Toys “R” Us/Babies “R” Us bankruptcy not expected to affect the industry long-term as brick and mortar outlets projected to pick up most of the shift in sales
Shelton, CT – May 2, 2018 – U.S. baby products purchasing rebounded, growing three percent compared to 2017 according to TABS Analytics’ 2018 Baby Products Study, which was released today. According to the annual baby products study, an increase in purchasing from the lower income brackets (under $50,000) was a part of the reason for stabilization. The study says that purchasing also grew for older households, particularly those ages 65-74. The study showed that while purchase incidence is higher for households with young children than households without young children, households without young children comprise about 58 percent of the buyers overall and 50 percent of any given baby products segment. Purchase incidence for households without young children is 16 percent overall, the study showed.
“The high volume of purchasing among adults without young children tells us that there’s a very high discretionary component to purchasing in this category,” said TABS Analytics CEO and founder, Dr. Kurt Jetta. “It’s not all just need-based, as a lot of people in the industry perceive. Very few of the older consumers have young children in the house, so this tells us that people are buying for friends, children or grandchildren, and not just their own young children. This very high discretionary component helps us to understand some of the swings that we see year-to-year.”
The TABS Baby Products Study, conducted in March 2018 with Toluna, surveyed 2,000 geographically and demographically dispersed consumers between the ages of 18 and 75. The study analyzed the outlet shopping patterns of the buyers, with a focus on comparing online to brick-and-mortar, and measured non-tracked channels such as Toys ”R” Us/Babies ”R” Us. The study results were presented in a webinar in mid-April 2018.
The study analyzed six major infant and baby needs product categories: 1) baby seat and safety products (car seats, strollers, baby monitoring devices); 2) baby feeding (cups, bottles, plates); 3) diapers and accessories; 4) baby formula, 5) baby food; and 6) baby needs (powders, ointments, lotions). This year’s study also cross-referenced consumer purchasing across nine consumer sectors: baby, books, clothes, electronics, beauty, pet, office, jewelry and sports.
Here are five key findings from the study:
- The webinar included a discussion of the recent closure of Toys “R” Us/Babies “R” Us and what that might do to purchasing in the category. According to the study, only about 25 percent of buyers purchase at either retailer and of those buyers, 80 percent of their transactions were done in other channels. The study suggests that sales will shift toward Food, Drug, Club and Dollar stores, giving these retailers an opportunity to enhance their assortment in key category segments.
- The baby industry’s “Big 4” (Walmart, Target, Amazon and Toys “R Us/Babies “R” Us) account for only 50-55 percent of all transactions. Club, Food and Dollar stores all have meaningful contributions, the study says, especially among non-edible items. Other specialty outlets such as Marshall’s or TJ Maxx showed meaningful sales.
- The disparity in baby category sales by income is one of the most noteworthy dynamics that marketers should understand. When looking at the various segments within the baby category, even food and formula skewed toward higher income consumers. Those whose household incomes are over $100,000 are twice as likely to purchase food or formula (26 percent incidence) as those whose incomes are between $50,000 and $99,000, the study says. When looking at eCommerce spending, the only two segments where higher income households purchase more frequently are food and formula.
- Ecommerce’s share of outlet purchases, a proxy for share of purchase occasions, grew for four out of the six baby care categories. Diapers and baby formula both saw .6 percentage point declines. For diapers, Amazon’s share dropped from 7 percent to 6.6 percent in the study despite Amazon folding Diapers.com into its offerings. Baby food saw a 3.9 percentage point increase, including spikes of 1 and 1.8 percentage points at Amazon and Walmart respectively. Walmart’s jump in the study now brings the retailer’s eCommerce segment to a tie with Amazon in the baby food category.
- The larger types within the diaper segment, such as wipes and disposable diapers, saw penetration gains. Baby wipes grew from 14.4 percent to 15.3 percent and disposable diapers grew from 12.1 percent to 14.2 percent. Within the safety category, penetration was roughly flat compared to 2017, the study said. Strollers grew from 6.4 percent to 6.9 percent, but potty seats declined from 5.5 percent to 4.7 percent in penetration, the study said.
“At a market level, I don’t expect the closure of Toys “R” Us/Babies “R” Us to impact purchasing by more than a point or so,” Jetta said. “There have been so many precedents of consumers being able to rebound quickly when one of their preferred formats goes away—Sports Authority and Diapers.com are two examples.”
Throughout 2018, TABS Analytics will be conducting six studies across the consumer packaged goods industry including: baby, vitamin (VMS), BevAlc, Candy, Food and Beverage, and Cosmetics. More information about previous TABS studies is available at TABS Analytics' resources page.
About TABS Analytics
Operating since 1998, TABS Analytics, based in Shelton, Conn., is a technology-enabled analytics firm. Its mission is to simplify and improve the way analytics are conducted in the consumer products industry. TABS offers cloud-based software analytics and applications solutions, including TABS Insight® and TABS Total Insights™, for CPG manufacturers that integrate, harmonize, and analyze sales and marketing data. Additional services include TABS CatMan Advantage™, an outsourced category management solution, TABS WorldView™, a global business intelligence tool, and TABS Promo Insight™, a cloud-based software and consulting service that helps companies measure, plan and optimize trade spending. For more information, please call 203-446-8837, email robertbaldwin (at) tabsanalytics.com or visit www.tabsanalytics.com