler section. Target's lullaby Club brochure includes a list of about 80 items that an expectant mother will need. It also encourages consumers to expand their concept of who is gift-worthy. The copy in the brochure states, "Baby showers traditionally were a totally female experience. These days, it's permissible to expand the shower to include the father-to-be and any other male friends and relatives who would enjoy being part of the celebration."

Like any category, certain products drive the business. At Baby Superstore, furniture and accessories like decorative lamps account for half of the company's revenues, Taylor said, with safety and baby care needs such as Safety 1st outlet plugs and cabinet latches accounting for 15% to 16% of sales Taylor has also noticed a strong trend in multipurpose items such as Evenflo's adjustable Phases high chair, which can be adjusted as the child grows, or a Century stroller/car chair combination.

Safety 1st and The First Years lines of safety items, including thermometers, night lights, electrical outlet plugs and cabinet locks, are extremely popular.

Another innovation that has become popular is the Diaper Genie System by Mondial-a type of trash bin for diapers that traps smells. Similar products are now being offered by Fisher-Price and The First Years,-which retail for about $16 to $17. To demonstrate the wide variety of infant products, Wal-Mart carries several items devoted to potty training ranging from a simple Safety 1st potty seat for $10.96 to a Step by Step toilet training system for $19.96.

Crib walkie-talkies and transmitter systems have also become quite popular. Baby Superstore recently offered a $5 discount on a Fisher-Price monitor that normally sells for $34.

At Kmart, baby monitors are the most popular safety items said spokeswoman Laura Mahle. The chain carries both Gerry and Fisher-Price monitors, which retail for about $30 to $40. Another strong-selling product for the chain is the Playtex no-spill training cup for $2.99. Mahle said that a curved-tap bottle by Johnson & Johnson is also popular, and the chain will add a similar battle from Evenflo in March Price points will range from $1.50 to $2.50

While the large discounters offer competitive prices, owners of specialized infant and toddler concepts said that there is room for stores that offer extensive customer service. For example, Mark Widdicombe, co-owner of the 11,000-sq.-ft. Baby Town in West St. Louis County, Mo., said that his store has been extremely successful since it opened a year ago. He said -that his most popular items are from The First Years. He added that Winnie the Poohlicensed merchandise, which includes a trainer cup with two handles, is doing well. Another popular item is the Happy Cabana by Evenflo, a traveling play yard designed for both indoor and outdoor use, which retails for $99.