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Baby Boom Spawning Upsurge in Childrens’ Retailers

It’s a small world after all. Women are having more children than at any time in the last 30 years, and the number of children enrolled in elementary and high schools in 2003 topped the baby boomers that set records three decades ago. Is it any wonder that a new breed of retail shops is opening to cater to this seismic shift in demographics? Pumpkin Patch, an Australasian retailer opened its first U.S. store in the Glendale Galleria last month. And babystyle, a retailer that had its beginnings online, is expanding its bricks and mortar units count with its latest opening this month, also at the Glendale Galleria. The stores have somewhat different formats, but they share a key thread in common catering to moms and families that don’t have the time to shop several different stores and want the service they cannot get at big box stores that cater to the same markets. “Today’s women are busier than ever,” said Lariayn Payne, vice president of marketing for babystyle, which currently operates 15 stores. “They’re trying to balance family, work and lots of kids with lots of activities.” Women are having more children than at any time in the last 30 years, averaging 2.1 children after giving birth to fewer than 2 children for most of the 1970s and 1980s, according to a report by the Centers for Disease Control and Prevention. And they are having children later in life. Over the past three decades, the average age when a woman had her first baby increased to 25 years old from 21.4 years of age, according to the CDC. Birth rates for women aged 40 to 44 rose by 5 percent between 2002 and 2003 and more than doubled since 1981, according to the National Center for Health Statistics, a Maryland-based monitoring agency. Birth rates for women aged 30 to 34 also increased by 4 percent between 2002 and 2003 and rates for 35- to 39-year-old women rose 6 percent during that same period. These older moms are not only busier, they also tend to have more disposable income to spend on their children. “There are a lot of issues that come into play,” said Allen Martin, director of the Consumer Research Center at Cal State Northridge. “A lot revolve around time and the exchange of time for money. We’re driving on freeways, waiting in line for gas and the necessity of making that mortgage payment requires both spouses work. There’s so little time and families aren’t giving up on having children, so you have to compromise. One way is by paying for the things we typically did ourselves.” Babystyle founder and CEO, Laurie McCartney, got the idea for the stores when she was pregnant with the first of her two children and found herself traveling to several different stores for her maternity clothes, infant clothes, nursery furniture and other gear like car seats and strollers. “The only places that did aggregate them under one roof were superstores, and they didn’t have that specialty store approach,” Payne said. “Her feeling was, put it in a specialty store environment where the merchandise offerings were more selective and it’s more of a pleasant experience.” After launching on the Internet in 1999 and adding catalog sales sometime later, babystyle launched its first retail store in 2002. Late last year it opened in Westfield Shoppingtown’s Fashion Square in Sherman Oaks and plans are to add six to 10 more stores next year. Pumpkin Patch, which originated in New Zealand in 1990, currently operates 135 stores in New Zealand, Australia and the United Kingdom, and after moving into the U.S. market through department stores like Nordstrom, is beginning to open its own shops here. The Glendale opening will be followed by stores in San Francisco and Seattle for a total of seven U.S. stores this year with additional openings slated for 2006. Pumpkin Patch, a publicly traded company on the NZX with annual revenues in fiscal 2004 equivalent to about $220 million, said it expected to see net profits after taxes climb 48 percent to at least $16 million in U.S. values for its full fiscal year ended July, 2005. “There is no doubt that today’s parents view fashion for their kids in a very different light to their predecessors,” said Maurice Prendergast, managing director at Pumpkin Patch. “Because they are having their children later in life they are able to be more discerning with their choice of kids’ clothes and of course there is a much wider range in the market as fashion labels have recognized the children’s wear niche.” Gen Xer’s, those born between 1965 and 1979, are the parents of this new generation of children, and their child-rearing styles are markedly different from those of their parents. Typically latch key kids whose parents treated them as equals, these Gen Xer’s are likely to be far more doting on their children. “There’s just a lot more focus on kids and planning everything that has to do with that child’s life, starting with what do you need for a baby,” said Payne. “There’s a lot more information out there like the kind of car seat you need, where parents feel they have to get a lot of these things to be good parents.” Martin believes there may also be something of a “trophy” approach to child rearing in play, with Gen Xer’s wanting their children to look and live in a way that mirrors the kind of lifestyle they have achieved or hope to achieve. At the same time, this generation is rearing children in California, at least, at a time when buying a home for many is unattainable. “If I can’t afford to buy the house I want, I’ll lease a cool-looking car and I’ll spend my money so my friends and family think I’m successful,” Martin conjectured. “And one of the ways I’m doing that is by what I buy for my kids.”

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