High income households fueling sales while households under $74,000 pull back from $30 Billion baby care products market; Walmart and Target lead all retailers in overall sales
Shelton, CT – April 26, 2017 – U.S. baby products sales have declined at least $3 billion (approximately 10 percent of the baby product market) compared to 2016 according to TABS Analytics’ 2017 Baby Products Study which was released today. According to the annual baby products study, 57 percent of high income households with incomes of $150,000 or more made at least one baby product purchase in the last year compared to just 24 percent of households with incomes between $75,000 to $99,000. Although the online share of baby products sales increased from 20 percent in 2016 to 22 percent in 2017, the actual online sales dropped, mirroring the overall drop in sales of the entire U.S. baby products market.
“What was most surprising about this year’s baby study was the dramatic division of baby products purchasing among the income groups,” said Dr. Kurt Jetta, CEO and founder of TABS Analytics. “Drilling into the data, we found that the only income group that actually increased their purchasing was high income consumers while all the other income groups decreased their purchasing compared to 2016. We certainly expect to see gains in purchasing for luxury products by high income buyers but not for baby essentials such as diapers and baby food. My concern is that in baby products the income disparity in purchasing behavior is a microcosm of the major shifts we already see in retail, in politics and in our economy.”
The baby products study, conducted in April 2017 by 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 Babies”R”Us.
The study analyzed the five 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 and food; 5) baby care 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 nine key findings from the study:
- Fourteen percent of consumers making under $50,000 purchase baby products. Thirty percent of consumers earning $100,000 to $149,000 group purchase baby products and 57 percent of consumers earning $150,000 and up also purchase baby products. This is a profound difference in penetration across the income groups. Further, all nine consumer sectors evaluated saw gains in purchase incidence from consumers in the $150,000 and higher income level. In most other sectors and income groups, purchase incidences were down.
- com, Target.com, Amazon and recently shuttered Diapers.com all gained in baby products share although sales declined. Online sales experienced less of a decline in sales than brick and mortar stores.
- Share of purchases by product category varied by each retail channel: mass merchandise (including Walmart) saw fairly consistent share trends across all product categories with baby needs and food being the largest; online channel’s highest share was in safety products; other mass market (including grocery stores) had higher shares of lower-priced, high velocity products like baby needs, formula and food; specialty (including Babies”R”Us) had higher shares for both safety and formula.
- Mass market outlets accounted for just under 60 percent of transactions overall, while specialty brick and mortar and online each accounted for 20 percent of transactions. The top two specific retailers were Walmart with 17 percent share and Target with 12 percent. Both Walmart and Target lost approximately one share point from the prior year.
- Target lost share in five of six baby product segments. However, some of these declines were offset by online gains at Target.com.
- Fifty-nine percent of consumers purchase baby products for their own children. The remaining 41 percent are buying products for grandchildren, the children of relatives and friends and such.
- Households without children account for 58 percent of all sector buyers an estimated 20 percent of all transactions. Households with children represent 42 percent of all buyers and account for approximately 80 percent of all transactions. The largest decline in buyers, however, were with households without children, which was down 25 percent compared to 2016. This suggests that there is a high discretionary component among these households in buying baby products captured in the results of the 2017 study.
- Diapers, feeding and safety products all had an eight percentage point drop in the percent of adults purchasing. Baby need products and formula each dropped by six percentage points. While these declines captured in the survey are substantial at upwards of 30 percent, they translate into smaller but still significant drops in household penetration estimated at 10 to 15 percent.
- Across the other consumer sectors that were cross-referenced in the study, books, jewelry and sporting goods also had substantial declines in purchasing penetration. These declines were corroborated by weakness in their respective retailer sectors.
“Clearly the baby products category is under duress and retailers and manufacturers need to understand what factors are in play,” said Jetta. “The decline in lower-income household penetration is an important factor that manufacturers should research to understand why it is happening and what the longer-term implications are for the category.”
Throughout 2017, TABS Analytics will be conducting six studies across the consumer packaged goods industry including personal care, baby, vitamin (VMS), food and beverage, household products, and beauty. More information about previous TABS studies is available at http://www.tabsanalytics.com/resources.
About TABS Analytics
Operating since 1998, TABS Analytics, formerly TABS Group, 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 Market Insights™ 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 Insights™, 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 (dot) com or visit www.tabsanalytics.com