Baby Boom, Take 3!

More than fifty years ago, following the end of World War II, the United States experienced a major baby boom. A generation later, the country went through a kind of "echo boom," as the original Baby Boomers (some 76 million strong) began having children of their own. Now, predictably, the Baby Boomers are becoming grandparents to a new generation — take three in the baby boom cycle.

Last year, more than four million babies were born in the United States, many of them to the children of the original Baby Boom generation. And, as all grandparents, the Boomers are eager to shower their grandkids with gifts.

"These grandparents have plenty of disposable income," says Susan Clayton, product manager for the Hopscotch division of New Creative Enterprises (NCE).

Obviously, there is a huge market for baby merchandise. Manufacturers that didn't previously have children's collections are moving to add one now, and those that already do are expanding them.

The gift industry, too, has noted this trend, and is getting on-board by adding children's lines to their current collections. NCE, which test-launched its Hopscotch line in March 2003, officially introduced the kids' line three months later. According to Clayton, the response has been great. "I'm pretty surprised," she admits. It's not just specialty stores, but mainstream gift shops too."

Upscale manufacturers are also moving to get in on the action. Tabletop maker Christofle has always offered sterling silver baby cups and spoons, but recently the company introduced a porcelain line of children's tableware. The Fan Fan pattern was introduced in 1998, followed by Foletto in 2001. In 2002, designer Christian Lacroix created Les Petites Monsters. And at October's Tabletop Market in New York, Lacroix introduced another new collection, Le Chat et La Souris (The Cat and the Mouse), that includes a cereal bowl, mug, dessert plate, and box, as well as a stuffed cat and mouse toy. That's quite a departure for a manufacturer better known for its formal, and very adult, silver, porcelain, and crystal.

Companies that enter the market have found that the baby business is booming. "We've grown every year," says Tori Swaim, owner of accessories manufacturer New Arrivals. Swaim is also upbeat about the future of baby gifts. "We expect this year to be a growth year, especially because we have so many more products," she says.

Most of the new products available are gifty items — and for good reason, as gift givers are generally staying away from buying clothing for babies. Rather, they are opting for products that will prove more lasting. New Arrivals, for example, offers versatile items — such as keepsake boxes, nightlights, and frames — that can be part of the child's room well into the pre-teen years.

NCE plans to focus mainly on baby and toddler gift items. "We are doing well with tooth fairy items, banks, and frames. But we are testing some new products, like our Cuddlies line of soft pillows for toddlers and binky bags, which hold pacifiers and can be conveniently hooked onto the stroller," explains Susan Clayton. "There are also gift sets that include a bath mitt, finger puppet, washcloth, and bib, all tied with ribbon."

Indeed, gift sets, gift baskets, and pre-wrapped items are categories that are popular with customers shopping for baby. "A lot of people pick up our wicker Moses baskets and turn them into a gift basket. We do our own gift wrapping and send product to the stores that way, too. The store can display one and then the customer can choose the color they want. It's an easy sell," says Mary Fitzmaurice, co-owner of manufacturer Mullen & Fitzmaurice. (The company already had a very successful bridal line when they launched their baby line. And lately, their former bridal customers are coming back to the store, pregnant, and they always ask, "What do you have for the baby?")

Of course, toys are a mainstay in children's gifting. It's easy to go into Wal-Mart or Toys R Us to buy the latest high-tech toy. But for buyers who want to give something unique, the specialty toy market provides a wide selection of merchandise. Jack Rabbit Creations offers a variety of traditional specialty toys with a very modern edge. The company also offers a clothing line, as well as textiles and a Dr. Seuss collection.

Also available is a selection of inventive licenses that draw on characters drawn from children's literature. In addition to its own creations, Yottoy designs soft toys based on classic children's books like The Little Golden Books and The Velveteen Rabbit, as well as interpreting characters from the Curious George series. As an added bonus, the books themselves are also offered, providing the opportunity for some educational gifting or a nice gift set.

Even with the relative wealth of Boomer grandparents driving sales of baby merchandise, when it comes to buying gifts price is still an issue. Customers want value for their money; and with baby, price is even more important because babies develop so quickly that they outgrow their gifts in no time. Indeed, lower price points can also encourage return buying as baby matures.

Of course, consumers are willing to splurge on certain items like personalized products and other keepsakes — but for the most part keeping prices reasonable is important. But just what is the right price point?

"I'm trying to stay at about $20," says NCE's Susan Clayton.

"I think people will spend over $25," says Mary Fitzmaurice. "We're a little bit on the high end. But if customers think they're getting something of value for their money, they'll spend a little more."

New Arrivals offers 9"x13" hand-painted wooden letters that can be used to spell a child's name. At $18 a letter, Tori Swaim has been surprised at how well they sell. "I didn't think they'd be that successful, because of the price. After all, if you have a six-letter name that's $110. You'd think people would hesitate, but they don't."

At a time when the original Baby Boomers are spending less on themselves (after all, they already have everything they need), it's important for the specialty retailer to focus on a segment where they will spend. And for the foreseeable future, one such segment is going to be the grandkids.