No Kidding in kids retail

Today, children have become a very important demographic segment for the Indian marketers. Since, there are a few brands in the category, the segment remains untapped.

“It is a 40 to 50 thousand crore market. There are many unorganised players in this sector, thus, for a brand like us there remains many opportunities. It is a very big and growing industry,” Mayank Badola, Business Head for Offline, Firstcry.com, tells Franchise India.

Sharing similar thoughts, Nirav Patel, MD, Mera Toy Shop Mera Baby Shop, says, “There are very few players in the category and India has a very young population with immense opportunity for growth and business. India is a growing economy with a large young population and there will always be a huge demand for toys and baby care items.”

Growing market:

A country like India, which has 450 million child population and eight million being added annually, the retail sector is set to grow more.

A study undertaken by ASSOCHAM, which is one of the apex trade associations of India, says the Indian kids-wear market is expected to reach Rs 80,000 crore by 2015. The kids fashion has infiltrated into tier-II and III cities like Dehradun, Chandigarh, Pune, Nashik, Indore, Varanasi and so on, the report adds.

This report finds growing of kids wear at the rate of 17 per cent, making it one of the most attractive categories. The report is based on children in the age group of three to 13 years. The study reasons increased media exposure, double-income parents and peer pressure for children becoming more fashion and brand conscious.

On the growing market, Mamta Khatar-Tiwari, Director, Me n Moms Pvt Ltd, shares, “We have grown year–on-year by 30% in turnover and more than doubled the number of stores in the past three years. The future for franchising in this industry is very promising since the market is growing every year.”

Further, sharing their views, Prasar Sharma and Amit Chaudhary, Co-Founders, Exelixi Management Company, Master Franchisee of Simba Toys that has over 30+ stores in India, say, “Everyone understands the potential that the Indian market offers. With a population of 1.2 billion, any subsequent numbers are bound to be staggering. However, we go beyond just high-level numbers and identify where the real demand lies in this vast and diversified geography. A brand conscious lot, consumers from middle-class segment want to buy or consume iconic brands.” 

Kids’ retail brands take franchise route:

Recognising the market potential, market giants like Mahindra Group had launched Mom & Me stores way back in 2009. To further tap into this segment, many exclusive children's brands have also expanded their presence exponentially in last couple of years.

Now, to tap the market potential, the brands are going in for franchise for expansion. “Ideally, any individual who would like to be self-employed in an exciting and dynamic category of toys and babycare would be a suitable franchisee. Apart from this, the landlords who have got vacant spaces can consider taking a franchisee. The franchise model we have arrived at along with the expertise of Francorp is a path breaking one, which will give the prospective franchisee opportunity to make good profits in the shortest possible time,” says Patel.

Adding further about expansion via franchise, Prasar Sharma and Amit Chaudhary, tell Franchise India, “We work with partner brands to establish their presence in different parts of India through an extensive retail and distribution network. The retail network is primarily franchisee driven. Exelixi has already rolled out almost 25,000 square feet of retail space in the kids’ retail segment making us one of the largest retail players in this industry.” 

Also, Me n Moms Pvt Ltd finds franchising a very feasible model. “We offer franchise opportunity in major towns in retailing of baby care and mother care products. The franchise model is very feasible,” Mamta Khatar-Tiwari adds.

Badola, says, “We are into pure franchising. We provide all basic assistance and support to the franchisees. We support the organic method. We do not believe in giving guarantee to open stores just like that.”

Business therapy:

As per a joint study by Oxford University and the Open University, retail therapy is actually good for the brains of kids. Shopping trips are just as beneficial for the child’s development as painting or drawing activities.

The interaction between child and parent while shopping helps young people develop social skills and promotes happiness. Shopping may be beneficial because it involves change of visual display from shop to shop, which improves the child's motor and social skills more than a sedentary activity, further adds the study. The people in the trade believe such studies are practical in nature and will further flourish their business.

Specialised online kids retail sites:

Not just offline stores even specialised e-commerce for kids have gone viral. FirstCry.com and Babyoye.com are some of the brands that are offering the online opportunities. A report by Internet and Mobile Association of India says out of the total internet population, 75 per cent, that is, nine million, are youngsters.  Out of which 1.9 million users are kids and this segment has been experiencing a substantial 70 per cent year-on-year growth.

On this trend, Mayak Badola, says, “We are number one in online kids retail while in offline also we have made good growth. Our online and offline model has been successful.”

Challenges

With new market and few players, there are bound to be challenges.  Simba Toys, feels, “Due to the missteps of a few brands, who offer concepts like “minimum guarantee” and “consignment stock”, these are currently the primary demand of those entering the sector as franchisees. This is the main reason causing a supply bottleneck in the market. Since an overwhelming majority of products are imported, brands have to invest heavily into stock and in various cases due to either macro or direct factors, these stocks don't move, brands are left with a huge amount of non-moving, or “dead”, stock which does not have any liquidation options in this country unlike the West and other developed markets. In situations like the recent downturn, brands are currently left on hand with large volumes of stock and having to payout hefty amounts as minimum guarantee or support payouts.”

The overall kids’ retail segment is also underdeveloped and is hungry for the top brands.

On their part, Me n Moms shares, “The challenge is to identify the right kind of partner. We try to assess the franchisee’s current business and reputation to become sure of the partner. One of the trends in this sector is to open stores even in small towns (with populations as low as 5 lakh) to catch the market in the growing stage.”

Conclusion

So gear up and jump in this fast growing kids retail industry. Since, there are many unorganised players in the fray in the country, there is a huge potential remainaing unexplored. With many big brands fast offering franchises, time is right to become an entrepreneur via investing in kids’ retail.

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