Executive Summary

The under-5s market experienced growth of 30% between 1991 and 1996 to achieve a market value of £2.4bn. This was ahead of the rise in consumer expenditure as a whole during this period, thus leading to a rise in product penetration in this sector. Many of the products supplied in the market are essentials for parents, although many are willing to indulge their children with more sophisticated items.

The market has six main sectors: clothing and footwear; nappies; food, milk and feeding accessories; toys; nursery and safety equipment; and toiletries and wipes. All these sectors have experienced growth, despite the fall in the birth rate over the past decade. With the rise in consumer expenditure, premium products have emerged across all sectors offering more features or better design. This has been one of the major factors in pushing up average transaction costs.

A significant development in the market has been the entry of new players, led by own-label products, that have eroded the value of manufacturer brand shares. However, tighter competition has encouraged new product development (NPD) and brand investment, thus building the market generically, as well as for the suppliers involved.

Retail distribution has also seen a shift towards this market, as more stores have come to stock under-5s products. The grocery multiples have gained the largest proportion of overall sales in the last 5 years. This has been achieved by widening their product portfolio, as well as adding competitively priced own-brand lines. Boots remains the leading mixed retailer, although department stores in particular have enough space to offer a significant breadth of goods.

The birth rate will continue to fall to the beginning of the next century. However, older parents and falling family sizes will continue to encourage higher spending in the under-5s market. Parents today have more sophisticated tastes and are much more aware of issues such as safety and child development. Manufacturers and suppliers have already been able to respond with more effective market segmentation and better targeting of products. As a result, the under-5s market will continue to grow from £2.49bn in 1997 to £2.91bn in 2001.

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