Kid-sumers: Today's Super-Spenders

by Dan Rafter and Nancy Tanker

Sales are Growing

How fast is the US children's market growing? Packaged Facts, a division of MarketResearch.com based in New York City, estimates that the annual buying power of children in the US will grow to $21.4 billion in 2010, up from $18.3 billion in 2005. And that's just a fraction of the $143 billion parents will spend annually on their children by 2010. Specialty retailers across the country are tapping into the huge-and-growing children's market by offering a mix of new and traditional products designed to appeal to both youngsters and their parents. Some companies are offering tried-and-true products that grab the attention of kids (and their parents) year after year, while others are introducing fresh new products to the common area in hopes of catching the eye of kid-sumers who want something new-perhaps a product they can design themselves. Here's the scoop on the latest products making the kids scene in specialty retail.

Personalizing the music

Personalized music CDs that include a child's name multiple times in a variety of songs are consistent sellers year after year, says Michael Kennedy, director of sales and marketing for Brooksville, FL-based GiggleMedia. The company expects to supply its music-personalization system to about 300 independent cart and kiosk retailers across the US by the winter holiday season.

"This kind of product seems almost recession-proof," Kennedy says. "Parents are not as likely to cut back on things that they know give joy to their children... and keep them engaged. And this is not a huge investment." GiggleMedia CDs, which feature popular licensed characters such as Barney & Friends, The Wiggles and Mickey Mouse, among others, retail for $29.95, which parents aren't afraid to spend even during tough economic times, Kennedy says.

Start-up as a GiggleMedia independent operator costs $899, which "will generate $1,500 in sales for an instant $600 profit," Kennedy says. The start-up package includes a USB external hard drive that contains the software (plus documentation) needed to produce the personalized CDs and run demos, a library of more than 10,000 names and songs from seven different CDs, and the CD-copying hardware and supplies to produce and label 50 CDs. Operators plug the hard drive into their own personal computers and they're ready to produce personalized CDs in just a few minutes. Once they hit 50 burns, they can replenish the system by calling GiggleMedia or order more burns through the company's website. "Parents love seeing the joy on the faces of their children when they hear the CDs," Kennedy says. "It's not like the children hear their names once or twice; they hear their names up to 80 or 90 times on a studio-quality recording as well as having their own name on the CD label-and all this in under five minutes."

Smarter toys

Children don't necessarily associate learning with fun. But MindWare, a St. Paul, MN-based wholesaler of strategy games, books and puzzles, has managed to combine fun with education, offering a series of products that are not only enjoyable but teach critical thinking and problem-solving skills.

The company's strategy has worked well enough so that more than 4,000 retail locations-including inline specialty retailers, zoos, aquariums and museums-sell MindWare products.

"We do brainy toys for kids of all ages," says Erik Quam, general manager of MindWare. "Our products promote critical thinking and visual thinking. They promote accidental learning. Children are learning when they play our games, but they don't realize it."

An example is the company's popular Rush Hour game, in which children attempt to maneuver colorful plastic cars through a series of increasingly complicated "traffic jams." Children think they're merely trying to drive their car home. The game, though, actually teaches children how to think visually and problem solve.

In 2007, the company tested its first cart, opening in Rosedale Center in Roseville, MN, for the winter holiday season. The test was successful and the same location's scheduled to reopen in October. To make the cart experience a success, every employee who staffed the Rosedale Center cart went through a five-day training process on how to use MindWare's games and puzzles. This way, the cart staffers were able to demonstrate all the games that they were selling.

"I think the unique nature of our products means that they're ones that are good to sell from carts," Quam says. "There's a specific MindWare customer out there. They understand what our products are about. They get that [MindWare games] are a great way to spend a Sunday evening as a family together."

The plush rush

Stuffed animals and plush toys have long been favorites of both children and their parents. It's little surprise, then, that Little Ferry, NJ-based BearHands & Buddies has seen steady growth as it enters its fifth year in business.

The company's core line, BearHands, are oversized, warm "bear paw" mittens that have a "secret opening" that lets kids fingers out, so they don't have to take off their mittens to get a good hold on something with their bare fingers, which has obvious appeal for parents who've spent countless hours searching for that missing mitten. The company also sells a line of "buddy" hats, scarves, baseball caps and other branded items that have small plush animals peeking out from under cap bills or perching on scarves, baseball hats and other branded products.

Jeff Golden, president and owner of BearHands & Buddies, expects demand for the company's products to increase. "These products are unique. They're cute," Golden says. "We're an entire line of products. You can get a mitten, hat and scarf set from us."

Retailers offer the company's products in more than 500 stores across the country, Golden says. Last year, Bearhands & Buddies sold their products to 12 independent cart operators during the holiday season. Start-up package costs for a cart location are $3,500. That includes about three weeks worth of inventory, signs and information for the media. "Without a crystal ball, it's hard to say how fast we will continue to grow, but I know we had a good response from the cart operators last year," Golden says. "Gauging from that response, I think we will be adding more and growing in 2008."

Design-your-own creativity

Parents are always looking for creative activities to tackle with their children. For Ran Schilo, president of Shanghai, China-based My Design, this is good news.

My Design offers its own Paintable Boots kit for kids (of all ages). The kit, which includes a pair of rubber boots, six waterproof paints, 32 erasing pads, two paint brushes and a mixing palette, allows children to paint their boots with whatever color schemes or designs they can imagine. When they grow tired of their masterpiece, they can erase-yes, erase-the paint and start over with a new design.

The boots, which retail for about $55, are now available from cart-based and traditional retailers in the US and several other countries. Schilo, who invented the product, says kids and parents "enjoy painting their boots. For younger people, they can change their designs depending on the season. They can paint their favorite animal. They can paint fish or roses. Even parents like to paint their own boots."

My Design Paintable Boots startup kits for independent operators include 300 paintable boot sets, a promotional DVD, signs and product catalogs. As the inventor, Schilo says his product is truly unique. "This is a product that has never been seen before."

"People like these because they can be personalized," he adds. "You can change them, erase them and make new ones." If there's anything today's "what's next?" consumers love-kids or parents-it's a product that can become something totally new each day. Another design-your-own unique product is the LauraLi Design-a-Purse created by Laura Elrick, president of Centerville, MA-based LauraLi. She has been selling her Design-a-Purse products for about two years through the Web, traditional retailers and home parties, and only recently turned to the cart and kiosk market to explore opportunities there. Design-A-Purse kits allow children and adults to decorate their own purses by picking their own straps, jewels, colors and trims to create a one-of-a-kind purse. The products appeal to both children and parents who want to express their creativity, Elrick says.

She came up with the idea for Design-a-Purse after her favorite purse broke. Instead of searching for a replacement, Elrick began making a purse of her own, adding jewels, fabric scraps and whatever else she could find. Along the way, she discovered that the process was fun.

"Little by little, I started to create the product," Elrick says. Now that it's in stores, she's had the chance to get a lot of feedback from her customer base, which is very enthusiastic. "Every age group loves this product," she says. "There's no cutoff. I've seen children as young as four or five putting these together."

Carts are ideal locations for the Design-A-Purse line, she says. Retailers can easily "display them all in their full glory, all their colors or styles together" to create a "magnificent look.... When all the components are visually together, [the display] looks beautiful." Just the eye-catching type of display that lures kids-and their parents.

Kids rule

As these companies illustrate, there are several affordable entry points into this market available for specialty retailers. From complete start-up packages at less than $1,000 to fresh new wholesale products ready for you to create your own unique cart concept, tapping into the growing kids' market could be your chance to let kids-and their billions in buying power-rule your register.