Kidswear not child's play for retail industry

Dressing kids up can be a daunting task, and not just parents, but even retailers would agree.

The recent collapse of several mainstay Indian kidswear retailers after an initial tryst with success shows this segment is more challenging than most had estimated, reports CNBC-TV18’s Farah Bookwala. A look at recent trends in kidswear retail shows multiple players court initial success before heading for a downward spiral. For example, brands like Koutons Junior, Raymond's Zapp and Spykar's Oyo are no longer in business. Gini & Jony is struggling to stay afloat as private equity owner Reliance Capital looks to exit its 22% stake. All this even as Lilliput's lenders decide on how to restructure its Rs 873 crore debt. What went wrong with the branded kidswear segment despite the growing purchasing power of middle-class India? For one, experts say retailers did not pay heed to their pricing in an extremely value-driven segment. “The fact is that kids are growing, so the frequency of purchase of kidswear is far greater than for adults or young adults. The consumer just won't understand that the price points for a pair of denims for a child and an adult is the same,” explained Russell Berman, the CEO – Hypermarket of Aditya Birla Retail. However, analysts do not agree that entry of foreign players such as Bossini Kids and Mothercare did Indian players in. Instead, they say their own unchecked expansion during the 2007-08 retail boom and other such intrinsic reasons are to blame. Arvind singhal, chairman of Technopak says “When you talk about the penetration of children's clothing from overseas brands, it is insignificant in terms of volume compared to what Gini & Jony or Lilliput or even Mom & Me would be doing in India. So the challenge is not so much in terms of foreign competition.” He believes the reason for the kidswear industry’s downfall is “indiscriminate expansion, not focusing on profitability and sometimes maybe more focus on valuations and therefore too strong an emphasis on expansion without putting adequate systems in place.” Meanwhile, Venkataraman K, CEO of Mahindra Retail syas “It’s a question of being able to market very well and also be able to provide differentiation which the customer values. I think this is where a lot of development needs to take place. “ While retailers are excited to see this segment grow from the current USD 281 billion to USD 444 billion by 2016, according to estimates by Care Research, experts feel that the next 3-5 years will see significant amount of consolidation. Watch the accompanying video for more details..