Thanks to consumers who grow and change at lightning speed, children’s wear has always been somewhat insulated from many of the ills that can plague the adult market. But in 2016, children’s proved to be a microcosm of the apparel industry at large. Just like in men’s and women’s, currency, trade, production, technology and politics had the biggest influences over the category this year. Here, we outline the five top business trends in the kids’ market.
1. International influx
Children’s wear has always been a challenging business, and over the last year, competition has increased thanks to an influx of new labels. Louise Connor, president of The Showroom in New York and consultant for the Playtime New York trade show, counts globalization as a major trend for 2016.
“With the strong U.S. dollar, it’s easier for international brands to sell here. And the Fed. just raised interest rates, which will make it even stronger,” Connor said.
Christine McCarthy, owner of CMSM LLC., a children’s wear consultancy in Stratford, Conn., has also seen an increase in the number of established international brands entering the U.S. market.
“European and South American lines are coming in dirt cheap, which is forcing U.S. brands to compete,” she said. For the recent imports like Jo Jo Maman Bébé, Rockin’ Baby and Pulla Bulla, they have economies of scale on their side. “When they have stores or already have a following in other areas around the world, it really helps their price points. It gives them volume, which gives them the ability to have lower wholesale prices.”
Both Connor and McCarthy agree that price is only part of the equation. To be successful in the U.S., service goes a long way.
“You need to have the product, but logistics has to be really thought through and well established,” Connor said. “There are some brands that become attractive to people, but then the shipping or payments become a problem.”
2. Accelerated demands
Our buy now, wear now tendencies have put more pressure on brands to reevaluate their deliveries across all categories of the apparel industry, and kids is no different. Leslie Pitts, founder of Lucky Jade in Los Angeles, said throw social media into the mix, and the traditional wholesale calendar may soon be a thing of the past.
“Instead of a six month cycle, we’ll offer some things six months out and others two months out. Boutiques don’t want to wait six months,” she said. “Plus, there’s a constant need for new content for social media in order to keep things interesting.”
In response to these demands, the whole supply chain is learning to do things differently, she said. “The challenge is on the production side. I needed newer faster,” Pitts said. “Now my cashmere factory in Hong Kong is finding yarn suppliers that can knit in three weeks instead of two months.”
Dipali Patwa, founder of Masala Baby in New York, echoes these concerns. Patwa said consumer behavior results in budget constraints for boutiques, pushing them to buy closer to season.
“It definitely affects our production cycle. We take a lot of educated guesses, but having been around for six years, we’ve figured out the appetite,” she said. “We keep tight control over production, and we’re trying to cut down on our lead times.”
In 2017, Masala Baby will switch from two big collections a year to four to keep assortments fresh and to allow the company to address stores’ needs more quickly.
3. Pricing woes
It’s nothing new to say that e-commerce is threatening traditional stores. And that lament continued, and in some cases, intensified in 2016. “The biggest complaint I hear is that the Internet business is impeding brick-and-mortar business,” said Jared Levine, owner of Jamari LTD, a distributor and sales rep firm based in New York. First, he said web sites have an inherent advantage in that they aren’t constrained by a physical structure. Traditional stores only have so much space, so their buys are shallow. He said it’s frustrating for a consumer to visit a store only to find out their size or style isn’t available.
Then, there’s the matter of discounts.
“For five or six years, we’ve had an issue with pricing online,” Levine said. “We try to make sure [online retailers] are respecting a reasonable price. And if not, we reach out to them to discuss it.”
McCarthy said discounting online has become a huge problem in the last year, especially on Amazon.
“Manufacturers are really having to pay attention on Amazon. If one person discounts, it drives the price of the clothing down,” she said, noting vendors are starting to enforce strict guidelines to protect against this. Some are even ending relationships with all but a handful of trusted sellers. “Brands are forced to go to MAPP pricing [or a minimum advertised price policy], which was only really seen in juvenile products before. And all sellers must adhere to it unless it’s an authorized sale period.”
4. Truth in advertising
“One of the issues that has been big on my clients’ agenda has been advertising claims because children’s product companies have been sued, which has gotten a lot of attention and gets picked up by the morning shows or becomes the butt of jokes on the late night shows,” said Jeremy Richardson, an attorney at Phillips Nizer who specializes in the children’s apparel and product categories. “This year, the children’s products industry has become more of a target and become more visible.”
The list of children’s brands facing legal action, includes the Honest Company, which has been hit with a raft of lawsuits over the ingredients in its detergent, baby food, sunscreen and body wash. Orbit Baby is facing a class action suit regarding the materials in its car seats. And the list could grow.
In this heightened litigious climate, Richardson said product language matters more than ever.
“My suspicion is that without any malfeasance, companies are attaching terms to products without thinking it through,” he said, using the term “organic” as an example. “What about the dye? Is it organic? What about the buttons or the thread? Do you know for sure the farm really was organic? Or that the factory didn’t get the specs mixed up? Unless you have someone who witnesses the product from cradle to gave, you can’t be sure.”
His suggestion? Companies must avoid blanket statements. For instance, rather than saying simply calling your children’s clothing organic, these days Richardson said it might be safer to say its made from 100-percent certified GOTS organic cotton.
5. The Trump card
The biggest topic of 2016 is likely to have its biggest impact in the coming years: The election. How the incoming administration might affect children’s wear remains to be seen, but the industry is already speculating on possible outcomes.
“The President-elect ran on a platform of renegotiating trade deals, which could be a real game changer. If he follows through, we’ll see the peso plummeting,” said Connor. “It’ll also mean inflation, which means people will gear up with more domestic production, which is the point. But I don’t think it’s realistic. I understand the mission, but in terms of our industry and textiles and cut-and-sew factories, it will be difficult to reverse what has been in play for decades now.”
Like everyone else, Levine is in a holding pattern until after the Inauguration. “I know there’s been a lot of talk about the new administration but nothing has changed for the moment. We have to wait and see what happens,” he said, noting that his luxury brands are somewhat insulated. “Even if trade does change with China or Mexico or wherever, a good amount of the brands we work with produce everything in Europe.”
From a compliance standpoint, the new Republican administration is likely to mean a new guard at the Consumer Products Safety Commission.
“This raises questions of whether Elliott Kaye will remain chairman or if there will be an outsider who will come in,” Richardson said. “If you have a switch to a Republican-controlled CPSC, presumably it would be more business friendly. The result would be fewer or lower fines and more flexibility toward business.”