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Children's wear a recession buster for clothing brands

Segment outstrips growth patterns in men's and women's wear

Ravi Rao at the Angels store in the Dubai Mall
Image Credit: Francois Nel/Gulf News
Ravi Rao at the Angels store in the Dubai Mall. The company plans to have four stores in the UAE and hopes to concentrate on adapting its business model to the Gulf market and make it profitable.
Gulf News

Dubai: Forget everything you heard about catching them young. For some fashion retailers it's more a case of catching them in their cribs. They have a sound marketing reason too.

Children's wear has turned out to be the great recession-buster for retailers, and easily outstripping the growth patterns recorded in women's and menswear. Both international brands and home-grown retail majors are seeing the value in that.

"We feel that in a depressed marketplace where consumption is going down, families need to reduce their spending on wear," said Javier de Rivera, director at the Spanish children label Gocco. It has just opened the first dedicated outlet in Dubai as part of a move into overseas markets.

"The first reductions are usually seen in home textiles, then men and women's wear. It is only at the end that children wear sees a reduction."

It was clearly the case in 2009 and thereafter. So much so, major local fashion retail chains are looking for tie-ups with new international names and expanding their merchandising options for children.

It's a slightly different story at Angels, the dedicated children's wear stores operated by the Rivoli Group. There a shopper gets to see some distinctive names in the fashion business — Dior, John Galliano, Kenzo and Ferrari. It's upscale all the way.

‘Powerful segment'

Ravi Rao, group general manager at Rivoli who oversees Angels, says the returns are becoming quite favourable. "As of last year, the Angels operation is standing on its own in terms of not requiring financial support from the parent company," said Rao. "We have a base of eight shops, predominantly in Dubai and with plans to add more in Abu Dhabi.

"While we have ranges up to ten years, we find that the 0-2 years is a very powerful segment for us."

For local mall operators, they can't seem to get enough of children's brands, irrespective of which price range they fall in. These outlets manage to pull in steady traffic throughout the year and do not see the demand fluctuations that occur in women's fashion.

But Rao believes some home truths still need to be factored in when selling to children. At the top would be to have a firm handle on inventory management.

"In the niche fashion that we are in, there are only two collections a year, and it's vital for any retailer not to be caught with a heavy load of unsold merchandise," said Rao. Thereafter, these go on sale at significantly knocked down values, which is what determines the retailer's margins for the full year. If a retailer gets this side of things wrong, he will go bust."

‘Strong player'

Even then global brands and their local or regional partners are willing to take their chances. While the established names in children's wear duke it out for any competitive advantage they can derive, brands as yet unrepresented are lining up.

Gocco has just been through the process. It roped in Abu Dhabi-based Liwa Group to be the franchise partner.

"Franchising was the option; we believe we need a strong player in the Middle East and the most difficult decision was with whom to do it," said Rivera. "We finally decided to do it with Liwa Group and are very happy with the performance so far."

While the first one at the Dubai Mall is open, the plans are to have four in the UAE.

"We are going to concentrate in adapting our business model to the Gulf market, as well as making it profitable," said Rivera. "And after that continue our expansion through the other Gulf markets.

"[The Spanish brands] Zara and Mango are now leaders in their market segments and we are still very far from that. But we have an opportunity to keep getting closer to them by being a prominent children brand in the Gulf markets."

For Angels, where the average price-points tend to be around Dh500, the expansion of its store network will be a pretty selective affair. It now operates eight stores, including one at The Atlantis. "We need not necessarily be there only in the malls; we could be in pockets such as Jumeirah," said Rao.

"The concentration of our target customers will determine where our prospective openings should be.

"The key point for us is that this is a category that will not be affected by fluctuations in the economic environment. But the challenge is how to increase your customer base because as a niche retailer you can never be a 50-store chain.

"That's why we are working towards optimising the number of repeat customers each year."

By the sound of it, selling to children — and their parents — still represents a learning process.