Market analysis: Baby and child needs in retail

Whether diapers, rompers, pacifiers or baby monitors: German consumers spent 7.2 billion euros on equipment for their children last year. This is the result of this year's study “Industry focus on baby and children's equipment” by the Institute for Retail Research (IFH) in Cologne and BBE Retail Consulting. In today's article we therefore take a look at the market development in the area of baby and children's needs and show you which products are particularly in demand with consumers.

Baby and children's needs: industry on a growth path

Sales for baby and children's needs rose between 2011 and 2016 from around 6.5 billion euros to 7.2 billion euros - a total of 10 percent. This corresponds to an annual increase of 1.9 percent on average and illustrates the growth potential of the industry.

Still on a growth path: In the period from 2011 to 2016, the market volume of the industry grew by a total of 10%. This corresponds to an annual growth of 1.9%. (Source: IFH Cologne )

Let's take a look at the sales development of the 15 product groups in the industry for baby and children's needs. Here it becomes clear that the consumer's shopping list mainly includes products from the initial equipment, such as furniture. For this purpose, sales increased by a full 17 percent between 2011 and 2016. This means that this sector has grown more than twice as fast as baby and children's clothing, including shoes and accessories. The parents spent a total of 2.5 billion euros on equipping their offspring in their first three years of life alone.

Sales for children's school bags and rucksacks have developed extremely positively in recent years. Here sales increased by 42 percent from 2011 to 2016. These were particularly in demand in 2016 and sales increased by almost 7 percent compared to the previous year.

Furthermore, parents attach great importance to the safety of their offspring. This is shown by the increasing sales figures in the security product group. In 2016, everyday aids such as baby monitors or stair gates were mainly purchased for the youngsters.

The sales of children's school bags and backpacks increased by a full 42% between 2011 and 2016. (Source IFH Cologne )

Particularly popular in the industry: toys for children

The positive market development continues with toy sales: in 2017, mothers and fathers spent an estimated 3.2 billion euros for their children on toys alone - of which 529 million euros was spent on toys for children in the first three years of life.

Toys for small children (21%), construction kits (18%) and games and puzzles (13%) will be found under this year's Christmas tree, as these toys are currently in great demand. The current top brands include Barbie, Carrera, Lego, playmobil and Ravensburger.

The Germans spent around 3.2 billion euros on toys for their offspring. (Source: BVS )
“The market is divided into two parts: significantly more money is being spent on more 'technical' products, and willingness to pay has also increased. In contrast, there is a stronger polarization in clothing and shoes: In addition to the continued strong low-price sector, the luxury market has conquered a veritable niche - designer fashion for children was hardly relevant just a few years ago," says Peter Frank, Senior Consultant at BBE Handelsberatung."

Baby and children's equipment is becoming more and more popular in German e-commerce

Due to the wide range of products, product-specific sales channels are possible in the baby and children's equipment industry. This means that retailers can sell their goods through specialist baby stores as well as through toy, clothing, shoe and sports retailers. In addition, due to the broad age range - from newborns to young teenagers - the products are sold on diverse channels.

The future outlook “Retail scenario 2020” of the IFH Cologne also shows, however, that online trading is getting stronger and the sales figures in stationary retail will continue to decline. This is also made clear by the bankruptcy filing and the associated business closure of the well-known toy chain Toys “R” Us. One of the main reasons for this is said to be competition from online retailers, especially from Amazon.

A forecast by the IFH Cologne from the last few years says that for the whole of 2017, a quarter of sales for baby and children's needs will be generated online. This increases the competition in the industry enormously.

In the toy sector, e-commerce has already left stationary trade behind: It is estimated that 37 percent of Germans buy toys for their children on the Internet, whereas 32 percent prefer stationary retailers for this.

The distribution channels are diverse and e-commerce is becoming more and more important. 36% of German consumers buy toys only online. (Source: BVS )

Due to the wide range of products in the area of baby and children's needs, more and more companies are entering the market for baby and children's needs. The business is particularly lucrative for dealers and manufacturers of products such as prams, car seats and baby furniture.

“The market for baby and children's equipment remains on a growth path. This is due to the continued slight increase in expenditure per child, but above all to the growing number of children in Germany. Because more children are being born and the increased immigration in recent years has also increased the demand base. So in the future, too, we can expect the market to develop positively,” says Hansjürgen Heinick, Senior Consultant at IFH Cologne.

With the right tool for an efficient market analysis

The market for baby and children's needs is a challenging industry with intense competition. A precise overview of the market is all the more important for your own business success. Because only those who reliably recognize the offers and pricing strategies of competitors can make better decisions about their own prices and product ranges.

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