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Kids catalogs lead brand extensions

The never-ending quest for higher margin incremental sales growth has an increasing number of catalogers fixated on extending their brands to kids — the juvenile market, where soccer moms seem routinely willing to make better-quality, higher-priced purchases.

It seems like the perfect marketing opportunity. Selling to the kids market has at least mirrored adult domestics in terms of upgraded quality, many retailers said.

"Companies are looking for opportunities for growth in the catalog industry, and the children's market is a natural for that," said Amy Blankenship, director, Shop-At-Home Information Center, Direct Marketing Association.

What's more, the catalog industry is growing faster than overall retail sales, she added. Catalogs are expected to produce 6 percent annual sales increases compared to retail's 4.8 percent averaged over the next five years, although catalog sales are only a small portion of the retail pie, which is projected to be $3.8 trillion this year.

But the juvenile category may be an ideal segue for catalogers since they've often already captured the parents. "They are already dealing with people that traditionally make the purchases for the home" and who often have children or grandchildren, said Blankenship.

"Many of these consumers are already shopping flagship catalogs," she said, citing such examples as Pottery Barn and The Company Store. "It's another opportunity for catalog companies to find and serve a niche."

Williams-Sonoma was concerned about cannibalizing Pottery Barn catalog sales when it first launched Pottery Barn Kids, but found just th opposite, Pat Connolly, executive vp and chief marketing officer, said last week during the Thomas Weisel Partners conference. "The Pottery Barn customer who got a kids book that day or the next day [following the receipt of the Pottery Barn book], actually spent more with us in the Pottery Barn book."

Last month, Williams- Sonoma announced that the Pottery Barn Kids brand, including retail, catalog and Internet, had 36 percent growth at the end of the first quarter. Although it is always looking for improvements in merchandise assortments and operations, "right now, we have never been more confident in where we're going and we see opportunity to take our business to a whole new level," Laura Alber, president, Pottery Barn brand, said at the time. "What's amazing to us is its strong profitability in its high-growth phase." The company recently extended the PB brand to teens, with the successful launch of Pottery Barn Teen.

Sears' Room for Kids began because Direct Marketing Services, which markets Sears' catalogs, saw it was selling a lot of children's items in its regular catalogs. Three years later, the category is still strong, said David Milgrom, president, DMS.

In addition, "the vendor base has stepped up, offering more products and focus than when we started. Our business is up; we're able to offer the customer more," he said.

The customer is trading up as well, he said, selecting better quality items, such as higher thread counts.

Mailing five different books a year and targeting products at 5- to 18-year-olds, the catalog offers "more of a value proposition; we're trying to create real value for the customer," while brands such as Pottery Barn are more of a lifestyle. Twin sheet sets in a recent Room for Kids catalog ranged from a $22.99 cotton jersey set to a $39.99 180-count percale.

Domestics are half of the book, with the other half composed of beds, furniture and storage, as well as outdoor living. The entire accessory category, including bean bag chairs, wall hangings and storage have done really well, Milgrom said. The home office area is also strong, with desk colors that coordinate with bedding. "Anything with storage is good."

Lillian Vernon, which broke into children's domestics with its Lilly's Kids catalog less than a year ago, has also seen the customers pick higher quality items, said David Hochberg, vp, public affairs. Sales in 100 percent cotton sheets have grown, for example.

"Parents are more aware of that. They're becoming more sophisticated and are more tuned into counts and such," he said.

Lilly's Kids has great success with complete children's rooms ensembles, he said, and so now offers 12 ensembles instead of 10. "It tells the whole story in one photo...The catalog lends itself to the kids areas well. You could never go to a department or specialty store and see the complete room. In our catalogs, the customer can envision the child's room."

At Company Kids, which Hanover Direct launched in 2001, products target a higher quality to begin with. Sheets are only offered in all-cotton, and price points hover from $16 to $19 for 200-count percale and $50 for appliqued twin sheets. Prices are "pretty standardized," said Lisa Simms, vp, merchandising, The Company Store brand. "We're not in a price war."

The brand is still very strong, she said, and growing faster than The Company Store, though the latter is "a mature brand."

Company Kids, which mails five new books a year, along with others with minor changes, sees its bedding and window as its strongest textiles categories, and recently added categories including sleepwear and, in the fall, outerwear.

Hanover executives have also hinted in the past at the possibility of a kids' brand sprouting out of Domestications in the future.

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