| FOR IMMEDIATE RELEASE | 5/21/2009 |
Recession or not – Older parents drive boom in baby gear
With Australia currently in the grip of a baby boom among mothers over 30, businesses servicing the increasingly fashionable infant market are bucking the economic downturn and outperforming many other industries. Business information analysts, IBISWorld, investigate the phenomenon of cashed-up thirty and forty-somethings who find splurging on their offspring irresistible.
As Australian households cull spending on most discretionary items in the current unstable economic environment, first-time parents and those giving birth for the first time in their later 30s or early 40s are buying up big for their newborns – and only the best will do.
According to IBISWorld, this financial year revenue for the baby products sector is estimated to grow by 3.2% to $3.9 billion, with the “average” cost for the typical Australian family of raising the first baby in terms of merchandise purchases from birth to 4 years, estimated to be around $5,393, a figure that has been rising steadily over the past decade.
The following table breaks down the market share of the main segments of the baby products market for this financial year:
| Product/Services | Share | Millions |
| Nappies | 25.6% | $1,010.5 |
| Clothing | 29% | $1,144.7 |
| Nutrition/food | 16% | $631.5 |
| Other merchandise | 9.9% | $390.8 |
| Furniture | 10% | $394.7 |
| Toys | 7% | $276.3 |
| Footwear | 2.5% | $98.6 |
“Rising birth rates to older parents, and a focus on only buying quality items, has given rise to huge growth in businesses churning out high-end baby products,” said IBISWorld General Manager (Australia), Mr Robert Bryant.
“In fact, over the past five to 10 years, the market has seen a proliferation of hip baby boutiques and online companies supplying the middle to premium market, with celebrated fashion designers such as Collette Dinnigan and Fiona Scanlan also expanding into babywear.”
And while some media reports have predicted the global financial crisis will put an end to the current baby boom, IBISWorld believes that’s not necessarily the case, with some women seeing the weak employment climate as a natural career break, and ideal time to have either their first, or a subsequent baby; while many couples planning a baby will sacrifice in other areas to pursue their family plans.
Mr Bryant noted, however, that couples who already have children may postpone having additional children until the economic outlook stabilises, if they feel threatened by the rising rate of unemployment.
According to IBISWorld, as the baby products market reaches saturation levels over the next 10 to 15 years, the market’s emphasis will turn to infant merchandise as more retailers capitalise on the fact the under-two’s can be marketed to as a distinct group from their three and four-year-old siblings. Mr Bryant anticipates that the three key growth areas will be in products focusing on entertainment, development, and education.
“Entertainment-based merchandise and products designed to aid with cognitive development will do well as parents hone in on purchasing toys that stimulate, excite and teach rather than just ‘occupy’ their little one’s time,” he said.
Retailers will invest further in branding specifically for Australian infants, said Mr Bryant, with the industry focusing on two key expansion strategies. “The first is the evolution of baby brands from their adult counterparts, such as Baby Gucci, Esprit Kids and Cotton On Kids; while the second looks at conceiving new brands just for infants.”
So far in Australia, Mr Bryant said the first strategy had driven growth in the local baby products market, since spin-off stores already benefit from an existing clientele and brand-awareness among the adult market.
He warned that this strategy would only work for some clothing brands, as not every adult label will be able to successfully convince and attract its audience to purchase ‘mini-me’ products.
“Although they are already well-known, the evolution of infant-only brands on a large scale, such as Pumpkin Patch and Baby Bunting, is still a relatively new concept for the Australian retail landscape with international brands previously dominating this domain. We expect new infant brands to make significant inroads into this market over the next decade, and beyond,” he added.
Currently, between 60% and 70% of baby merchandise revenue is derived from independent retailers, with the rest generated by department stores, and demand is driven by the share of purchases allocated to each specific age group.
Newborns and babies under the age of one account for around 35% of the market, toddlers between one and two represent 43%, while sales for three to four-year-olds comprise 22%.
“Nappies dominate purchases for babies under two, while clothing and toys account for the greatest proportion of revenue for those between two and four years of age. In fact, Australian babies will use around 2.1 billion nappies this year – that’s 168 million per month, 39.2 million per week, 5.6 million per day. Now there’s a recession-proof industry if ever there was one!”
For more information on these, or any of Australia’s 500 industries, log onto www.ibisworld.com.au
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