Baby Specialists Supply Something Special
By Bernice Hurst, Contributing Editor, RetailWire
Now here’s a surprise. According to The Daily Telegraph,
one of the U.K.’s best-known retailers has increased its full-year pre-tax
profits “tenfold to £42.2m from £4.5m the previous year.” Furthermore, “Sales
rose by 6.9pc to £723.6m and it increased its dividend by 20.8pc to 14.5p a
share.”
The retailer under discussion is Mothercare, specialists in
all the things that any family with a baby may either need or want. Once the
only specialist baby retailer in the country, by the time former Disney executive
Ben Gordon signed on in 2002 cash apparently had to be taken from the registers
to pay bills and directors reportedly delivered stock to stores using their
own cars.
Last year, however, Mothercare had recovered to take over
its rival, Early Learning Centre. It is also, Mr. Gordon said, getting
“into channels” by “turning ourselves from a retailer into a
branded goods company. We take these goods and sell them through…traditional
retail stores, the internet and third-party franchises.”
This boils down to more than 400 stores in the U.K. plus more
than 600 run by franchisees in some 51 countries. Online sales are said to
have increased by 25.5 percent year-on-year. The Telegraph reports
support from a new social networking website, gurgle.com, which uses the catchline “Baby
stuff made simple.”
Among the reasons Mr. Gordon cites for Mothercare’s success
are a tendency for British parents to have babies later in life and, therefore,
to be “better off…and more aspirational for their baby.” He also
believes that people continue spending on their babies
“long after they stop spending on themselves.”
The newspaper didn’t ask for Mr. Gordon’s opinion on why parents
are spending in Mothercare rather than the many other places selling baby goods
these days. Certainly they are no longer the only option. Perhaps it just goes
without saying that he believes Mothercare to be the best option.
Discussion questions: What do you think of the overall
outlook for baby-specialist shops? What can baby specialists offer that general
chains with baby lines cannot?
Potential for growth in the baby sector stores is excellent for any number of reasons: Moms are starting their families later in life than they did in the past. This trend in itself translates to greater income, more maturity and discretion, and the desire for more information. Moms are busy. They are doing their shopping while multi-tasking with careers and other family business. Shopping for the baby needs to be targeted and time-efficient.
Baby-sector stores are already out-performing drug stores and supermarkets even for everyday needs. However, baby-sector stores have the ability to carry far more fringe items, specialty items, and fashion items, all which appeal to today’s mainstream Moms. Because baby-sector stores can carry more of the niche and specialty items, they also have a tendency to make greater profits.
Baby Specialists can really be a one-stop-shop in times when mothers have more than ever to deal with. On top of the notion that mothers might be paying a little bit more due to the ‘convenience factor’, it has also been proven time and again that parents (mothers) are willing to pay more for their children’s needs than their own. This holds true even in a tough economy, when families are cutting back on things that used to be deemed necessities. Children’s–particularly infants’–needs come first and Mothercare seems to be doing a good job providing consistently high-quality offerings that bring moms not only into their stores but purchasing in less traditional outlets as well.
Baby specialists have the opportunity to bring mothers in the door by offering services that broader-based outlets cannot. Examples of this are birthing classes, consultants for baby registries, lactation consultants, etc. Expectant and new moms seek out this information in their new, overwhelming world and being able to find this in one place can be a true stress reliever. Successful operators like Mothercare can squeeze out retail pharmacy as the source of trusted information and products for precious tiny ones.
The trends do seem right on for this concept. Older moms with more disposable income. Here in the states, Babies R Us ought to be best positioned to cash in on the heart of the less-price sensitive market.
Here’s a crazy idea for the baby superstores: work with the pet superstores and with household data sources to figure out which households are DINKs or families with babies, and who spend on higher-end pet supplies. I can think of half a dozen among my close friends. When folks who spend thousands a year on the dog have kids, boy do they spend! Then, make those households yours.
From a customer perspective, I can see buyers being more confident about the information they get from a specialized store. From an operational perspective, it’s easier for me to focus on only one category which ironically requires the most amount of product knowledge.
Babies R Us is a testament to the success of a specialized store. Many single unit operators are seeing success (yes even now) here in Toronto and suburbs. You were considered an awful parent if you didn’t buy at least one thing from Dearborn (even though they were overpriced and not entirely committed to customer service). Baby specialty shops are they way to go in the consumers mind.
Jonathan Marek is on to something. Specialty stores for babies and for pets have a lot in common: Toys, food, vitamins, cages, beds, grooming aids, garments, cleaning products, leashes, and excrement removal equipment. It’s no surprise that they operate so similarly, experience the same trends, and share the same customers. Cross-marketing is a natural relationship.
Another thing about the baby store customer is that they want/need information about their babies’ clothing, toys, food, etc. This is another fantastic opportunity for social networking. It’s an opportunity for the individual consumers to have their voices heard by the manufacturers, retailers, even governmental agencies around public policy. The sky is the limit here. Tell me the babies’ moms aren’t concerned about food safety. The retailer could set up blogs/sites, etc, and even invite customers to face-to-face events/forums.
As an example, there is a key food safety event in Washington, D.C. on June 24 that will have many stakeholders involved, including consumer advocates. Why couldn’t the baby store connect with that event and help shape the agenda? It can be done.
I am very curious about demographic data in this area. From what I can see there are several trends going on. Generation X and Y are having children later–into their 40s. Therefore, there has been a very extended “echo boom.” However, the subsequent generations–who are they? Generation Z?–are having children younger. This seems to be producing a huge pig moving through the python. I wonder whether there is a predicted “baby bust,” which will eventually dry up demand for these stores.
Most baby products are easily available online and at warehouse clubs, at cutthroat discount prices. The baby specialist niche is no easy road to Profitland.