Retail franchise Apr, 27 2011

Baby Steps towards Big Growth

Baby care industry has undergone huge transformation from being an entirely unorganised industry to being a part of the organised retail scenario. During the recent years it has emerged as an upcoming opportunity for aspiring entrepreneurs. Read on to kno

By Abha Garyali
Sub Editor
Baby Steps towards Big Growth

India has a lot of potential and untapped market for baby care products. Johnson and Johnson was the only baby care product player, with which elite used to get associated with for their kids. However, now baby care product market is just not dependent on elite class for growth. Indian baby care market has substantially grown during the past few years. In the future, this industry is predicted to show a robust growth as the market is anticipated to register a CAGR of more than 11 per cent during 2010-2013. The keenness among parents to give the best in the world to their kids is the major factor that has led to the emergence of large number of national and international players to explore an opportunity in the industry and grab the maximum share of the profits. Considering the increasing demand and popularity of the concept, companies are taking franchise route for fast expansion.

Factors fuelling growth

A report published by RNCOS has declared India as the most preferred market for the companies involved in baby care product manufacturing and marketing. Let us have a look at the factors which have fuelled the emergence of infant care players in the country. Rakesh Dhawan, Proprietor, Aardee Specials, Sole Distributorship Licensee for Hauck in India said, “India has a very young population with more than 50 per cent below the age of 25 years. Moreover, it has an ever growing middle class with large disposable incomes. Hence, there is tremendous potential in businesses connected with babies and children.” Other factors are as follows:

Offering kids the best of the world: With parents getting keener to offer their children the best, the markets are booming with branded baby products. Parents do not mind spending some extra bucks for the comfort of their kids.

Concept of small families: People prefer to stay in nuclear families and have a single child. Therefore all the attention is given to the kid.

Interrelation between disposable income and spending: Due to both couples working and earning, the disposable incomes have increased. Parents want branded clothes, soaps, shampoos and diapers etc for their babies. Sanjeev Narula, Managing Director, Lilliput Kidswear, said, “With the increasing strength of the price sensitive yet upwardly mobile middle class, a trend which is an offshoot of awareness, double incomes, nuclear families, and urbanization, this sunrise sector ensures incessant splurging of the ‘discretionary income’ by the target group.”

Kid’s consciousness: The growth in this sector can be guessed by all the television commercials made on baby products. The idiot box is full of advertisements accentuating the benefits of infant diaper brands, hair oil, baby soap, shampoo and even creams. Baby food and milk bottles are not to be left behind. While visiting any market or mall, customers comes across a huge range of baby shops and players. Small kids are also getting more brand conscious by watching TV commercials. They become aware of different brands in skin care and apparel sectors and want that for themselves.

Entry of international players: The emergence of international players has also boosted the popularity of infant care products. Earlier with limited brands in this sector, there was less awareness but now entrepreneurs as well as parents have recognised the demand of the market.

Key franchise players

There has been a sudden sprouting up of many international brands in the Indian markets. Players like Hauck and Chicco are international players who have taken the franchise route for their enteries. Hauck, a Germany based company entered India in 2009 through Aardee Specials. Hauck Group has been manufacturing baby prams, strollers, car seats, playpens and many more such items. Another brand Chicco considered the masterbrand in the global baby care market has entered India recently. It offers almost all categories of baby care products like toys, hard goods (strollers, prams, high chairs, and car seats etc), along with apparels and shoes. Hanung Toys and Textiles Limited, a soft toys manufacturer and exporter has also expanded by franchising to expand its retail presence and global sourcing under the brand name FUNLAND.  Hanung has created a niche for itself in the international soft toys and children's furnishings market. Me n Moms Pvt. Ltd (earlier known as Mamta Baby Products Pvt Ltd) is the leading importer, consolidator and marketer of infant products in India, since 13 years. On the other hand apparel brands like Lilliput Kidswear, Toon Kidz, Gini & Jony, Lilstop, Zapp baby zap etc have also emerged successfully in the infant and baby apparel sector. Narula said, “Kidswear in India is currently a Rs17,000 crore market with a growth of 15 per cent per annum. However Lilliput World, our  new concept, is a chain of large format stores showcasing the complete range of toys, soft toys, strollers, walkers, car seats, baby care products, feeding bottles and other feeding gear, nursery furniture, bedroom furniture, baby linen and furnishings, premium party wear, ethnic wear, casual wear, footwear and accessories.”

Selection criteria and support for franchisees

There is not any special degree needed for becoming a franchisee of a infant product outlet. However they should have the ‘Business Fit’ in the prospect and should know/ understand the baby care segment. Moreover size and location are two very significant factors for success, particularly in infant and baby sector. Baby products like prams, high chairs etc need a lot of space for their display. Therefore aspirants should be having a large retail outlet to display all products.  For an exclusive outlet, around 1500- 2000 sq carpet area is needed. This would typically require an investment of around 60-70 lakh. The companies offer every possible help to their franchisees in establishing and running the business successfully. As stated by Dhawan, “We aid franchisees by suggesting the layout of the outlet and also marketing the brand at the local level. The layout is not same across the world. Our franchisees can choose layout of their choice.”

Potential in small cities

It is seen that the infant product industry is mostly restricted to metros and urban cities. It is time the brands penetrate to smaller cities to cater to the needs of the people there. Therefore it can be an apt opportunity for aspirants to invest in this sector for reaping higher profits. Dhawan informs, “We are appointing sub distributors in every state in India. To begin with we would like to cover all the metros and state capitals, and then move onto other cities. We have adopted the distribution/franchise route to cover the whole country under our brand umbrella.”

Few challenges like competition from cheaper substitutes from the unorganized sector, cultural aspects etc can be faced by budding entrepreneurs. But these can be quickly overcome when parents experience the comfort of their kids, which can only be offered by branded stuff.

Aspirants have a great potential in this sector, especially if they have an interest in babies and their products.

Related: Fashion franchising at its best

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