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Oct, 01 2007

Kids’ stuff in demand

The Indian market for children’s products is offering huge opportunity to investors. With Children’s Day around the corner, TFW takes a look at the services related to children’s products and the speed at which this market is growing, attracting potential

Intro:

The Indian market for children’s products is offering huge opportunity to investors. With Children’s Day around the corner, TFW takes a look at the services related to children’s products and the speed at which this market is growing, attracting potential franchisees to consider this market for investment

Blurbs:

Kids of today belong to the screen age (TV, internet, mobile etc.) and thus are more aware of the latest trends and fashion. Children being vulnerable are easily influenced by advertisements on television

With apparel and education being the most prominent sectors in kids franchise, other sectors like party planners, furniture, day care, retail stores are also witnessing an upsurge owing to franchising

The kids’ apparel market in India is over Rs 13,000 crore, is growing at the rate of 10 per cent and will touch annual growth of 30-35 per cent

Growing concern of parents over kids’ education and overall development has further led to the growth of many companies foraying into education sector

Start

No kidding, the market for children’s products is becoming larger. As Indian businesses serve and meet the demands of consumers below 15 years of age, forming 30 per cent of the Indian populace, industry experts continue to toy with new ideas to attract these young customers. From assigning a section in the store separately for kids to launching exclusive kids’ store, the market is witnessing exponential changes in this sector.

Changing consumer habits

With development in technology, the world is becoming increasingly smaller by the day. Kids of today belong to the screen age (TV, internet, mobile etc.) and thus are more aware of the latest trends and fashion. Children being vulnerable are easily influenced by advertisements on television and this activates ‘pester power’, i.e. where the children harass their parents to purchase the latest products they want. With the increase in number of working couples and their respective disposable income, the child’s pester power becomes inversely proportionate to the time available with parents. Two sub-segments are expected to emerge in future within the kids’ apparel market: between 0-6 years, where mothers buy and 8-14 years where brand awareness among kids is generally high and kids play a major role in making the purchase.

The Indian market is observing a sea change in how the new age kids behave and think. Their enforcement of individuality, their attitude towards fashion has changed over the years. In today’s world the kids are decision makers in family buys and are the future trends setters. With the growing economy, the family’s disposable income is much higher comparatively.

India is witnessing a huge change in the consumer habits with growing dispensable incomes and increase in nuclear families, increasingly the child has become the centre of focus with a growing awareness of his or her individualities further demanding the best. The brands stand a good chance of growth as it offer recognition.

Franchising in kids market

India is now taking the nuclear family route where both parents are working, they do not get enough time to spend with the child. Conditions like these have given rise to child becoming the centre of attraction of the family and parents obliging to all his demands. Kids’ products and services market is all set for a big fillip with companies from apparel to education all set to enter the kids segment. Many companies in the kids market are expanding through franchising. With apparel and education being the most prominent sectors in kids franchise, other sectors like party planners, furniture, day care, retail stores are also witnessing an upsurge owing to franchising. Toy retailing in India still continues to dominate through licensing.

One can perceive that kids are the new block of consumers in the retail market. The fact can further be stated by seeing the emerging new segments launched for kids every other day. A retailer is always on the look out on what makes his sales tick and if kids can add a significant part in the retail business then this is the time to cash in.

In the following paragraphs some well-known companies in the kids’ products-related businesses are highlighted.

Apparel

The mainstay of kids’ retail revolution is on apparel business which accounts for 80 per cent of the market. The kids’ apparel market in India is over Rs 13,000 crore is growing at the rate of 10 per cent. Kids’ apparel market in India is increasing by leaps and bounds. As per the industry experts, kids’ retailing will touch annual growth of 30-35 per cent.

The competition has started to grow with many players now entering the fray. To carve a niche in this developing sector which is getting attention from many firms, the solution is to keep focused in your products and offerings. To this Eugene Cooper, Director, Primetex Clothing says, “With the growing demands in the market place and the huge potential each one can carve out a niche. That is to say the size of the pie is increasing and every one can have his share provided the brand portrays a difference in approach and attitude.”

Companies like Lilliput have not just constrained itself within kids wear but have also enlarged its umbrella by entering into kids footwear. According to Sanjeev Narula, MD, Lilliput Kidswear, “We are looking to become a one stop-shop for kids and thus our product range consists of dungarees, capris, shirts, t-shirts, skirts, jackets, tops, denims, rompers, ethnic wear, inner wear, eye wear, caps, footwear and night wear for the age group of 0 to 12 years.”

Today Lilliput has 125 stores across 52 cities in India. Talking about the upcoming stores, Narula says, “We are in the process of opening 25 more stores in the coming month.” Besides India, Lilliput is also present in China and Bahrain.

Other players like Primetex Clothing Pvt ltd, which entered the kids market in September 2005 with its home bred brand zyx’w targets the next generation kids.

Primetex Clothing is working towards establishing brands in the Kidswear segment with zyx’w being positioned at the premium segment of the market, caters to the age group 0 – 14 years. The Company has also tied up with Cartoon Network for manufacturing and marketing of their character Johnny Bravo and Dexter Apparel range.

Primetex has also launched a mass market brand JUNO Funwear catering to the price conscious with the hygiene of the brand associated for an age group of 2-14 years. The company plans to make the brand available in all major markets of the country.

Throwing light on the future plans of the company Cooper says, “Zyx’w currently has 3 operational stores and another 3 to be operational by the end of October. The Company plans to put up a total of 30 stores by the end of this financial year and this shall be feasible with a franchising network being set up.”

Education

Kids education and development is another sector which has shown tremendous growth opportunities over the last few years and is expected to grow in the coming years as well with many organised players in the sector.

Growing concern of parents over kids’ education and overall development has further led to the growth of many companies foraying into this sector. Whether it is pre-school education, secondary education, supplementary education, or higher education, there is tremendous scope for all this.

With Indian middle class’ interest growing towards a better lifestyle and dual income couples increasing the block there is an increased demand for child care. Full time child care is on its peak and is very needed in the 0-5 age group.

To start a child care centre in your area you first need to study the market and do a research on need for a child care centre in your area. Upper income professionals who find it difficult to give sufficient time to the child will be your target consumers. Once you have figured out the need it is easy to offer services by getting associated with a popular child care centre which offers you and your team proper training to run the centre.

One of the biggest companies playing a contributory role in kids education, Zee Interactive Learning Systems (ZILS) entered the fray with Kidzee in mid 2003. Currently ZILS has 650+ Kidzee centres which the company proliferated in 48 months; 8+ Kidzcare centres in 6 months; and 7 Kidzee High schools in the first year itself. The company is bullish on franchising.

ZILS offer educational courses both in formal and non-formal education and is deeply involved into the ECCD (Early Childhood Care and Development). In Kidzee, the company’s target group is kids up to the age of 6 years and Kidzee High takes care of the K12 segment (Primary, Secondary and Plus 2 education).

Talking about the future kids education services hold in India, Arun Khetan, CEO and MD, ZILS says, “I still foresee that most of the players are scratching the tip of the iceberg. With a population of a billion plus and ever growing, India being one of the fastest growing economy with rising purchasing power parity in the hands of the individual with each passing year, the potential in kids education is very huge.”

Putting off the competition the company faces with the coming of other organised players, Khetan says, “India is a huge market and there is ample scope for right service providers with the right attitude and required knowledge and who can meet the expectations of the consumers.”

Rise of Brain Gyms

In terms of supplementary education parents are keen on developing the skills of their kids. This has further given rise to many companies which have started business in India teaching abacus education. The way these companies have grown over the years is tremendous. The main business model for all these companies has been franchising. Academies like SIP, UCMAS, Ideal Play Abacus have seen the light of the day with franchising giving boost to the business. Abacus is basically a Chinese invention which helps a person do arithmetic calculations quickly. Cities like Hyderabad, Chennai and down South where one can see more level of concern on parent’s part for a child’s education, these concepts are becoming very popular. The reach and popularity of Abacus education grew with the spread of more number of centres via franchisees.

UCMAS India began its operations in India in the year 1999 and offers brain development programme for children in the age group of 4-12 years. Talking about the growth the education sector holds, Basheer Ahamed, Chairman and Managing Director, UCMAS India, says, “People nowadays are very much concerned about giving quality education to their children and they do not mind paying well if you offer them value for money.”

UCMAS India with a little over two lakh student enrolments in the past 7 years has reached out to a very small percentage of the market segment, and is bullish on the kind of potential the market holds.

The confectionery market

Over the years there has been increase in the amount of kids daily pocket money. Owing to this increased buying power children get to spend more on liclollies, candies and other confectionery items. From being a unit based 50 paisa purchase, the confectionery market has now fully grown into a big retail business. Confectionery manufacturers are getting into speciality retailing and net based purchase increases for confectionery.

In 1997, Candico started off by getting into confectionery market in India marketing through kirana stores, paan shop and grocery outlets. In the end of 2005-2006 the company launched specialised confectionery retailing to cash in the opportunity to grow in this area. Thriving on the mall culture the company started looking at organised growth.

Today the company is present in 19 countries and spreading its footprint further to 20 to 23 counties by April. With food and beverages and entertainment acting as the bestseller in malls Candico is expanding its kiosk model in mall and multiplexes, its smallest store carrying 40 products, which offers a whole new range of variety for consumer. With players like DLF, PVR and many more Candico has tied up with 400 different malls locations.

If we compare Indian confectionery market with Western Europe than we see India’s per capita consumption is at 73 gm whereas in Western Europe it is at 16 kilos. Looking at such a scenario the market offers huge scope for growth.

Party planners

The kids' entertainment market is vast and ever increasing. Whilst balloons are evidently fun and frisk for one and all, young and old alike, Balloonman has captured the eyes of children very well.

Through the years, it has been most encouraging to witness parents being far more generous to ring in celebrations of their little ones, be it in the form of a birthday party or a naming ceremony at birth. Besides this, companies like Ballonman cater to the ever increasing requests of Events` Managers, be it in the form of entertainment, decorations, invites, food, theme parties, colour scheme, etc., the techniques and know-how of which are forever being kept very much up to speed with the ever increasing and fluctuating market trends and flavours.

Balloonman was founded on January 19, 2005. Balloonman, a venture of Lighter Than Air, has been manufacturing and marketing bouncies for the past 15 years with over 200 designs to offer, as well as welcoming ‘tailor made requests’ concurrently. Be it a small sized play school or the largest multiplex, both Lighter Than Air and Balloonman have been prominent leaders in providing the highest quality range of products and services always.

Leading name like ‘U Kids’ in Delhi, encompassing an area of 17,000 sq.ft. is of sheer excitement and fun for children tenderly aged between 2 and 16.

The franchising solution

If you are not the one who prefers the trial and error method then franchising offers you a tried an tested formula.

According to Narula, “We hire the staff and train them as per our policies and procedures (SOP). The outlet is designed and supported completely by Lilliput functions.”

Talking about the franchise plans of Primetex Clothing, Cooper says, “Our franchise network is just starting to take shape and would lend us the reach in market at a future date.”

Further talking about the support the company bestows on its franchisees, he says, “Our company offers a complete package in terms of Store Design, Merchandise, Software, Marketing Support with other operational support on a day to day basis.”

On the support front Khetan says, “Necessary emphasis and support is imparted on proper teacher recruitment, training with refresher training from time to time. In addition, a lot of hand holding assistance in operation, marketing support and identification and recruitment of teachers and counsellors is also imparted.”

Talking about choosing franchising as a business model for UCMAS, Ahemad says, “Franchising model of business was chosen by our company so that we could spread this concept quickly and effectively to every nook and corner of the country.”

UCMAS is now present in as many as 19 states in India. Further emphasising on the benefits a franchisor gets, Ahemad says, “It relieves the franchisor of huge investments and of being involved in the day to day operations at the grass root level. It also helps them to effectively monitor and control the quality and expansion of the business.”

Explaining further, Madhav Gupta, Executive Director, Candico India Limited, adds “It is not easy to start your own business, but, if you buy a franchise you acquire wealth of knowledge and years of experience from the day one”. The franchisor already knows what sells in the market and ways to sell it.

For setting up a kiosk of a kids confectionery store you need to invest around Rs 3 lakh and get the support of the franchisor in terms of location, setting up the business, added with the knowledge and experience acquired over the years.

Future prospects

While children are in the growing up process, spending on them and for them presents a market too large to be ignored. Much of the reason why children`s market has taken off is because the system of traditional single-income family is rapidly disappearing. There is increased attention towards children, and parents are generally trying to juggle work time, quality time and family time in dual working households. Simultaneously, today`s parents want their children to have every possible advantage and are willing to spend on these activities. In the 50s and 60s children were seen and not heard. Today the whole dynamics of upbringing has changed dramatically. Children have become more active members of the family.

The franchise industry has long been meeting the demands created by dual-income families with active children. From serving the most basic of kids` needs by offering day care to dishing out fun with entertainment, franchising has covered all categories when it comes to kids. Kids’ products-related companies are leading in the business game, and the growth has been most significant with the entry of foreign and domestic companies which are creating opportunities for entrepreneurs.

Box Lilliput

Profile: One-stop-shop 0-12 years

Present: 125 stores in 52 Indian cities, plus China and Bahrain

Future plans: Opening 25

Requirements: Location, space, fees, security, interior costs

Primetex

Direct owned: 74 stores

Franchisee: 51 stores

Future plans: Direct stores – 20; Franchisee - 16

Requirements: Different modules; open mind for partnership, flair for business

Zee Interactive Learning School

Present: 650 Kidzee, 8 Kidzcare, 7 Kidzee schools

Future plans: Around 5,000 Kidzee in 3-4 years

Requirements: Right-minded professionals; adequate finances; education background

UC MAS

Franchisees: 1,375 in 19 states

Requirements: Space 400 sq.ft, 2 classrooms, table & chair to seat 15 in a class, white board & marker, drinking water & toilet facility

Balloonman

Future plans: 100 bps by 2008-end

Future plans: 4 party stores, 9 bouquet shops

Requirements: Party store - Rs 15 to 20 lakh; Bouquet Rs 5 to 7.5 lakh depending on city, location, size of store. Dedication, commitment in business.

Candico

Present: 17, 13 company-owned

Requirements: 40 to 60 sq.ft,

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