Member Article

The children’s market - A tiny goldmine?

Stepping out of the lift with clammy hands and a rising pulse, entrepreneur Effie Moss would never have expected what was about to happen as she faced Deborah Meaden and her fellow Dragons in their infamous den, last month.

Having established her children’s tepee business - Just for Tiny People - 17 months ago, she approached the hugely popular BBC show looking for an investment of £50,000 for an equity stake of 10%. By the end of her pitch, she had three dragons fighting for the chance to invest. She finally settled on Meaden, despite Kelly Hoppen and Duncan Bannatyne offering more favourable terms.

With sales of £124,000 in her first year (of which £48,000 was net profit) and having already handcrafted 800 ‘magical’ tee-pees and 1,600 accessories, it was a lucrative investment.

Moss’s children’s business produces kid’s products that are bespoke, creative and profitable: all magic words in an investor’s dictionary.

Hers is a business fairy-tale, with a very happy ending – but how viable is the children’s market today and what should potential traders look for?

Getting down with the kids

Diving into the children’s market can be a fruitful endeavour – particularly now, according to HKDC research carried out in 2013: ‘Parents are spending more on their children, offering a wealth of opportunities for babies’ and children’s products.’

Yet, this market depends on two aspects: the number of babies and children and the purchasing power of parents, says economist Wenda Ma,

‘In developed economies, although the birth rates are generally in a downtrend, parents are more affluent and can afford to spend more on their children. Even in an economic downturn, parents are willing to buy for their babies and children.’

The enormous range of items available from stockists – from apparel, accessories and footwear, to baby food, toys and health care products – confirms this claim. The value of global retail sales in this market was estimated at US$275 billion in 2012, according to Euromonitor International and 30% growth is predicted by 2016.

Key factors in appealing to your customer (also known as doting parents)

Before launching a product aimed at children, there are many factors that need to be addressed.

Firstly, how ‘bespoke’ a children’s product is can increase or decrease its value. One of Effie Moss’s greatest selling points was that parents could choose the designs and materials for their kids’ tee-pees before they were handcrafted.

Branding is another essential thought process. Take into account your target audience: children will want the product, but it’s the parents who will buy it. And remember, there is no point in making something unique if your branding is bog-standard.

As your product will be aimed at the children’s market, health and safety restrictions will be heavily enforced. To avoid wasting money, breaking laws or worse, an agency such as SGS [http://www.sgs.com/en.aspx] can make assessments for you to ensure your market offering is able to conform to CPSIA (US), EN71 (European) and other regulations.

Now is the time of the ‘new age mum’, who uses the internet not only to buy products, but to check out the numerous reviews available for those items. This was another factor that Ms Moss got right: in establishing a strong collaborative community via her Facebook page (which had over 62,500 likes) she generated around 70% of her sales through social media.

Social media platforms are strong PR and marketing tools in this business, and are especially powerful when directed at parents anxious to buy just the right for their little darlings.

Finally, think top-down approach: start with one niche idea, see how it takes off… and let it grow. Don’t jump in with a bunch of ideas for children’s products: the risk of failure will be far greater.

The beauty of Effie Moss’ vision lies in its simplicity (bespoke tee-pees) but by choosing a clever name for her enterprise - Just for Little People – she has given herself the potential to expand her product range, once her brand is established.

Kids market leaders

There are hundreds of businesses aimed at the children’s market. These UK companies, all started small and have grown exponentially:

The Great Little Trading Company [http://www.gltc.co.uk/fcp/content/awards/content] was voted Best Children’s Retailer 2014 and sells a variety of children’s products. All the items are sold via their online store, which was set up in 1997. They pride themselves on quality and innovation, and make sure over half of their products are exclusive to their site.

Party Pieces [http://www.partypieces.co.uk] aims at the “children’s parties” market. Established 25 years ago by Carole and Michael Middleton (yes, Kate’s mum and dad!), they aim to provide parents with the possibility of creating ‘magic’ for their children at their parties.

NotOnTheHighStreet.com [http://www.notonthehighstreet.com/baby-child] although not exclusively aimed at children, has a whole section dedicated to baby and child. Started in 2006 by award-winning entrepreneurs Holly Tucker and Sophie Cornish, the site aims to stock unique products from small businesses and has enjoyed a remarkable trajectory of success.

So, is it really worth it?

If you have a unique and/or useful idea, then of course it’s worth it. With the children’s market bubbling with activity despite downturns in the economy, there will always be parents willing to buy their kids what they need (or what they think they need). It’s not yet a fully-explored industry, and there are plenty of opportunities to be had.

By Rose Hill, Online Journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Rose writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com.

This was posted in Bdaily's Members' News section by BusinessesForSale .