Balancing Act

Despite the negative headlines permeating the childrenswear industry of late, retailers  on their way to the trade shows—the main attractions being Children’s Club in New York in July and Children’s Club MAGIC in Las Vegas this month—seemed surprisingly upbeat. That, according to an informal poll of stores across the country.

Sure, there were some wild cards thrown in, like the uncertainty related to the presidential election, which could wreak havoc on consumer confidence during the latter half of the year. But the talk was certainly not all doom and gloom, either.

The numbers reflect the current climate—flat. Childrenswear sales in the U.S. grew 2 percent, reaching $29.7 billion in 2015 with girls’ apparel as the largest category, accounting for 38 percent of total sales, according to Euromonitor International. Boys’ apparel was not far behind, holding 32 percent of market share. Baby and toddler took the remaining 30 percent.

For the next five years anyway, big changes in demographics aren’t expected either. The actual number of births is expected to increase to 4.1 million in 2020, up 3 percent, according to Euromonitor.

Heading into the month of August, back-to-school was on the minds of retailers and expectations didn’t include substantial growth. The National Retail Federation stated that 54 percent of adults with school-age kids planned to spend exactly the same amount of money for back-to-school goods as they did last year. That’s slightly down from the 57 percent who said the same thing  one year ago. The main takeaway from the study is that most consumers are growing increasingly savvy, shopping for sales, planning to use more coupons and studying ad circulars and newspapers for back-to-school deals.

The consumers’ unwillingness to overspend came up most often in conversations with store owners, followed by unpredictable weather patterns adversely affecting sales, the buy-now-wear-now climate and the unstoppable force of e-commerce. Simultaneously, large chains are making investments in an effort to bump up sophistication levels of childrenswear, encouraged by a global market that, for the last five years and at a 6 percent rate, has outpaced womenswear and menswear, according to Euromonitor.

Jamie Applefield, owner of Aristokids with four stores (Aristokids, PB Girls Club for juniors and women, PB Boys Club with surf and skate product and an outlet) in West Palm Beach, Fla., is seeing the more financially conservative customer first-hand. She used to sell imported French goods. Not anymore. “I have wealthy clients, but they still don’t want to overspend,” she says. “And they’re spending money for everyday clothes.” That said, when it comes to selling swimwear, all bets are off. “We can sell any price in a bathing suit, from Roxy to Mill,” Applefield says. Vintage Havana and Milly are other brands with strong sell-throughs. In the end, the look reigns supreme for her customers, not the name, she says and rompers, in particular, are selling briskly.

In San Francisco, another wealthy area buoyed by the tech industry, the current generation of mommies are much more permissive when it comes to dressing their children. Leave it up to the kids, and they will choose items that are comfortable and casual. “It used to be that children didn’t wear their pajamas to have lunch with grandma,” says Maggie Chafen, owner of the 40-year-old institution Dottie Doolittle that attracts well-heeled customers like Yahoo Chief Executive Officer and mom Marissa Mayer. “Life has become so casual and around here, it’s kind of a reverse snobbery. Children wear leggings and a T-shirt to the fanciest birthday parties. It’s just a different time.” Although her business is good—“I wouldn’t say it’s excellent, but sales are up for the year,” she says—the work that goes into maintaining it, has increased over the years. Business is so tenuous, manufacturers are asking stores to prepay orders, she relays.

While the small stores are moving toward casual goods, big chains are focused on elevating children’s assortments. In July, Betsey Johnson launched her first baby collection at Babies“R”Us, joining other designers like Heidi Klum. We’re talking punk rock elements like faux leather vests, letterman jackets, faux fur accents, rose and leopard prints. There’s also tutus, rose gold skirts, hearts, bows and plush puffer vests, all with Betsey Johnson’s signature bold colors and fun graphics. Other designers are expected to be added to the Babies“R”Us mix this summer, including Jessica Simpson, Kate Moross, Rachel Zoe and an expanded Kardashian Kids collection. “It’s a different Babies‘R’Us consumer,” says Toys ‘‘R’’Us Spokesperson Adrienne O’Hara. “You’re looking at new grandmas, aunts and uncles, a newer expectant parent. They’re making very thoughtful purchasing decisions.”

As for toys, Toys “R” Us is drilling down on innovation and technology. The retailer is keeping an eye on companies like U.K.-based Kano, originally funded by a Kickstarter campaign. Kano is basically all of the components of a computer that kids can build from the ground up as well as learn code and how to create apps. On that note, Toys“R”Us is betting the Fisher Price Think and Learn Code-a-Pillar, $49.99, is going to be a huge item for the holiday season.

Target is also investing time and resources into making childrenswear more fashionable and sophisticated. Soliciting the opinion of 1,000 kids, ages 4 to 12, the result is Cat & Jack, which bowed in stores in July. The line features unique color combinations, including long tulle skirts with glow-in-the-dark stars and a short-sleeve dress with boldly drawn flowers on a black background for girls, and dinosaurs and astronauts on T-shirts and slouchy pants with drawstring waists for boys. Target expects Cat & Jack to revitalize the retailer and has identified kids—alongside babies, style and wellness—as one of its primary focuses going forward.

Other trade show attendees identified childrenswear sizes as a major point of concern, particularly kids reaching the tween phase. Business has been good for Stoopher & Boots, a children’s boutique located on the Upper West Side of Manhattan, says owner Stephanie Goldstein. The store stocks children’s clothing, gifts and toys as well as some junior women’s clothing. But she’s heading to Children’s Club keenly more aware that her customers, even as young as 10-years-old, seem to be growing out of her store. “I have been able to buy the same brands in bigger sizes,” she says. “I’m very conscious about body issues and wanted to say to them, ‘Look, we have it in your size.’” Goldstein says it’s important to be conservative in her styles—no cuts or slits—for youngsters of this age. Among the brands that do best are Vintage Havana and Sparkle by Stoopher, she notes.

Meanwhile, stores that cater to religious events appear to be on solid ground. Amy Collins, owner of the Good Hearts Children’s Shop in Reading, Mass., along with Karen Martignetti, is heading to New York with a sizeable open-to-buy. “We have a very large first communion business and we purchase 80 percent of our dresses and veils at Children’s Club,” she says. “It’s a lot of dollars for us. We’ll also tidy our fall buy, which is 75 percent complete. And then, of course, we’re open to seeing new lines or gifts.” On the part of her customer, Collins is seeing more moms buying for themselves and their progeny as opposed to just grandparents. She credits her advantage over e-commerce—she hasn’t taken her business online—to all the beading and detail that go into a communion dress and its sizeable investment. The show’s floor is fully stocked with dresses and some customers travel far to see them in person. “It’s hard to see that on a computer screen,” she says, noting the Internet has helped in other ways. “Sometimes they’ve already shopped and price compared and know what they want before they come in.”

Probably the biggest thing affecting small stores like Puddleduds in Scottsdale, Ariz., is the rise of e-commerce. “The young mothers are buying everything online because they work and don’t have time, it’s easy and they get free shipping,” says owner Carol Dudley. “It’s made a big impact.” Add to that the Arizona summer heat that’s driving snowbirds back to Canada or elsewhere, and business is slow. Still, she’s confident sales will get back to normal and will restock successful brands like Havaianas flip-flops.

In the end, however, store owners agree that anybody who’s in the baby business is in a good spot. “There’s a huge baby business out there,” confirms Chafen. The birth of a baby is still a momentous occasion that tends to pry open the wallets of the stingiest parents, grandparents, aunts, uncles or friends. “Everybody still wants to dress the baby,” says Holli Gold, owner of Hopscotch boutique, in Longview, Texas, noting Mud Pie and Jack & Jill are some of her bestsellers. “When you have a baby, it’s about all about the baby.” •