Expert opinions, INVESTMENT CLIMATE

Children’s stores are disappearing?

Popular stores selling goods for children such as Detsky Mir, Korablik, Olanta, Mothercare and others, continue to have shoppers, although their number has fallen dramatically from, say, five years ago. And, if you take a closer look, you will notice that most of these buyers are people of the older generation, grandparents. If parents actually go shopping, it is more likely they do it to entertain their kids, to get out of the house, and maybe to actually hold the things they want in their hands. Modern moms and dads prefer online shopping: it is more convenient, faster, and cheaper. How is this trend changing the market for children’s goods? How do marketplaces compete for buyers? Will we still have a chance to go to a children’s store ten years from now, to choose a doll for our daughter and a toy car for our son, or will all sales move online, and Detsky Mir will become a curiosity ‘mothers used to talk about’?

Credit: depositphotos.com
Credit: depositphotos.com

Moms choose online shopping

Online sales are booming; it is a global trend. However, experts say it is especially noticeable when it comes to baby products. Young parents are always short of time, and often have to save, to relieve the pressure of a new family member on the family budget. They have no time to go shopping; they do not want to overpay. It is so convenient to buy what they need and take advantage of the best offers online, without leaving home, while their child is sleeping or playing.

According to Data Insight, the number of online orders for children’s products surged 82% in 2020; overall online sales increased by 63% in rubles in the same period. In 2020, online stores selling children’s goods accounted for 4% of the Russian e-commerce market. Over the past year, 30 million orders worth RUR 60 bln ($843 mio) were placed in the top 1,000 online children’s stores.

On the other hand, children’s online stores are not the only vendors that sell toys, strollers, highchairs, diapers, food and clothing for newborns. Bigger platforms such as marketplaces are interested in this rapidly growing segment. According to Yefim Aldukhov, founder of the goOmni consultancy, Wildberries has shown particularly strong growth in the context of sales of children’s goods exceeding RUR 6 bln ($84.3 mio) per month this year. The number of sellers on Wildberries has skyrocketed to 27,000 from 4,000 last year. The number of brands represented on this marketplace has grown eight-fold.

Other marketplaces are also striving to catch up by placing increasingly more children’s products on their virtual shelves. Yandex.Market, for example, currently has 2,000 retailer partners and half of them sell toys, baby food and baby hygiene products. The best-selling products on Ozon this fall include diapers, toys and children’s sport accessories.

It may seem that the marketplaces selling to parents enjoy glowing prospects. However, marketing experts have pointed out certain difficulties that online shops are facing.

Freebies and bonuses

According to experts, the growing competition among marketplaces is much higher than among offline stores thanks to wider price dispersion, bigger variety and multiple delivery options. Online shops are fighting fiercely for their customers. An average mother looking for a birthday gift for her child will meticulously compare prices and sales terms. While a toy may be cheaper in one store, there may be free delivery in another; a third store also offers nice bonuses and freebies. Online shops have to lower prices and ensure fast, error-free and preferably free delivery, as well as launch promo campaigns and sales.

“Customers are now used to getting bonuses, discounts, gifts and nicely packaged orders. They order a toy worth RUR 50 (70 cents) and expect to receive it within 20 minutes in a gift-wrapping with a shiny ribbon, without paying extra for delivery. As a result, retailers often “deliver air” because the item itself costs less than its packaging and delivery. What can be done about that? Who will be the first to say that delivery actually costs RUR 500 ($7)?” comments Igor Tatarenko, Director of the Product Catalogue and Content Department at Dochki-Synochki.

Although children’s shopping is not a segment where customers like to be stingy, Russians’ purchasing power is in decline, with an average receipt for children’s goods being RUR 2,028 ($28), or 11% less than a year ago, according to Data Insight. Retailers want to make more while customers want to spend less. A compromise requires that marketing experts and designers work their socks off to come up with new strategies and selling tricks.

Assorted princess dolls

When you go to an offline store to buy a children’s overall, you have a chance to feel the fabric and check the quality of seams and zippers. When you shop online, there is no such option but there is a product description and reviews for you to explore. They are also the main focus of designers and marketers.

“New parents have no time to spare so the description must be brief and concise. Today marketplaces deal with a huge number of small retailers that want to sell via popular platforms but often don’t even know the basics. “Assorted princess dolls” will not work. Each princess is unique and must have its own description and bar code. Otherwise you can’t expect good sales,” Igor Tatarenko explains.

Many experts recommend creating a product page after thoroughly reading reviews. Reviews usually show what is important to a customer. Feedback is another challenge for marketers. Who will buy baby shoes that, according to most recent reviews, shrink and discolor after the first wash and are itchy and uncomfortable in general?

“Year 2022 will be the year of reviews. We all understand that good reviews can be bought but they clearly work. Today, when advertising is scarce, it falls on deaf ears but customers still believe reviews from “real buyers.” Of course, when a new product goes on sale, we have to write our own reviews until other people start buying it. The main idea is to not damage real reviews with fake ones,” says Olga Teslya, CEO of Olant. 

Some of the efficient customer loyalty tools include bonuses for reviews, modern well-written product pages (many online shops now choose in favor of 3D views and short videos instead of traditional text and images) and quality delivery (A delivery guy who will call several times to figure out a customer’s address and show up at the wrong apartment will discredit the store. Some moms often prefer to stop by a collection point instead of waiting around at home).

Store atmosphere matters

According to experts, the “last mile” of delivery has an even greater importance now. An online store that cannot provide a cheap, fast and convenient delivery is doomed. Our pace of life is getting faster. Customers want to receive their orders not in a week or two, but today or at least tomorrow. And they want to receive them from a delivery man who prioritizes punctuality and speed. Marketplaces adjust to their customers’ wishes, and delivery is getting faster and more convenient: for instance, Wildberries has 21,716 pickup points in Russia and the company has no plans to stop there. What does this mean for offline stores? Ruin, some experts believe.

“In the next three years, offline children’s stores will leave the market. If a conventional store cannot offer anything unique, what’s the point of having it? Many chain stores already operate as pickup points for orders placed through online stores. Women do sometimes visit conventional stores to take a closer look at strollers but then purchase them at an online marketplace. So it is unnecessary and unviable for chains to have many stores; they can have just a few but make them more interesting so people will go there to enjoy the atmosphere,” says Olga Teslya.

She adds that prices on children’s goods grow by 10%‒12% every year, and this trend will persist because one can give up on eating out or visiting a beauty salon, purchasing new jeans or an interesting book, but they will never leave their children without birthday presents, comfy winter clothes, bikes, sleds or teddy bears. As children’s poet Vladimir Borisov wrote, with children you lose out on sleep and money. Instead, you find happiness.

By Natalia Sysoyeva

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