THE BUSINESS OF CHILDREN’S APPAREL IS GETTING EVEN trickier as fashion trends become more numerous — and fleeting — while competition grows for consumer dollars among clothing, computers and anything digital, according to industry insiders and analysts.
At the same time, the kids’ business is focusing more and more on three markets: discount stores, retailers specializing in kids’ apparel and higher-end fashion retailers, leaving mid-market department stores working harder to make a statement.
“Increasingly, consumers see the quality at discount as quite good,” said Ira Kalish, director of consumer business at Deloitte Research. “Department store merchandise just can’t be differentiated enough to demand a higher price.”
Children’s apparel sales in the U.S. are relatively small in contrast to other categories, amounting to $30 billion in 2006, a sliver of the $180 billion domestic apparel sales, according to The NPD Group. Last year was good for the children’s apparel business, up about 8 percent from 2005.
Marshal Cohen, chief industry analyst with NPD, said catering to children’s fashion whims has become more complicated. “It’s more difficult to be an apparel retailer in general, and I would say it is doubly more difficult being a children’s apparel retailer,” Cohen said. “Kids are distracted by more interests than adults.”
With young kids more eager than ever to make their own fashion decisions, there’s increased pressure to dress like actors, cartoon characters, musicians and peers. In addition, children no longer are following junior fashions, which means retailers should no longer rely on “one big fashion hit” per delivery, Kalish said. “There is a lot of subculture influencing fashion.”
Because children’s apparel isn’t a volume business, its production can be pricy, the cost of an item rivaling the price of a similar women’s or junior garment. That’s why it’s common for an existing fashion company to get into the children’s business, like Funky Kids, of Wooster, Ohio, which is branching out after 12 years selling its trendy junior fashions to specialty stores like Fred Segal.
“We decided to start a kids’ line inspired by juniors, which allows us to make small modifications, like when something is cut too low,” said Manish Walia, owner of Funky Kids. At MAGIC, Funky Kids’ inventory includes a suede printed jacket that wholesales for $40, paired with a velvet tiered skirt for $30 that’s worn over a $21 lace skirt.
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As in other fashion categories, the Internet has fueled growth in children’s apparel business by giving vendors exposure to trend-hungry retailers.
“We’ve been in a real rapid increase,” thanks to the Internet, said Susan Burns, founder and designer at Fairy Finery, which makes make-believe costumes for children two to 12 years old. Popular at the Minneapolis-based company are princess dresses for $60 wholesale, with matching full-circle velvet capes.
Without the Internet, the suburban Houston vendor Greggy Girl would probably still be in business, but wouldn’t be selling to anywhere near the 1,500 independent high-end boutiques it now has as clients, said founder and designer Charlene May. May said key to her success had been the added expense of color photographs of her garments on professional models, which are shared on the company Web site, greggygirl.com, used in photo packets and in showroom books.