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Private Label Childrenswear Grows, Report Shows

Morrisons Launches Nutmeg Range

March 16, 2013
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Both the UK and U.S. saw private label in childrenswear grow in value by more than any of its branded rivals during 2012, according to Euromonitor International’s recently released apparel data.

In the UK, private label, which already held a dominant share, added an extra 2 percentage points in 2012 and now accounts for a 39 percent share of the US$8.7 billion childrenswear category.

Emily Potts, contributing analyst, reports in a new Euromonitor International Analyst Insight article that the figures are all the more impressive when considering that in 2004, less than a decade ago, private label accounted for only 19 percent of childrenswear.

In the U.S., private label added more than a full percentage point to its share to reach 19 percent of the $26.8 billion childrenswear category in 2012.

Grocery retailers have been large beneficiaries of this private label category. Potts writes that grocery retailers have invested heavily in their childrenswear offering, improving not only the quality of their clothing but also upping their levels of customer service.

Potts writes that it is not difficult to see why parents have so quickly switched to buying childrenswear along with their groceries. Aside from convenience, given that children’s clothing is unlikely to fit for long, it is easy to see why parents would opt to pay less if they can.

On top of low pricing, supermarkets have instigated strong customer service initiatives, with Asda for example promising a 100-day guarantee on all of its clothing items.

The full article is available HERE. On March 21, supermarket retailer Morrisons, the smallest of the four largest four supermarkets in the UK, will launch its first childrenswear line, Nutmeg, a range for children ages 0-12. The range initially will be launched in 100 Morrisons stores, with the potential to be rolled out to 300,
and to a future online channel.

The new apparel division, Nutmeg, is headed by former Peacocks Managing Director Tim Bettley and is based in Coalville, Leicestershire. Nutmeg operates via a separate supply chain, and utilizes an outsourced distribution center provided by Clipper Logistics Group. Morrisons also recently announced Merret will become the supply chain system of choice for their existing range of essentials menswear and womenswear.

According to Potts, in the UK, childrenswear value sales are set to slow over the forecast period. The category is predicted to contract by 3 percent in value through 2017. Volume sales will, however, grow by 4 percent over the same period as price competition increases and consumers buy more for less.

In the U.S., where private label lags behind the UK, value growth is expected to fare a little better, with a 2 percent gain predicted through 2017. Predicted volume growth is higher, at 6 percent, highlighting downward price pressure for the category in the U.S., as well.

According to Euromonitor International, Wal-Mart’s private label brands collectively were the category leader in 2011 with a 21 percent retail value share, ahead of national brands Carter’s with 11 percent and Gap with 7 percent. Overall, polarization of the childrenswear market continues, with the luxury and value ends growing faster than the middle.

Top designers have diversified into the children’s apparel market, such as Diane von Furstenberg who’s second GapKids and babyGap collection will become available this April. Additionally on the luxury end there are limited-edition collections, such as Gap’s babyGap collection inspired by Beatrix Potter’s “The Tale of Peter Rabbit,” which rolled out in January.

According to Euromonitor International, given the high turnover rate for childrenswear and the unlikelihood of items to last for a long period of time in a child’s wardrobe, the high price points of luxury childrenswear will limit the size of this market in the U.S. Major brands in childrenswear view their products more as consumer staples dependent not on fashion trends but on more basic and predictable demographic factors.

Potts writes that with the playing field between grocery retailers largely level in terms of price, supermarkets will need to become more creative in childrenswear to find a way to differentiate themselves from their rivals.

One example of this differentiation may be seen at Wegmans in the U.S., which offers an organic childrenswear line, “eat your fruits & veggies,” which includes hats, rompers, one-pieces, cardigans and pants. The 100 percent organic cotton clothes are designed using low-impact dyes, water based inks and nickel-free snaps. Organic cotton increasingly is trendy as consumers pay more attention to “green” products, sustainability and health concerns.

An additional trend for the U.S. market is the expanding of selections of plus-size children’s apparel. According to the U.S. Centers for Disease Control, about 17 percent of American children ages 2-19 are clinically obese. Rates of childhood obesity are expected to remain high over the forecast period, according to Euromonitor International, which is why it expects this trend to continue with larger apparel sizes from established children’s retailers and new specialty stores emerging to meet the needs of this growing segment.

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