Sector Insight: Childrenswear

Tesco
Tesco

LONDON - Value childrenswear offerings from Asda and Tesco are putting pressure on upmarket brands.

Childrenswear has come a long way since the days of home-knitted jumpers with patches on the elbows, as parents dress their offspring in styles that reflect their own fashion tastes. For these consumers, value has become the most important factor in purchasing decisions, benefiting supermarkets such as Asda and Tesco and low-cost clothing outlets, such as Primark. It also means that despite a fall in the number of children in the UK, the sector is booming as consumers buy more items more often. The market is expected to grow 15% by 2012 to reach a value of £6.37bn. 

Children's clothes once had a unique style, comprising white knee-high socks, shorts and jumpers. But in this age of celebrity worship and fashion-consciousness, parents are dressing their kids in the latest fashion and designer labels as soon as they are born.

Few go as far as soap actress Danniella Westbrook, who was photographed with her daughter in matching Burberry outfits. However, it was illustrative of the degree to which some parents use their children to reflect their own style and status. 

While not everyone's wallets extend to the full plaid attire, from designer labels to value brands, there has been a shift in the styles of kids' clothes. As parents and children alike want to be seen in the latest trends, volumes have grown. The wider availability of lower-cost, on-trend clothes have helped stimulate the market as people buy more items, more frequently, for each child.

Over the past five years, the market has grown by 21% to reach £5.6bn in 2007, according to Mintel. When inflation is stripped out, this represents growth of 32%, despite the number of children in the population falling.

Baby and infant clothes are the best performers, due largely to family and friends buying higher-value items as gifts for newborns. Overall, gifts are the most common reason for purchase. About a third of adults say purchases are down to necessity, compared with almost half who say they buy children's clothes as a present.

There is also a gender split. Girls tend to have more clothes and are interested in fashion earlier, whereas boys tend to have more basic items such as T-shirts. For both sexes, character licensing has had a big effect on the nightwear and underwear categories. The rise of Spider-Man and Barbie Princess nightwear, for example, has added value to a category traditionally stocked with low-priced basics.

This sector as a whole is extremely competitive, with specialist retailers and branded suppliers losing out to supermarkets and discount retailers, which have encroached on their territory. Big multiples' own-label clothes account for 86% of value sales. The low cost and ease of purchase, as part of the weekly food shop, has encouraged impulse buys and helped build supermarkets' share.

However, the increase in such in-expensive clothing creates ethical and environmental issues. Conscientious consumers want to be reassured that child labour has not been exploited, or unnecessary air miles accrued, to bring them a £5 pair of trousers. As a counterbalance, more organic and fairtrade products are entering the market.

While Tesco has been as unstoppable in this sector as in most others it chooses to enter, it is Primark that has really stood out. As the value retailer's adult ranges have appealed to the under-35s, similarly, its children's clothes have gained a reputation for good value. Promoting itself under the banner 'Look good, pay less', its strategy of low prices and quick turn-around of the latest trends has made it the store of choice for the savvy

shopper. As a result, it has become the number-one value clothing retailer, according to Verdict Research, over-taking Asda.

Primark has also been boosted by the growth of its store network, as former Littlewoods shops have been converted. It now has more than 130 outlets in the UK and is looking to expand into Europe.

Tesco and Asda have both expanded their non-food items and built their own-brand clothes ranges; Cherokee and George respectively. In addition to its mid-market Cherokee brand, Tesco has a Value clothing range at a lower price point.

Asda experimented with some standalone George stores, but has decided not to pursue this strategy. Instead it plans to extend its Asda Living non-food stores, which will stock clothing, among other things. It has been extremely aggressive with its pricing, offering school uniform-style polo shirts at £2 a pair and cotton sweatshirts at £1.75.

The rise of this type of retailer has hit specialist and independents. Adams, which underwent a management buy-out last year, is the only big chain in the UK dedicated solely to childrenswear, catering to all ages up to 10. It has worked with Sainsbury's and Boots on their children's ranges, although the former has since taken the Tu range in-house.

Adams' ownership change will no doubt spur it to try to mirror the success of Mothercare, which, since Ben Gordon took over as chief executive in 2002, has improved its stores and merchandise sufficiently to make it a destination store for mothers of young children and mothers-to-be.

With so many players vying for a slice of parents' and children's spending money, this will remain a tough sector. But the trend for indulging children looks set to continue.

The market is predicted to reach a value of £6.37bn by 2012, a rise of 15% compared with 2007, according to Mintel. While girlswear will continue to account for the biggest proportion, infant wear will post the strongest growth, predicted to be 28% over the next five years.L

Analyst comment

Anne Benoist, Senior associate director, Enlightenment, BMRB

Predominantly price-oriented, and threatened by a declining birth rate, prospects for this market might appear limited. However, the widening gap between value brands and designer labels may offer an opportunity for mid-market brands.

Excluding sportswear, the British market has relatively few clothing brands exclusively for children, with most of the major players being supermarkets or variants of adult-clothing retailers. The choice is broadly between labels that offer low-priced items worn only for a season, often driven by school attendance and physical growth, or aspiration-led, premium labels.

The desire to mimic role models appears to be at its strongest among seven- to 10-year-olds, while those aged between 11 and 14, anxious to keep up with the latest trends, often have different aspirations. While they may be attracted by a certain image, they are not strongly influenced by brands. Their preferences appear to be driven by a desire to experience, bond and express themselves, and, ultimately, to 'fit in'.

There is a significant minority (about 20% of 11- to 14-year-olds) who appear not to care what they wear, being more interested in, among other things, good causes. Such affinities could provide a platform for brands that celebrate such specific values.

More widely, the rise of a smarter form of consumerism, together with a less materialistic and superficial shopping experience is likely to accelerate as a result of the credit crunch. The market for children's clothes, as many others, faces a choice between moving further toward cheap disposable fashion, fuelling deflation in the market, or to opt to restore solid brands, with a fresh edge, to generate real value.

 
Childrenswear manufacturers by retail value and share
2007 (est) 2005% change 
 £m  £m  2005-07 
1Next610114899.424.7
2Primark4698.53025.855.3
3Asda4508.14017.712.2
4Tesco3556.42815.426.3
5Marks & Spencer3155.72865.510.1
6Mothercare2274.11823.524.7
7Debenhams1873.4156319.9
8Woolworths1753.21823.5-3.8
9Adams1703.11803.5-5.6
10Bhs*1472.61603.1-8.1
11New Look1322.4104226.9
12H&M1122931.820.4
13Matalan1081.91192.3-9.2
14Peacocks841.5731.415.1
15Monsoon430.8310.638.7
Other retail brands118921.4129724.9-8.3
All own-label477386433683.410.1
All brands7771486416.6-10.1
Total  555010052001006.7
Source: Mintel   *Includes Tammy, acquired April 2005
Childrenswear outlet types by value and share
2007 (est) 2005% change
£m % £m % 2005-07
1Clothing multiples*2165391976389.5
2Grocery multiples999188321620.1
3Variety stores66612624126.7
4Department stores3897312624.5
5Mail order/internet38974168-6.6
6Clothing independents27853647-23.8
Other**6661267613-1.5
Total  555010052001006.7
Source: Mintel   *includes discounters  
**including market stalls/sports shops

 

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