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With reports that 41-year-old children’s apparel chain Gymboree will be filing for Chapter 11 bankruptcy protection and shuttering 350 stores nationwide, questions about the kids retail market mount. Has online shopping fundamentally changed the way that parents shop for their kids’ clothes? Or is there still space for the Gymborees of the world?
The answer to both questions, as is the case with most questions percolating in the ongoing brick-and-mortar versus e-commerce debate, is both yes and no.
Brick-and-mortar isn’t going away anytime soon, particularly for kids apparel, say some analysts. According to Rachel Saunders, insights and strategy director at youth-research firm Cassandra, 78 percent of parents in the US prefer to shop in-store over online, and 70 percent shop continuously throughout the year, as opposed to seasonally.
One key factor that maintains brick-and-mortar’s relevance in the kids clothes market? Sizing. “Sizes are always different,” says Korin Lewis. She shops in Austin for her 2-year-old daughter, and struggles with both size variance among brands and the need to keep pace with her toddler’s rapid growth. “Also, it’s just easier to tell in person what something looks like.”
Store choice matters in any market, and kids clothing is no exception. “Whereas the family shopping experiences of the past were designed with the kid in mind, today’s experiences are more about appeasing parent and child alike,” says Saunders, adding that 54 percent of US parents prioritize stress-free options when selecting a retailer. “To Gen Y parents and their children, the best stores are a ‘destination’ or place of discovery that feels like a special experience.”
In that way, Gymboree might have fit the bill as a destination-slash-discovery-zone if only it had returned to its roots by introducing more mommy-and-me classes to its struggling retail locations, but the company sold its Play & Music business to Singapore investment group Zeavion in 2016 for $127.5 million in an attempt to move the struggling corporation out of the red. After a buyout from Bain Capital in 2010, Gymboree reports a net loss of $324.9 million for 2017’s second quarter, with Bloomberg adding that the chain “hasn’t posted an annual profit since 2011, with losses totaling more than $800 million” and a debt of $1 billion.
Walkable cities like New York are rich with kids clothes boutiques that give parents, as Saunders puts it, “a sense of calm, not chaos.” But elsewhere in the country, big-box stores like Target and affordable chains like Old Navy retain their foothold in the children’s retail space.
“Target is our go-to for kids clothes,” says Shana Westlake, who lives in Rockville, Maryland. Target’s frequency of sales are a big draw for Westlake when shopping for her two kids, as is the superstore’s one-year return policy on apparel. “Most of my 4-year-old's everyday clothes are from Target.”
Despite Target’s lag in sales at the end of last year, CEO Brian Cornell shared in the company’s 2016 Annual Report that “Signature categories, including Style and Kids, gained market share, growing approximately 3 percentage points faster than our total comparable sales,” and “two new blockbuster brands for kids — Cat & Jack and Pillowfort — […] have consistently generated double digit comp sales increases since they launched.” Target declined to share additional financial details when reached via the company’s media hotline.
There’s another big upside for parents when it comes to shopping at megastores like Target and Walmart: the one-stop-shop factor. It’s a logistics benefit, albeit a double-edged one. “It’s like the story you hear, ‘Oh, I went in for paper towels and I spent $50 on kids clothes,’” says Lewis, who adds that it’s easier to shop solo than with her daughter in tow. “Time-wise […] there definitely is something to be said for maximizing my time that I don’t have her with me, being able to go and get shampoo and other things like that while I’m also clothes shopping.”
Target and Walmart are also inexpensive. The inarguable facts that kids grow and play (often outdoors!) cannot be undersold; many parents nix high-end brands and seek out budget-friendly alternatives at chains like Gap-owned Old Navy specifically because they know they’ll need to buy replacement leggings and tees before YouTube’s Kids app can auto-load the next episode of Peppa Pig. Old Navy is the biggest earner of Gap’s brands, producing nearly $7 billion in sales by last tally.
Though brick-and-mortar dominates right now, the future for kids clothes shopping looks like it’ll soon pivot to e-commerce. “Online shopping is slowly gaining momentum with parents, especially as more e-commerce platforms catering to parents emerge,” says Saunders.
To that point, D.C.-based Marieke Lewis Brock shops frequently at Old Navy for her 2-year-old son, but largely online, taking advantage of their sales and promotions and applying rewards collected on her Banana Republic card (another sister company under the Gap Inc. umbrella). “Who knew that card would come in so handy?” she says. “I hardly pay anything, the clothes hold up well, my little boy loves what I pick out, and it’s super easy.”
According to an industry survey, parents spend two-thirds more money shopping online and three-quarters more time shopping online than their non-parent counterparts. “Parents, especially working parents, are arguably the busiest adults in history,” explains trends expert Daniel Levine of Avant-Guide Institute. “Anything that makes their lives easier is going to be preferred over a similar activity that is more time-consuming.”
Colleen Abel, a mom of two in Tulsa, agrees. “I hate shopping in person because the kids are always with me, and I am constantly rushed. Online shopping means I don't just grab the first thing I see to get it over with.” Jayme Kennedy, a mom of two in Upland, outside of Los Angeles, adds that limited proximity to malls renders online shopping much easier. In terms of brick-and-mortar, Target is Kennedy’s main option.
“The question is not just about how [superstores] are performing today, but what is the direction of the trend, and the outlook is not good,” adds Levine. “Target and other big-box stores need to do a better job of being multichannel to compete.”
Sure, superstores are desirable because of their multifunctionality and ubiquity, but then there’s Amazon, the online equivalent of the all-in-one brick-and-mortar.
“Absolutely e-commerce has changed the way parents shop, and Amazon is really the primary stakeholder in that shift,” says Cooper Smith, director of Amazon research for L2, a business-intelligence firm. Amazon’s “core strategy,” explains Smith, is to boost Prime membership, whose benefits include free two-day shipping and subscription services. “Parents fall squarely into the consumer demographic Amazon is targeting with Prime.” Smith adds that almost 50 percent of diapers sold on Amazon are eligible for Prime’s two-day shipping. “Now, who do you think owns those diapers? Amazon, of course.”
The ease of buying necessities like diapers and socks on Amazon makes the e-commerce giant especially dominant in the baby market. Smith points to estimates from TABS Analytics that highlight baby goods as a $30 billion-a-year industry. Adds Smith, “Roughly 20 percent of those sales occur online, more than any other [consumer packaged goods] category, and of that online share, Amazon controls roughly 43 percent of the market.”
While Amazon delivers an online alternative to the convenience of an all-in-one brick-and-mortar, the site doesn’t necessarily deliver on the fashion-forward front. Instead, a host of specialty kids retail businesses have emerged online, not only as replacements for boutique shopping, but also as fulfillers of specific parental needs, targeting themes where brick-and-mortars may fall short — like choice, ease, and the kid pickiness factor.
For a plethora of options and ample sales, there’s Zulily, an online-only retailer founded in 2010 and geared toward moms. “We launch 9,000 products a day in 100 different sales events,” says Zulily’s merchandise manager Lisa Vammen, “and it’s all up to 70 percent off, which is the icing on the cake for money-conscious parents.” The company reports net sales for 2016 at $1.5 billion.
Relative newcomer Primary caters to an oft-iterated parental desire for simplicity, not to mention gender-neutral options. Founded in 2015, Primary’s gimmick is that its styles are gimmick-free, solid-colored basics with zero logos, slogans, or decoration — which, say co-founders Christina Carbonell and Galyn Bernard, formerly of Diapers.com, means that their styles can’t go out of style. “Who has time to reinvent the wheel every time your favorites get too small?” write Carbonell and Bernard via email. “Our customers appreciate the simplicity of Primary in terms of both the aesthetic of our clothing and the ease of shopping,” the latter of which hinges on browsing by color. Primary declined to share sales figures, but Carbonell and Bernard report that the company’s Facebook group has surpassed 150,000 fans.
And for more trend-conscious parents and kids, there are a number of new curated-box companies cropping up online that exclusively package looks for kids. KidPik, Rockets of Awesome, and Mac & Mia are essentially kid versions of Stitch Fix and Trunk Club, operating on a stylist-selected/keep-what-you-want model. KidPik calls their delivered shopping experience “fun-boxing.”
There’s a third option alongside brick-and-mortar and online shopping, a time-honored tradition of parenting now given an extra boost by the efficiency of e-commerce: secondhand shopping, facilitated by apps.
“In the aftermath of the recession, [Gen] Ys have become more selective about how they spend their time and money,” says Cassandra’s Saunders, adding that more than half of US parents buy clothes for their kids secondhand, and more than 40 percent resell their kids’ clothes once they’ve outgrown them, increasingly on platforms like Reshopper, Kidizen, and Envie.
Facebook has proved valuable in connecting parents with one another to save bucks on needed items and de-clutter their homes of pieces they no longer need. “The combination of the wear and tear they put on clothes [and] how fast they grow out of them means we don't need a lot of new stuff,” says Ramona Layne Mueller, who shops secondhand on Facebook for her two kids under 5 years old. In Austin, closed Facebook groups like South Austin Buy-Sell-Swap Maternity, Baby & Kid Items, Ladies with Babies, and Austin Mamas Classified boast memberships in the thousands.
Instagram, too, is a useful resale tool, especially among parents hunting for a specific item. Kennedy in Upland is a big fan of the platform for that purpose. “It's easy, and lots of times, you can find items that have sold out in stores. I’m currently waiting for an IG tag on an H&M unicorn dress for my unicorn-obsessed 6-year-old.”
To all the unicorn-obsessed 6-year-olds out there, and their devoted parents, the shopping world is their oyster.