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Kids stuff

National brands fuel $5 billion junior furnishings category

By Edmund Mander

Ethan Allen launched a line of junior furnishings within its stores last year.

Children’s bedrooms are offering an interesting — in some cases jaw-dropping — index of the health of the nation’s economy in general, and the junior furnishings retail sector in particular.

Not all parents are buying $6,000 cottage armoires from Neiman Marcus for their little girls, or even the $699 leather upholstered Manhattan chairs offered by Pottery Barn Kids. But spending on children’s furnishings has exploded in recent years, and it continues to grow.

Overall sales for juvenile products and accessories — excluding toys — hit $5.4 billion in 1999, an 11% increase over the previous year, according to figures provided by the Juvenile Products Manufacturers Association (JPMA), Morristown, N.J.

“It truly has mushroomed,” said Jennifer Szwalek, vice president of communications for the JPMA. “To give you an idea, in 1980 the figure was only $850 million.”

Sales in junior furnishings alone are now hovering around $5 billion, according to Jerry Epperson, a furnishings industry analyst at Mann, Armistad and Epperson, Richmond, Va.

Accordingly, retailers and manufacturers are scrambling to meet this demand with new merchandise lines, catalogs and, in the case of Pottery Barn Kids, stores devoted exclusively to children’s furnishings. The retail offshoot, which started off as a catalog in January 1999, is in the midst of a brick-and-mortar rollout in some of the leading malls in the country.

Ethan Allen launched a line of junior furnishings, EA Kids Collection, within its existing stores last year, and New York City-based Delia’s, which started as a catalog, is doing the same for its teen-age girl customers. Children’s furniture has become a big item in catalogs such as Garnet Hill and The Company Store. The Company Store, which also sells over the Web, publishes “Companykids,” a catalog of furniture and “room accents.”

A boom in babies as well as bank accounts is responsible for this trend, analysts note. Epperson said there are 77 million affluent baby boomers, age 36 to 54, many of whom still have their children living at home.

“There are so many younger people in the market and there’s so much disposable income,” said Faith Hope Consolo, a retail consultant and vice chairwoman of Garrick-Aug Worldwide, the New York City-based retail services company. This has spawned new retail concepts and prompted traditional furniture companies to branch out with lines in children’s furnishings.

“The Baker Co. told me that children come in and, instead of a gift of a new bicycle, they get a whole room furnished,” she said, referring to the venerable Grand Rapids, Mich., furniture manufacturing company.

Retailers are rising to the challenge in a variety of ways. In the last few months, Pottery Barn Kids has opened “test stores” in a total of seven malls across the country, and parent company Williams-Sonoma, San Francisco, plans to open another 25 Pottery Barn Kids stores next year, according to Shelly Hale, managing director and senior research analyst at Banc of America Securities, San Francisco.

The existing ones are at South Coast Plaza, Costa Mesa, Calif.; the Village at Corte Madera, outside San Francisco; the King of Prussia (Pa.) Mall; Lenox Square, Atlanta; Old Hyde Park Village, Tampa, Fla; Park Meadows, Littleton, Colo.; and Keystone at the Crossing Fashion Mall, Indianapolis. The rollout will not be affected by the quarterly report released in October showing a plunge in sales across the board at Williams-Sonoma, according to the company’s executives and outside observers.

The population boom, coupled with the absence until recently of a national junior furnishings brand, has offered the opportunity to create an exciting new retail sector, Hale said. While she attributed this development to the birthrate more than the economy, it does help that parents tend to be older, and therefore wealthier, these days, she observed.

“We've had an almost record number of births in the past three or four years,” she said. “Children need their own furniture, and what’s been lacking is a one-stop retail source for children’s furniture.”

Pottery Barn is William-Sonoma’s strongest division, and Pottery Barn Kids is its most successful catalog, according to company executives and analysts. It achieved catalog revenues of $50 million in its first year from the sale of only 9 million catalogs and is expecting to double that this year, Hale said.

Pottery Barn Kids’ merchandise is virtually a mirror image of the adult product line, only smaller, and includes $500 easy chairs, $300 ottomans and even a $1,200 love seat.

Shoppers' response to the Pottery Barn Kids store at the Village at Corte Madera provides a dramatic illustration of this retail sector’s popularity, according to Frank Johnston, vice president for leasing at The Macerich Co., which owns and manages the mall.

“The store is doing really, really well,” he said. “My understanding from the people at Pottery Barn is it’s even outperforming South Coast Plaza.”

While there is nothing new about the children’s furnishings sector in itself, which until recently was served almost exclusively by local retailers, explained Johnston, the interest in the sector taken by national chains is relatively new.

Danbury, Conn.-based Ethan Allen last year launched its EA Kids Collection, selling children’s furnishings in designated areas in its more than 300 stores. The EA Kids Collection includes a bunk bed and a dresser, each costing $1,500, a $600 night table and a $450 bed cover; some of the items also are available over the Internet and through a catalog.

“Our strategy is to provide a one-stop shopping home furnishings store, where products for adults and children are under one roof,” according to a company spokesman.

Delia’s, which started out as a mail-order company catering to adolescent girls, began selling what it describes as “roomwares” to its teen-age clientele. The predominantly East Coast retailer, which has about 36 mall stores in 10 states, sells bedding, lighting, furniture and various accessories, some of which are available from its Web site.

According to Garrick-Aug's Consolo, the current enthusiasm for child furnishings came to the United States about two years ago from Europe, where there is a longer tradition of indulging children with pint-sized furnishings.

The media has since then played a big part in whipping up interest in the subject through newspapers, magazines and even books.

“With the economy booming, parents and grandparents are spending big bucks on the little ones,” read one typical recent newspaper headline in Crain’s New York Business.

There are books on the subject as well, like Annie Kasabian’s “Kids’ Rooms: A Hands-on Decorating Guide.”

In Consolo's view, the economy is playing a big part in the trend.

"There's much more money around," she said, adding that executives at The Baker Co. reported that it is not unusual for parents to come in and drop $30,000 to $50,000 on children’s furnishings.

Neither is it just children’s primary bedrooms that are getting all this attention.

"They're not only purchasing items for the home, but they’re also buying furnishings for the caregiver," said Szwalek, of the JPMA, explaining that the rooms children use when staying with their grandparents and other relatives are getting a makeover.

Successful junior furnishings retailers are going to be keenly sought by mall leasing personnel across the country, with Pottery Barn Kids at or near the top of their lists, according to Macerich’s Johnston. “I have no doubt that they’re being swamped by requests from developers.”

However, the company is being extremely selective about where to put the stores, which generally are 5,000 to 7,000 square feet.

“It doesn't mean that everywhere there’s a successful Pottery Barn they’ll put a Pottery Barn Kids,” he said, explaining that co-tenancy and demographic guidelines for the latter are even stricter.

But Pottery Barn, which so far is the only retailer to open stores exclusively devoted to children’s furnishings, could well have company in the field in the future, said Banc America’s Hale, speculating that Crate & Barrel, which already sells some children’s furnishings, would be a likely candidate to open a chain in the future.

There will be plenty of customers to go around, according to Epperson, the furnishings industry analyst. In boomer families both parents often are working, so they lavish money on their kids in lieu of attention to assuage their guilt. And the parents’ parents also are feeding the junior furnishings frenzy, he added. “As the grandparents are living longer and healthier lives, they’re spending more on the kids.”

Meanwhile, the older kids of boomer parents — the so-called echo boomers — are on the verge of moving into their own homes and starting the cycle again, he said. “We’re looking for a pretty significant upswing, probably in the year 2002 or 2003.”