UK: A baby boomlet brings in the business.

UK: A baby boomlet brings in the business. - The patter of tiny feet is creating a bonanza for a growing number of businesses.

by Diane Coyle.
Last Updated: 31 Aug 2010

The patter of tiny feet is creating a bonanza for a growing number of businesses.

At the less-than-lovely Wembley Exhibition Centre in north London, a long queue of parents and pushchairs stretched out far into the drizzle on Day One of this year's Parent and Baby exhibition. The car park was filling up fast. Inside, the unfriendly acoustics amplified the infant and toddler hubbub to nightmare levels and the temperature was climbing fast. Pram jams snarled up the aisles. Even so, most visitors, large and small, seemed to be having a good time. For the small ones there were balloons, toys and food; for the parents there was the chance to spend some money on their children.

No industry is recession-proof, but the market for baby and toddler goods is enjoying a spurt in growth. Britain is in the throes of a baby boomlet. Its birth rate is currently the EC's second-best after Ireland, and the highest it has been since the early 1970s. The average number of children per woman is increasing fractionally, too.

There is an accelerating trend in childbearing at an older age, particularly for large numbers of women now entering their thirties. The trend is most striking amongst midde-class professionals in the South-East. Nationally, almost half of all mothers return to work within three months of giving birth. As Sue Marshall, Boots's buying controller for baby products, puts it, "There is a lot of potential for encouraging parents to spend more. It's not just the higher birth rate, but the higher disposable income too."

The bump count in the London suburbs provides ample evidence of more young professionals on the way. However, population experts predict that the baby boomlet will peak mid-decade and be over by the end of the '90s, barring an unexpected increase in family size. So marketing opportunities could well be short-lived.

The best time to start gestating marketing plans was two or three years ago. One businessman who did so was Nigel Ragg, managing director of Crechendo, which runs playgym classes for tiny tots. He and his partner had a background in adventure holidays for older children, and had money to invest from selling their previous venture. They read the demographic reports, did some market research, and visited the US for ideas. "With the lack of facilities for children in Britain, we thought a nationwide chain of playgyms aimed at the upper end of the market could attract a lot of people," says Ragg. Crechendo started up in October 1990. "We filled our first five centres within two months. Now we have 15." They cater for over a thousand children a week in London, and Crechendo could soon start franchising across the country. It targets wealthy areas; there is a high nanny count at the classes.

Although Crechendo sessions are pricey they do appeal to professional parents. "Educational" is one of the key words in marketing to affluent parents. The educational tag has served the Early Learning Centres (ELCs), a subsidiary of John Menzies, well over the years. ELC marketing director David Bishop says, "The Early Learning concept now appeals right across the social scale but undoubtedly with an emphasis on the ABCls." Although the recession has had an impact, UK sales rose 10.5% in the latest year. Announcing the results, group managing director Ranald Noel-Paton said, "You don't skimp when it comes to children." Especially when you can justify a new jigsaw on the grounds that it is aiding your child's development.

Health and safety is another big marketing theme. Some parents think that not giving their offspring crisps and fizzy drinks is depriving them, but more have gone on the healthy-eating wagon and are doing the same for their babies. Cow and Gate launched its Olvarit range of baby food in 1990. The meals have minimum additives and corn starch padding and therefore minimum guilt for a health-conscious parent who is too busy to mash up tiny amounts of home cooking. A jar costs about twice as much as a can from competitor Heinz. Yet Olvarit accounts for 12% of the total baby foods market. Boots launched an organic baby meals range last October, and says that it is doing "extremely well". Boots also hopes to attract parents to its stores by introducing consultants in the baby products departments. Sue Marshall explains: "Though we cannot replace the health professionals, we can try to offer care and reassurance, with the health visitors and clinics being so busy."

Another adult preoccupation reflected in baby products is the environmental movement. One thing green parents worry about is nappies - not just what goes in them, but what happens to them afterwards. So disposable nappy manufacturers have turned their attention to the environmental impact of their product. Disposables are now less likely to be chlorine bleached, while their biodegradability is improving.

Nonetheless, cloth nappies are making a comeback - partly the result of a series of nappy laundering services opening up. Sue Balderston set up Britain's first one, Ducky Diapers, in 1990. She now runs the businesses' trade association. The firms provide the nappies - of a convenient modern design, no folding or jabbing in big safety pins - and collect them once a week for laundering. There are around 30 nappy-washing firms, eight of them in London. Each needs a population of 100,000 within a half-hour radius to be viable, so there is scope for more. Balderston says: "The market for the service is expanding fast. I'm sure there will be twice as many firms by the end of the year." She adds: "It is a good business opportunity but you must also care about the environmental issue because it is hard work." A Canadian, she started her firm because she used to live in a paper pulping area and became appalled at the environmental damage.

The Body Shop, greener than green, is now looking into the nappy recycling business. Its Mamatoto mother and baby toiletries range is two years old, and has been hugely successful. According to a spokesman: "We were keen to have a range because it is a lucrative market; but we had to gather enough information from other cultures. For instance, there is a culture of massaging babies in Third World countries. The massage oils are our second biggest-selling product."

The fact that something as esoteric as baby massage oils can sell well does not prove that the rising birth rate is a licence to print profits, however. Doyen of retailers Marks and Spencer recently withdrew a toddler food range because nobody was buying it; by the time children are that age, parents are feeding them adult foods. M and S also confessed, in the announcement of its 1991 results, that "children's wear sales were disappointing and particularly affected by import penetration". Its children's clothing is high quality and therefore expensive, too expensive for something that will last only a few months, and it has lost market share to cheaper stores like Woolworth and Adams. Yet at the other end of the scale, designer clothes for children are also making inroads.

Pitching products for the baby market is in fact just as fine an art as it is for the adult market, even though the one is growing while the other has been shrinking due to the recession. At Boots, Sue Marshall says: "The ideas come from the parents on our product development staff."

The baby boomlet has opened up other opportunities. Advertising agencies, with their keen nose for social trends, are aware of this. They have created that new stereotype, the executive parent - child in one hand and briefcase in the other. Car commercials, as a result, tend to emphasise the built-in child seats rather than any flashy gadgets the car might have. Off-screen, the expenditure patterns of thousands of young, high-spending households are being transformed by the arrival of children. Out with the dinkie (dual income, no kids) luxuries; in with the video rentals, take-away meals and life insurance. Legal and General has set up a clever community initiative with the National Childbirth Trust that reaches a multitude of middle-class families. The Daily Telegraph, whose readers were dropping off at a rate of a thousand a week five years ago, introduced a weekly family supplement; now around a quarter of its readers are 34 or under.

Market research by Mintel confirms that facilities for children, toilets and changing areas are real draws in shops and restaurants. Mintel's special 1991 report on children found that families eat out surprisingly often; and the deciding factor on choice of restaurant "is more likely to be the environment - toys, play equipment, or special promotions - rather than the food". At Early Learning Centre play areas children often come out with a new toy or crayons. Marketing director David Bishop says, "There is a big commerical advantage in having play areas. In general retailers have been tardy about parent and child facilities, but this is beginning to improve now".

The patter of tiny feet is at last making itself heard in all kinds of businesses. But the rejuvenation of the market could be short-lived; opportunities have to be taken now.

For reprints of this article, contact Anne Oakley (071) 413 4336.

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