Bringing up baby chains

The market for babies’ clothing and accessories has been dominated by supermarkets in recent years, but there’s a growing appetite among consumers for premium products. That demand is being supplied on the one hand by an increasing number of online retailers, and on the other by large-scale specialist stores setting up against market leaders Asda and Tesco.

Morrisons-owned children’s retailer Kiddicare – which started as a family-run, online-only brand – opened a 33,000sq ft superstore in Nottingham in September, the first of 10 planned sites. In doing so, it is swimming against a tide of multiplying web-based operators such as AlexandAlexa, Frugi and IndiaCoco, that are starting to make bigger waves in what is still an immature online market.

Kiddicare’s strategic move into bricks and mortar follows its £70m acquisition by Morrisons in 2011. According to Kiddicare chief executive Scott Weavers-Wright, the point of its planned stores, which are designed by agency 20.20, “is for people to see our range”.

It claims to stock a substantially higher number of product lines than high street competitor Mothercare, whose struggling sales have led to a decision to cut back to 200 stores and concentrate more on international markets. Kiddicare’s ranges currently focus mostly on equipment such as prams and high chairs, but it also plans to expand its clothing lines by stocking Morrisons’ new Nutmeg childrenswear brand, due to be launched in March 2013.

The childrenswear market will grow by 6 per cent in the next four years, according to a Mintel report. Premium products will be particularly attractive, Mintel says, because more parents are putting off having children until their 30s, when they are more financially secure and thus able to pay higher prices for upmarket brands. According to Alex Theophanous, chief executive of online retailer AlexandAlexa, this trend has coincided with new luxury fashion lines for children being launched by upmarket designer labels in recent years.

“Five years ago, many of the designers didn’t have childrenswear collections. Hugo Boss, Chloé, Fendi, Marc Jacobs and Stella McCartney are examples of brands that have only started offering childrenswear in the past couple of years, so we are seeing a lot of PR, a lot of interest and a lot of space in department stores dedicated to childrenswear now that wasn’t there before,” he says.

AlexandAlexa was founded in 2007 by Theophanous and his wife Alexa with a narrow focus on these luxury clothing lines for children. But the growth of the online-only business and demand from customers has led to expansion into areas such as sports and toys. Theophanous now regards the brand as a “department store for kids” (see Q&A, below).

The company is now selling designer product lines in international markets through its websites and, like other luxury brands, sees its future in serving the global fashion market. It is not the only UK childrenswear brand to show international ambitions. Mamas & Papas and JoJo Maman Bébé have both developed wholesale operations, selling their own-brand clothing to stores and distributors worldwide.

According to Claire Harper, former marketing director of Mamas & Papas, the company’s model of expansion through owned stores, franchises and wholesale distribution is a complex one for a brand to manage. Making sure its image was “seamless and consistent in every channel” was Harper’s most important task, but she adds that it has been worth it, given the popularity Mamas & Papas has enjoyed with consumers abroad.

“When I launched Mamas & Papas in New York, they went crazy for it. There is a real trend at the moment for British brands,” she says.

After leaving the company, Harper has latched on to this appetite for premium children’s brands and has launched her own start-up, IndiaCoco. Founded four months ago, the online retailer sells a carefully curated collection of independent or up-and-coming British baby clothes brands. She has already turned down supplier offers from well-known labels, she says.

“I wanted to be selective about the types of brands I work with. Chemistry with these suppliers is very important to me, because they’ve got to share my values,” she says.

Harper believes that having this point of difference is particularly important for succeeding in the online baby clothes market, alongside the stocking of high-quality products for which premium prices can be charged. That view is shared by Kurt Jewson, co-founder of Frugi, which positions itself on the basis of products manufactured from organically farmed cotton, at facilities where workers receive a living wage (see Q&A, below).

At JoJo Maman Bébé, founder Laura Tenison says the company hasn’t given up on bricks-and-mortar stores as a growth market for childrenswear. In fact, she says that the brand has been opening between eight and 12 stores a year, and intends to grow its footprint on the high street further. It currently has 50 stores, which are typically in London suburbs or county towns with a high density of young children, and easily accessible with nearby parking.

The retailer’s unique selling point, she says, is face-to-face customer service, enhanced by particular attention to staff training and product knowledge. “We are, in effect, a mid- to upmarket mother and baby store really concentrating on being a specialist rather than a mass-market multiple retailer,” she says. “Our store managers have the ideals and customer service an old-fashioned independent nursery retailer.”

JoJo Maman Bébé started as a mail order firm and it has since added physical stores that now make up more than 60 per cent of revenue — store sales are increasing faster than website sales. But this is a consequence only of the growing number of shops, Tenison says. In like-for-like terms, sales are growing faster online.

With the prevailing winds blowing customers towards ecommerce and away from the high street, the strategies of JoJo Maman Bébé and Kiddicare seem counter-intuitive, even though bricks-and-mortar stores still make up most sales in the UK. Mothercare is also likely to sharpen up its high street offer under a new management team, to become a stronger competitor.

Distinguishing themselves from the competition will perhaps be even more important to these brands than to those who have devoted their attentions entirely to the web. Either way, getting into this market is clearly not child’s play.