A New, Younger Demographic Emerging In China’s Luxury Market: Toddlers

Luxury Brands Like Gucci, Fendi And Stella McCartney Latest To Create “Pint-Sized” Lines

The future of luxury consumption in China?

The future of luxury consumption in China?

The New York Times reports today that more top luxury brands — including Gucci, Fendi and Stella McCartney — are adding children’s lines to their collections, in a move that may indicate that the global luxury industry is moving beyond recovery and towards actual growth for the first time in two years. Quoting Datamonitor findings, the article points out that children’s wear in the E.U. is outperforming the rest of the market, mostly due to the fact that parents are quicker to spend on their children than themselves, even in a tougher economic market. From the article:

Kids’ garments take a beating and their owners grow out of them fast, meaning that as long as there are children, there will always be a need for more children’s clothing. And parents with money can be persuaded to spend it on high-quality clothing for their children.

Although the high-end children’s market is still centered in Europe, it’s no surprise that China is seen as a prime potential destination for top brands’ children’s lines, and not just because of the country’s population. China’s one-child policy has, over the past 30 years, brought the emergence of the “Little Emperor,” an only child who can best be described as “spoiled rotten” by parents and grandparents. Generally raised in China’s more prosperous coastal cities, “Little Emperors” present a huge opportunity for Western luxury brands that have already made fans of mom and dad.

This week, the Chinese news portal PCBaby looks at the prospects for top luxury brands in the Chinese children’s market, suggesting the industry has experienced three stages of development since 1990: product awareness (1990-2000), brand awareness (2000-2010), and high-end brand maturity (2010-).

From the article (translation by Jing Daily team):

Product Awareness (1990-2000)

The Chinese baby industry really began during the 1990s, when many products from Hong Kong, Taiwan and overseas entered the market. Chinese parents became more aware of baby bottles, formula, baby cereal, diapers and other foreign products, and many domestic companies started up during this period. But most specialized shops were small, less than 50 square meters, with mom-and-pops making up the majority of baby stores.

Brand Awareness (2000-2010)

The baby industry developed quickly over the past decade, with brand choices and distribution channels expanding rapidly. Customers also had more options for shopping: big department stores, luxury boutiques, convenience stores, direct marketing, e-commerce, and so on. This last decade also brought the emergence of well-known Chinese brands: Goodbaby (好孩子), Beingmate (贝因美), i-baby and others.

High-End Brand Maturity (2010-)

Recently, the i-baby High-end Children’s Industry Global Summit was held in Shanghai, marking the official debut of the high-end kids’ demographic into the family of Chinese consumers. But currently, China’s high-end children’s market remains fragmented, with brand identities unsteady and original design capabilities inadequate. At the moment, consumer conceptions towards “high-end” remain fixated on “high prices.”

[At the Summit,] i-baby chairman Wang Yaomin said that “too many unoriginal Chinese brands try to act like foreign brands, and too many high-end malls stock foreign brands for the sake of self-aggrandizement. A people who kneel down before foreign brands are a people who can never truly stand up. A country without world-class brands to support GDP means a weak GDP!”

i-baby is determined to become China’s first high-end children’s brand, and we can see by Wang’s speech that the brand will do whatever it takes to accomplish this.

Steps

China is expected to have more than 4.4 million affluent households by 2015. These affluent families will be the ones who’ll “train” the new generation of luxury consumers. Amid the global economic crisis, the children’s market in China was hotter than ever, growing at an annual rate of 30%. The road ahead for Chinese children’s brands is, clearly, wide open.

Parents of the “post-80s” generation will be an instrumental factor [in the development of these brands.] They’re far more exposed to media, and are Internet-savvy, spending a significant amount of time online. As such, the Internet will be a key sales channel to reach “post-80s” parents, and the development of an e-commerce business model for the high-end children’s industry is an important step. We’ve already begun to see this with the development of online portals like “Red Children” (红孩子), “the Parenting Network” (育儿网) “Baby Tree” (宝贝树) and others.

Much of the development of China’s economic model has followed in the footsteps of other great powers in Europe and North America, and the high-end children’s industry is no exception.

Whether this luxury demographic proves a windfall for Western brands, domestic Chinese brands, or both, China’s “Little Emperors” are certain to make up a significant portion of high-end sales in coming years, and — given the country’s population and growing affluence in second- and third-tier cities — it wouldn’t be surprising to see China become the world’s top single market for luxury children’s wear within the next five to 10 years.

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Culture, Fashion