Where to find growth in the baby aisle

October 12, 2011

Category sales reflect a declining birth rate, but marketing to grandparents could bring success.

Babies are the perfect canvas for people to project thoughts of bright futures and continued success. Parents and grandparents light up when babies are in the room, even though they know those giggly little people will cost them plenty.

Retailers smile too because every growing family in their trading area means more potential ‘ca-ching’ at the cash register – for food, diapers, ointments and more. In the face of a declining birth rate (more on that later), supermarkets should begin marketing the baby connection to grandparents as well as parents, suggests F3.  

Why? Because households in the 45-to-64 age range command 46% of total U.S. household income – and these monies will be needed to help “young adult children and grandchildren find their way and prosper in the new global economy,” said demographic trends expert Peter Francese, who collaborated with the MetLife Mature Market Institute on The MetLife Report on American Grandparents.  

For example, the report noted households age 55 or older spent $7.6 billion in 2009 on such child-specific items as infant food, equipment and clothing, toys, games and tricycles, up 71% over the 1999 level. This spending should continue to rise, since about 4.5 million grandparent-headed households include one or more of their grandchildren, according to 2010 U.S. Census Bureau data.

Targeting grandparents could help offset the impact of a 7%+ decline in the U.S. birth rate, from 4.32 million births in 2007 to 4.01 million births in 2010, as estimated by Demographic Intelligence. The good news for baby products marketers and retailers is a prediction by DI’s quarterly U.S. Fertility Forecast that the birth rate might be ticking up again. “Many Americans cut back on childbearing in the wake of the Great Recession,” Dr. W. Bradford Wilcox, president, DI, said in a Christian Newswire account. “Our analysis indicates that recent improvements in the economy, and ongoing growth in the number of women of childbearing age, will lead to renewed growth of childbearing in the U.S.”

Nielsen data show the effect of the declining birth rate on dollar sales of baby foods and disposable diapers.  
•    Dollar sales of baby foods declined 6.1% a year ago and 3.2% to $4.36 billion in the latest 52 weeks ended August 6, 2011.  These Nielsen figures are for prepackaged, UPC-coded products only in U.S. food, drug and mass merchandiser stores (including Walmart).
•    Dollar sales of disposable diapers fell 5.7% a year ago and 9.5% to $3.41 billion in the most recent 52 weeks in the same retail channels.

Meanwhile, data from the landmark Nestle Feeding Infants and Toddlers Study presented at The Obesity Society’s annual scientific meeting sound a cautionary note. The Nestle data categorized 10% of young children age two to five as ‘obese.’ It said children as young as 1 to 2 begin to develop some unhealthy dietary patterns, and two- to three-year-olds fall short of the USDA MyPlate and AHA/AAP Dietary Guidelines for Children. They don’t eat enough vegetables or whole grains, but they do eat too many calories from solid fats and added sugar.