Market Analysis: Children’s Apparel Market in China
Children’s apparel market is one of the fastest growing sectors. The unique “4-2-1” family structure (four grandparents, two parents, and one child) in China is subjected to a change after the Chinese government announced the new “two-child” policy early 2016. This means more opportunities for children’s apparel market in China.
Children’s Apparel Market in China
Overview: Best Performing Sector Among the Entire Apparel Industry
Children’s apparel market is the fastest growing segment among the various segments of the apparel sector with 9.2% growth in 2014, over 2% more than both men’s apparel and women’s apparel. The children apparel is also a lot more resilient than both men’s and women’s apparel market because, children often outgrows clothes and shoes quickly, thus the purchase of new children’s clothing is a necessity. Adults can often delay purchases of new clothes for themselves.
Even though the performance of the market is forecast to stabilize after high growth in the recent years, the growth of children’s apparel market in China is set to continue in the coming years as the demand for children’s apparel is expected to increase due to the new policy of two children per couple. In 2014, China’s population for people in between the age of 0 to 15 years old accounts for 17.5% of the total population. As the announcement of the Chinese government about the “two-child” policy, we expect the percentage of the children in China to grow. Studies show that children’s market in China is forecast to grown at an annual compound rate of 10.5% between 2014 and 2018; this is considerably much higher than the global rate of 6.4%.
Over the entire children’s apparel market, baby and toddler wear is the best performing sector. The growth of girls’ apparel exceeds the growth of boys’ apparel. Girls’ apparel has considerably higher purchasing frequency and unit price than boys’ apparel. Parents are will to spend more on their children, especially in major cities in China such as Beijing, Shanghai, Chengdu, Wuhan, etc. Over 30% of household’s daily expenditure for families is child-related consumptions, of this; about 18% is on children’s apparels.
Physical Stores Still Remain as the Main Distribution Channel
Due to many outbreaks of problem children’s wear, Chinese parents are more concerned in the clothing that their child wears, checking for and avoiding abnormal pH level, formaldehyde, biodegradable carcinogenic aromatic amine dyes, etc. Thus, many Chinese parents prefer to “see, touch, smell” the product before they make their purchase. Therefore, many parents still prefer to buy children’s wear from physical stores, as they can examine the products before purchasing them. Also, children often grow fast, physical stores give the advantage of trying the clothing themselves before making the purchase. Thus, physical stores are expected to remain as the key distribution channel for children’s apparel.
From a marketing survey, shopping malls and department stores are the most popular retail channels that Chinese parents shop for children’s clothing. Over 70% of the parents prefers to purchase children’s apparels in shopping malls, 56% of the parents likes to shop in department stores. Over 50% of the parents prefer to visit shopping malls and department stores with child-related facilities at least once every month and over 30% visits on a weekly basis. Among these, parents with younger children are likely to visit shopping malls and department stores with child-related facilities.
Digital Channel Retailing Increase in Popularity
Even though physical store is an important channel, multi-channel retailing is increasingly popular in the recent years. Many local and foreign brands have built their online presence. Some products or brands are not yet available in China, thus, online stores are their only option if they want that particular product. Some Chinese parent chooses to buy the product online when they have already seen the product in a physical store and the price offered online is cheaper. Others may choose to purchase online because the brand they are purchasing is regularly worn by their children, thus, they know about the sizing, product quality, etc. Currently, most children’s apparel brands adopt a multi-channel retailing model, that is, they have physical stores, online stores and mobile apps to facilitate different consumer needs. However, even though online channels are increasingly popular, many parents are still concern about the quality of the clothes that their child is wearing thus online channels largely serves as a supplement of physical stores.
In the recent years, we see China’s rapid growing E-commerce market developing. M-commerce is becoming a large part of the E-commerce pie. More and more children’s apparel brands have built a digital and mobile presence help aid customers using mobile devices to obtain products’ information and carry out purchases. Many brands have set up their own online transactional website or mobile app and a large portion of them are also selling their products on WeChat (微信) or Weidian (微店).
Another key part of online purchases is social media. Nowadays, social media has a huge impact on consumer purchasing decisions. This is especially the case in China since Chinese consumers generally engage more actively on social media platforms than other countries. China has the largest number of social media users in the world and the highest percentage of Internet users as active social media members. Social media platforms are particularly relevant for the children’s apparel market as parents are inclined to buy children’s wear brands recommended by relatives and friends while retailers increasingly engage with consumers through social media and hope to build positive word-of-mouth.
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