Global brands driving growth of organised kids’ wear market

Kids’ wear has always been considered a difficult business because of several reasons. Indian kids’ wear market in particular has always been dominated by non-branded players since parents did not believe in investing in kids’ clothing. But those days are passé with global brands like Pepe, Gap, Benneton, Tommy Hilfiger, Pony, Pima and Reebok and designer labels vying for space.

Increased brand play boosts category

With The Children’s Place and Pepe Jeans ready to launch their kids’ wear lines in India, the market has got a boost. French children’s wear brand Jacadi and Malaysian brand Poney are also planning to expand presence.

The Children's Place has not only partnered with Shoppers Stop for shop-in-shops and Hopscotch for online retailing but it is also tying up with hospital chains to visit expecting mothers in maternity wards and gift merchandise for their new-born babies. With strategies like these, global kids’ wear labels are eyeing to fill the gap vacated by Indian brands such as Weekender Kids, Catmoss, Gini & Jony, Jack n Jill, Mom and Me and Lilliput, who could not leverage the opportunities. Most of them had to either exit or scale down operations over time.

However, Shoppers Stop, which has around 38 shop-in-shops of British brand Mothercare has seen the share of kids’ wear in its overall sales double to 10 percent over the past few years. With The Children’s Place, it expects the contribution to get a boost. An Assocham study says, kids’ wear market in the country will be worth Rs 95,000 crores by 2016, growing at a compound annual growth rate of about 20 percent.

Brands, designers negotiate the segment

Largely dominated by the unorganised segment, players have always found making clothing for kids a challenge because of the number of sizes they need to cater to, which puts pressure on supply chain. Also, earlier, parents did not spend much on kids’ clothing as they outgrew their size fast. However, with rising nuclear families, number of working women, rise in brand and fashion awareness and peer pressure are some of the factors that are creating opportunities for adult clothing brands and designers to enter this segment.

From Versace, Armani Junior to Fendi, global brands have found a dedicated customer base in India. And while Indian designer Monisha Jaising launched a label called ‘MJ Kids’, marking a foray into the category, designer Jattinn Kochhar has also been designing for kids after his children were born. His collection includes identical sets for the mothers and daughters and fathers and sons. And ethnic women’s label Biba has also launched its collection for kids.

After several online and offline players were forced to exit, PE investors have been skeptical about investing in kids’ brands and retailers. However, the scenario is changing with investors showing willingness in putting funds in the category. The largest baby and kids retailer Firstcry has already raised 69 million dollars (over Rs 439 crores) from a host of funds such as Saif Partners, IDG Ventures and Valiant Capital and incubating VC arm of Mahindra Group, Mahindra Partners, which already enjoys strong offline presence with Mom & Me in the category, acquired Babyoye.com to grow in the online space. Another online player, Hopscotch too has managed to raise 11 million dollars (around Rs 70 crores) in a second round of funding led by Facebook co-founder Eduardo Saverin and Los Angeles headquartered early stage investor Velcos Capital, earlier this year.

Globally, the market for children’s wear is projected to reach 156 billion dollars (over Rs 9,65,000 crores) by 2015, according to Global Industry Analysts (GIA), a US-based market research company. While globally, the 8-12 years category tends to sell the most, in India the 0-2 years category has the maximum takers.