Children's Products Market Overview

* The calculations use the average data for the World

1. INTRODUCTION

Children's goods usually include various games and toys, children's clothing, furniture, in some cases, baby food and hygiene products. A feature of this group of products is a relatively short life - the child quickly grows out of clothes and furniture.

Especially stringent safety requirements for health and environmental friendliness are placed on children's products.

Today, more than 24 million children live in Russia:

  • Up to 4 years - about 9 million people.

  • 5-9 years - about 8 million people.

  • 10-13 years - more than 5 million people.

  • 14-15 years - 2 million people.

2. MARKET ANALYSIS

Like other sectors of the national economy, the market for children's goods is experiencing multidirectional effects associated with a difficult economic and geopolitical situation. So, the negative factors of influence can be attributed to: a decrease in the solvency of the population, a decrease in real disposable income, a transition to a saving model of consumption. However, there are positive ones: government measures contribute to increasing the birth rate, the trend of import substitution stimulates domestic production, and a weakening ruble makes Russian goods more competitive in international markets, stimulating exports. Experts note that it is in this industry that import substitution is most successful.

According to research, the volume of the Russian market of goods for children in 2014 amounted to 507 billion rubles, and in 2015 reached 515.5 billion rubles. Thus, excluding inflation, the increase will be 1.7%. If inflation is taken into account, then the real drop may amount to 9.4%.

Consumers in Russia, according to research from the end of 2016, expect that the crisis could drag on for at least another 3-4 years. The reason for such conclusions is not only the news background about the state of the domestic economy and various macro-processes, but also the personal financial condition of the population. According to research, only 15% of income is left for free spending by the population, while 85% is aimed at purchasing basic necessities (food, etc.). With an estimated average per capita income of 31.5 thousand rubles per month, producers of durable goods, including children's goods, compete for 4.7 thousand rubles per month or 56 670 rubles per year.

The market for children's products today has undergone some changes, but they cannot be called negative. In the segments of children's clothing and footwear stagnation is observed, as in the entire fashion market. The premium segment of the apparel market suffered the most, while the middle and low price segments showed growth. With a more detailed division, the situation is as follows: in monetary terms, the luxury and premium segments fell by 5-7%, the medium and average plus segments increased by the same 5-7%, and the economy segments and Mass March rose 20%. In general, according to experts, while maintaining the volume of the market in physical terms, its volume in monetary terms is significantly reduced due to lower population costs.

Figure 1. The structure of the market for children's products

The Russian market for children's products in the 2000s was one of the fastest growing in Europe, its growth was 15-18% annually. At the end of 2016, growth is estimated at only 2%. There is an increase in the interval of purchase of children's goods, especially in the segment of toys, they began to buy several times less. In general, the volume of the toy segment is estimated at approximately 107 billion rubles.

There is also a high degree of market saturation - a large number of players, a large number of various products in stores. Against this background, many networks have reduced and optimized the assortment, leaving only the most turnover positions on the shelves. An interesting trend is the increasing demand for educational and educational toys - the consumer wants to get more functions from the acquired toy. Of course, this is due to a saving model of consumption.

Manufacturers take into account changes in the market and adapt to them, trying to maintain sales volumes. For example, the production of durable and cost-effective toys has increased (taking into account the increase in the acquisition interval). Profitability is achieved through the simplification of goods - for example, the rejection of expensive prints (plain bibs for feeding, bottles without pictures, and so on).

In the toy segment, growth is shown by certain categories of goods: sales of electronic games grew from 4.5% in 2014 to 6.3% in 2015, dolls - from 10.6% to 13%. Sales of soft toys decreased - now their volume is less than 2% of the market. Sales and toy vehicles fell.

The average cost of a toy in 2014 was 491 rubles, in 2015 - already 610 rubles. The assortment of toys reduced to 120 rubles - from 31.0% to 15.9%; at the same time, the share of toys worth 300-780 rubles increased.

The volume of the segment of goods for newborns is growing. Here, further preservation of significant growth rates is forecasted. The crisis did not affect products such as strollers, dishes and furniture for babies (the volume of the market for children's furniture is estimated at 25 billion rubles) or 3.6 million units). Non-essential goods — baby monitors, highchairs, teething — began to be purchased much less frequently. There is an increase in consumer interest in products that can grow with a child: sliding beds, strollers, transformers.

The segment of goods for sports, which includes sports goods, sports complexes, equipment for playgrounds, is estimated at 26 billion rubles or 9.6 million units. It is rather difficult to evaluate the segment of goods for creativity, since goods for children's creativity (7.6 billion rubles) are usually attributed to the segment of toys, and materials for creativity (paints, brushes, albums, etc. - 4.7 billion rubles) - to the category of school goods.

The segment of children's clothing remains one of the fastest growing, its volume is estimated at 168 billion rubles in monetary terms, in physical terms - 176 million units (the market for children's shoes is 50 billion rubles or 34.2 million units). If the adult clothing market has shown a steady decline in recent years, the growth of the children's clothing market amounted to 0.63% over the past year. Preference is given to more durable and high-quality products if you want to reduce the cost of frequent updating of the wardrobe. Thus, manufacturers who will be able to offer the most advantageous combination of price and quality of goods will be in a favorable position. Market participants agree that it is not enough competent to formulate an assortment today, it is also necessary to engage in active sales: make more attractive product displays, interact with the client at all possible sites, thus forming a loyal audience.

The baby food, care and hygiene segments remain generally stable. An exception is the so-called goods for pleasure, that is, not related to the category of basic necessities - baby juices and mashed potatoes. Their consumption decreased in 2016 by 18.2% and 4%, respectively. Due to the fall in these categories, the entire segment of baby food in physical terms lost 8.8%. Presumably, consumers have switched from industrial products to domestic ones.

Hygiene and care products are showing significant growth. For example, diapers, the largest product category, with an average price increase of 14%, showed an increase in 2016 of 20% in kind.

Figure 2. Dynamics of the children's goods market in monetary terms by categories in 2016 (growth rate over the previous year), %

Figure 3. Dynamics of the market for children's goods in physical terms by category in 2016 (growth rate over the previous year), %

Figure 4. Dynamics of prices for children's goods by categories in 2016 (growth rate over the previous year), %

Experts identify three main reasons for the growth of the market for children's goods. State support has led to an increase in the birth rate in the country, more large families have appeared, which leads to an increase in demand for children's goods. According to Rosstat, the birth rate in 2015 increased by 50% compared to 2000.

The second reason is the import substitution and support of the Ministry of Industry and Trade within the framework of the Children's Products Industry program: subsidies to compensate part of the interest on loans, reimbursement of part of leasing payments, information support for the promotion of goods, etc. The third reason is the tendency of Russians not to save on children's goods, thus bringing them closer to the category of essential goods.

Not only consumers, but also manufacturers seek to reduce costs. To a large extent this reduction is facilitated by the use of online stores. Over the past 2-3 years, the share of online trading in children's goods has increased from 7 to 20%. Firstly, due to the lack of a number of costs inherent in traditional stores, it is absent here, which makes it possible to reduce the final cost of goods. Secondly, buying online takes less time and is much more convenient, especially with delivery, which is very important for parents of young children. Today, according to market players, online trading in the toy segment accounts for about 13% of the market, in the segment of feeding devices - 5%, in the segment of bulky goods - 25%. Nevertheless, 46% of Russians still consider it important to see the goods before buying live, which means the need for traditional physical stores.

A study of distribution channels showed that specialized children's stores, as of the beginning of 2016, showed an increase of 5% in monetary terms and 1.6% in kind, primarily due to baby food, while durable goods showed stagnation or negative growth in kind. Within this channel, the toy segment showed a decrease of 7.8% in monetary terms and by 18.7% in kind. The clothing segment in specialized children's stores fell by 14% in physical terms, but in monetary terms, it grew by 4.8%. A negative factor here was a significant increase in prices for children's clothing and shoes: 22% and 28%, respectively. When choosing clothes for children under 2 years old, the main criterion is the convenience for the child, the naturalness of the materials, for children from 10-12 years old - design.

The segment of goods for newborns, according to experts, has already passed the bottom and demonstrates a steady growth rate in this distribution channel. The volume of this segment is more than 130 billion rubles per year.

Figure 5. The structure of the toy segment in Russia, %

In the field of marketing of children's retail, experts note such new trends as the need to form a loyal audience for selling goods without discounts, which the population is so used to. In addition, an attentive approach to assortment formation is becoming important, in which economical and durable products should prevail.

Service also becomes important. The traditional components of retail, which include a convenient layout of the store, convenient layout of goods, the absence of queues at the box office, the presence of consultants in the trading floor, are no longer decisive; in these areas, the problems of most players have been resolved. Speed, intimacy and personalization come to the fore. The multichannel of buyers, who use both online and offline tools when choosing a product, is also becoming a new trend. This creates certain difficulties in building communication with retailers. For some categories of goods, the decision-making period can be up to 90 days, while the number of models of one product under consideration can vary from 3 to 14. Moreover, the assortment considered by the consumer is far from always formed by price proximity, but, for example, in proximity to the functional at a significant price gap.

The importance of loyalty programs is also increasing. If earlier they traditionally consisted of providing customers with discount or accumulative cards, and did not allow informing the client about brand events, then new technologies, the increasing role of mobile devices in our lives allow us to talk about a new level of loyalty programs based on mobile applications as well.

In general, a redistribution of forces in the market is expected. The premium segment will reduce its volume, low-margin players will leave the market, the share of the so-called craft - handmade goods (usually made by mothers), which are already appearing on the market, will increase.

As a result of active import substitution, the share of Russian-made children's goods is growing. According to expert estimates, their share in the near future may reach 23% of the total. According to surveys conducted in 2015, one in five consumers began to purchase products of domestic manufacturers more often. The highest demand for Russian products is forecasted in the segment of baby food and diapers.

According to research, Russian-made products are perceived by consumers as culturally close, safe and reliable. At the same time, objectively, they are more consistent with the climate of Russia, they use more environmentally friendly materials. Products of foreign manufacturers are usually distinguished by design, promotion quality, but do not differ in durability and adaptability to Russian climatic conditions.

Denis Miroshnichenko

(c) www.clogicsecure.com - a portal to business plans and guidelines for starting a small business 08/18/2019


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