The first baby boom was driven by the United States, a reflection of America’s growing role as the largest global economy. The second boom now taking place primarily in emerging economies appears to be very different. Parents, regardless of their level of wealth, want to give their children the best. In developed economies, where birth rates are generally falling, parents are spending more on their children.The market in BRIC economies is even more promising, thanks to the growth of the middle class there.
Spending Boom
The market for baby and children’s products depends on two main factors – the number of babies and children, and parents’ purchasing power. The United Nations (UN) estimated that the children population under the age of five in developed economies – including the US, the EU and Japan – totalled 54 million in 2010. The average household disposable income reached US$50,000 or above.
Although birth rates are generally falling, parents now can afford to spend more on their children, even in an economic downturn. Euromonitor International says spending per child up to three years of age in major developed economies exceeded US$1,500 in 2009, with parents in Western Europe spending more than those in the US and Japan.
In emerging economies, the large customer base is the major attraction despite lower household disposable incomes. BRIC countries (especially China and India), have experienced both baby and economic booms over several decades, offering huge promise for businesses targeting these markets.
The UN estimates the four BRIC countries together had some 233 million children under the age of five in 2010, with China and India the main contributors. That equals some 75 per cent of the total US population. Higher household incomes have led to increased spending, but so too have been the rise in the number of women in the workforce and trends of urbanisation in emerging markets.
Small Size, Big Needs
Children require a broad range of items, from baby food, clothes, footwear and accessories, toys, to personal care products, furniture and nursery, monitoring and other accessories.
According to Euromonitor International, the value of global retail sales of the first four categories was estimated at US$275 billion in 2012 and is expected to expand by some 30 per cent in the next four years.
But there is also high growth potential in baby and children’s furniture, and in the nursery, monitoring and accessories category. While mothers increasingly recognise the benefits of breastfeeding, those who need to resume work quickly still rely on infant formula, which is a major driver of the baby food market.
Packaged or tinned baby food, including rice and fruit purees, are convenient substitutes or supplements for home-made baby food when infants are weaned. For baby food, strong emphasis is on the functionality, and more importantly, the safety of the product. In this context, nutritional science plays a vital role in building brand image, health credentials and market differentiation.
For preschoolers, educational toys or readers that can help development are in demand. A wide range of hygiene, skin and hair-care products, wound care, oral health care is also needed for babies and toddlers.
Parents are more willing to pay a premium for established brands or those that come with doctors’ recommendations. The demand for such products is likely to be market-specific, including sunbathing creams and baby lotions.
Safety is probably the top concern for children’s furniture. According to data from the US Consumer Product Safety Commission, unstable furniture have injured tens of thousands of children and killed scores in recent years. Manufacturers should focus on their products’ safety design. It is also important to limit the level of toxic and harmful substances contained in children’s furniture. Baby monitors have become increasingly popular.
Recipe for Success
Most countries have stringent safety requirements for baby and children’s products. In the US, infant formula is regulated by the Food and Drug Administration (FDA). All formulas marketed must meet federal nutrient requirements. Infant formula manufacturers are required to register with the FDA and provide the agency with a notification prior to marketing a new formula.
For toys and children’s products, there are typically regulations regarding the physical and mechanical elements, chemical properties, flammability, hygiene standards as well as labeling requirements. Europe, for instance, refuses toy imports that exceed allowed amounts of harmful chemical substances. Exporters may employ accredited testing laboratories to carry out pre-shipment inspections and testing, and obtain the necessary certificates of conformity, in order to comply with the importing country’s requirements.
Exporters should also be aware of any voluntary standards that parents consider when making purchasing decisions. Functionality is the second-most important aspect of babies’ and children’s products. While nutritional science plays a vital role in baby food production, in recent years many other products have undergone dramatic design shifts. Manufacturers compete by adding features or using new materials. For example, one-handed folding functions for strollers have been well-received in the market because of their ease of use.
Today, the Internet is a valuable resource for mothers. More and more parents research, discuss, shop, compare and seek group support online. Manufacturers and traders can gather information by joining parent discussion groups.