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How Retailers Can Adapt to Shifting Consumer Behaviour in Kids' Fashion Amid Financial Strains


Kate Bolland, RX Group's Marketing Executive, shares insights on impacts of a recession we are seeing in the children's clothing category. You may have seen in the media the struggles the likes of The Warehouse are facing, but is the impact being seen at all levels across all budgets?

 

Recessions bring about shifts in consumer behaviour, influencing how families manage their finances. Including their approach to purchasing children’s clothing. While you may logically think this would result in everyone tightening the belt, the reality is more complex.  


During economic downturns, shoppers often display a dichotomy in purchasing habits. Some shop down and opt for cheaper, more budget friendly options. While others turn to high-end luxury retailers – leaving a gap in the middle. 


The rise of budget-friendly retailers  

It’s no surprise that in tough financial times, many people gravitate towards more budget friendly retailers. Stores such as Kmart, The Warehouse and Cotton on kids become go-to destinations.


People are flocking to discount department stores in search of relief from rising prices.


At the end of 2023 Kmart Group, reported annual revenue of NZ $11.5b, up 16.% and earnings of $769 million, up 52.%. 




Budget-friendly retailers are winning market share due to: 

  • Affordability, stores such as Kmart characterised by everyday low pricing allow people to stretch their dollars further 

  • Practicality, although not high fashion, the quality of clothes at budget-friendly retailers are durable enough for everyday wear. 

  • Clothing life cycle, as kids are constantly growing, they outgrow clothing very quickly. Investing in more expensive children's clothing seems wasteful to many parents, whereas opting for a cheaper option means they can get repeated replacements with financial strain.  


The glitzy appeal of luxury retailers 


Contrary to what people may expect, luxury children’s clothing retailers such as Ralph Lauren, Burberry, Kenzo, Karl Lagerfield and The North Face can see an uptake during hard financial times.


Although it may seem paradoxical, this trend is driven by a complex interplay of different reasons. Understanding these motivations is key for retailers to tailor their strategies and meet the needs of customers.




This behaviour is driven by:

  • Perceived value, high-end brands are associated with better quality and durability. Parents who can afford it, may prefer to buy fewer, higher-quality items.  

  • Status symbol, Items from luxury brands can be used by affluent consumers to signal financial stability, maintaining social status and conveying a sense of security.  

  • Emotional spending, for people who previously purchased from luxury retailers who can no longer afford it for themselves, may indulgence in luxury items for their kids as a form of emotional comfort. In tough times, the final spending cut will be on children - household goods and items for parents come first.

Buying high-end clothes for their children can be a way to provide a sense of normalcy and special treatment during economic anxiety. Note: many people are having less children and waiting longer, so have more disposable income than the baby boomer generation.  


Although not a new concept, many luxury retailers are leaning into this trend and opening up spaces designed to provide fantastic customer experiences for young ones. Rather than an ‘afterthought’ kids' section in the corner. 


Here are some great international examples that have caught out attention - and I recently had the pleasure of experiencing these stores while overseas.


Bapekids in Harajuku, Japan 

Key features: 

  • A giant foam pit in the middle of the space to keep the kids entertained (and increase average time spent in-store) 

  • Stylish and colorful range of children's clothing – jackets, hoodies, shoes, accessories, anything Bape related 


Retailers that have the opportunity to further engage with this cohort need to recognise that it’s not just all about the kids. The role of the retail store is to foster a sense of togetherness that engage young and old on a multitude of levels. It is about utilising interactive elements that appeal to all ages to create an inclusive and ‘stress-free’ destination which has wide and varied appeal. This is where you start to create a relationship that goes beyond pure price.


There has been an incredible evolution in the children’s wear category and to reflect this brands and retailers are now creating engaging, educational, and immersive environments that relevantly speak to the unique market audience as some of the example below demonstrate.


Left to right, top to bottom:

Gucci Kid’s Concept Store Marina Bay Sands. Credits: Picture courtesy of Gucci.

Puma Kids Fruit Beach Festival Pop-Up, Le Méridien Hotel Hainan Shimei Bay. Credits: Picture courtesy of Puma. Baby Dior Boutique Miami. Credits: Picture courtesy of Dior.

Mini bala store concept Hangzhou China. Credits: Picture courtesy of Wen Studio.

Nike Play Store Concept Niketown London. Credits: Nike.


The middle market squeeze 

Interestingly, it’s often the mid-range retailers who really feel the squeeze during recessions. Brands that cater to the middle market tend to struggle as their customers either downgrade to cheaper alternatives or upgrade to luxury options. Retailers in the middle need to innovate, offer compelling promotions or unique items to retain or attract customers.  


But we can get ideas to create interest and getting customers to lean into your brand or store by providing compelling propositions. You are only as limited as your imagination to create concepts that make customers want to visit. The following are large ideas but are great thought starters for how you can imagine your own opportunities to get customers to come instore and experience (it's amazing how many parents will come and bring their kids just to see someone make giant bubbles. Trust me I know all about it).


The immersive experience

Physical space has become more than just a shopping destination. It is now a hub where families come together, create memories, become inspired and explore. Maybe even a cost effective outing if we are getting some necessary clothes as well. Think about how you can create the perfect place to deliver some real life ‘magic’.


Barbie at Selfridges Corner Shop. Credits: Pictures courtesy of Selfridges.


While not clothing, here is some inspiration from 2021 with Yinka Ilori's Laundrette of Dreams pop-up offers the ultimate destination for brand enthusiasts of all ages to engage, explore, and collectively participate in a whimsical and immersive experience. Check out the video to see how a simple idea and collaboration with kids brought to life new ideas and energy.


Yinka Ilori Laundrette of Dreams Pop-Up. Credits: Picture courtesy of Lego.





Overall, the impact of a recession reshapes consumer behaviour in many aspects, including shopping for children's clothing. Whether shopping down for budget-friendly options or up for the latest Ralph Lauren kids' sweater, there is a complex mix of needs, desires and emotions at play.


As a retailer, at the end of the day its all about truly understanding your customer and behaviours - both conscious and subconscious. So you can provide a solution to in customers hearts, minds and wallets. Maybe, just maybe, we have sparked some new ideas to inspire you.




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