SIC 5641 Children's and Infants' Wear Stores

 
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SIC 5641

This category includes establishments primarily engaged in the retail sale of children's and infants' clothing, furnishings and accessories. Such establishments may specialize in either children's or infants' wear, or they may sell a combination of children's and infants' wear.

NAICS CODE(S)

448130

Children's and Infants' Clothing Stores

INDUSTRY SNAPSHOT

The infants' and children's wear business consists of hundreds of small independently owned shops and dozens of larger retail chains. Because many of the companies in this industry are privately owned, the exact size of the industry is difficult to determine. Because it is a relatively small market in the apparel industry, this sector has traditionally lacked the fierce competitiveness of other clothing sectors. Even in children's specialty shops, apparel only accounts for only 17 percent of floor space and 16 percent of sales (baby furniture accounts for two-thirds of space and revenues).

In the mid-2000s, the trend in this sector was for clothing and accessories that were smaller versions of the hottest trends for adults, primarily women. The increase in consumer spending on apparel and accessories, begun in 2003, was growing very quickly in the children's sector, particularly in luxury and upscale products and brands. Designers such as Polo, DKNY, and Calvin Klein were entering the market with pint-sized products.

ORGANIZATION AND STRUCTURE

This industry has traditionally been highly seasonal, as with other clothing businesses. Industry sales generally peak between late August and December. During this period, stores compete for precious back-to-school sales and holiday gift purchases. Stores typically generate between 30 and 40 percent of their annual sales in these months. With record high numbers of infants, toddlers, and children attending preschool throughout the year, clothing purchases for this segment are becoming less cyclical.

Because children's and infants' wear stores carry narrow product lines, they are classified as specialty retail stores. Traditionally, children's and infants' wear stores, and specialty stores in general, were small boutique-style operations. These "mom and pop" stores were often undercapitalized and had high overhead costs in proportion to their sales. However, they did not compete on the basis of price alone. Rather, they pursued customer satisfaction strategies, such as offering products with low turnover rates and providing more sales expertise than their competitors.

Competition

Until the mid-1980s, department stores were the main competitors of children's and infants' wear specialty retailers. As this industry moved into the mid-1990s, however, the growing popularity of off-price and discount retailers presented new challenges. By 1994, discount stores accounted for 36.5 percent of children's and infants' wear sales. These low price retailers expected to expand by outselling both specialty children's wear stores and department stores. Department stores accounted for approximately 35 percent of sales in 1994 while children's and infant's wear stores accounted for 13 percent.

In addition to off-price and discount retailers, smaller children's and infants' wear stores experienced increased competition from chain stores. Eager to capitalize on growth opportunities in the children's wear market, apparel chains such as The Gap, Inc. and The Limited, Inc. launched children's versions of their successful adult stores—Gap Kids and Limited Too. Toys "R" Us launched their children's wear stores, Kids "R" Us. All of these companies are publicly traded and have access to tremendous amounts of capital. Their entry into the children's and infants' wear industry during the mid-1980s began a shift toward consolidation in the competitive structure of the industry.

BACKGROUND AND DEVELOPMENT

At the beginning of the 1990s, the industry felt the impact of a minor recession. Buyers were markedly value-oriented. Children's wear retailers noticed that consumers routinely bought basic...

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