European Nursery Industry – Challenges and Opportunities
Taking into account eight European countries, a research carried out by KidzGlobal on behalf of the European Nursery Products Confederation shows a rapidly developing landscape, with a generalized decrease in births, a changing consumers’ behaviour and the impact of new technologies
Philippe Guinaudeau, CEO of KidzGlobal, is a specialist for quantitative market research and consulting firm for children orientated consumer arkets
It does not happen often to be offered to gather information and data about the baby care products business in Europe, so the invitation to attend the conference organized by the European Nursery Products Confederation (ENPC) at Kind + Jugend on September 20, 2019, was really welcome. And our expectations were not disappointed, even if some parts of the research carried out by KidzGlobal on behalf of the ENPC resulted to be not so up-to-date as it would be hoped for in an environment where everything changes very fast.
Named “European Nursery Market Review – Opportunities for the Industry”, the speech by Philippe Guinaudeau, CEO of KidzGlobal, quantitative market research and consulting firm for children orientated consumer markets, started by pointing out the main aims of the study: to understand market size, components of consumption and retailing composition; to integrate the impact of the Internet on information search and e-shopping; to anticipate consumer needs and the challenges of a new retailing environment; to prepare nursery manufacturers to the developments caused by the changes in our societies. Guinaudeau then properly noted that there is no harmonized source of information about the size and characteristics of Europe’s nursery retail landscape and that a global approach to the European markets is
Births are decreasing in all the 8 European countries taken into consideration by the research, save Germany (677,947 in 2010, 787,541 in 2018); the most remarkable drops are registered in Italy (from 561,944 to 439,747 in the same period of time) and in Spain (from 486,575 to 369,302). In France, a previously stable trend turned down after funding and services for families with newborn children were cut in 2015. Accordingly, France, which was the Number One country as to nursery products market size, is now placed at Number Three. Other changes affect the demographic scenario: while the fertility rates are nowhere higher than in France (1.92 children per woman), new parents are older than before, couples with children are becoming less frequent and the share of single adults with children increases; on the economical side, however, parents on average have more purchasing power.
Births are increasing in Germany, but continue to decrease in the other territories
Spending per child, 2018include: Wheeled Equipment, Car Seats, Feeding Equipmentexclude: Apparel, Toys, Furniture: Spending per child on nursery products has increased across all countries but France
Altogether, in the 8 European countries (Austria, Belgium, France, Germany, Italy, The Netherlands, Spain and the United Kingdom), births have fallen by 310,000 units per year in the years 2010 to 2018, with a resulting fall of around 152 million Euro of the market value in 2018. For child care products (including wheeled equipment, car seats, feeding articles; excluding clothes, toys, furniture), spending per child in 2018 was at the top in The Netherlands (Euro 582) and in Belgium (Euro 574) and at the lowest in Spain (Euro 416) and Italy (Euro 448). The 8 countries’ total nursery market is worth 3.4 billion Euro (same product categories considered), with the UK leading (761 million Euro), closely followed by Germany (759) and France (727), while Italy (402) and Spain (317) are left behind.
In order to compensate for the decrease in births, the nursery industry needs the consumer to spend more. An encouraging aspect is the high loyalty to brands. A study carried out in France (source: FJP, from Crédoc and KidzGlobal) shows that shoppers spend a fair amount of time looking for the right product but, when they have obtained it, 83 percent of the consumers would purchase again the same product with the same brand. From the research it also emerges that the purchasers’ appreciation varies according to the distribution channels: in nursery shops, product quality, advice and customer service are at the forefront; price and large choice are valued in the mass market; depth of the offer on the Internet.
Market Sizes 2018, Million Euroinclude: Wheeled Equipment, Car Seats, Feeding Equipmentexclude: Apparel, Toys, Furniture: Europe eight nursery marketadds to 3,4 billionen Euro
Guinaudeau introduced ten current and emerging trends identified as relevant to the nursery industry, based on two selection criteria: the level of certainty as to how the trend will play out and the trend’s potential impact on the child care products companies.
1. The second hand market is growing impressively. Data from the apparel business indicate that the second hand market will double in five years (2018 to 2023) with resale driving the growth as compared to thrift and donations.
2. The sharing economy’s value of transactions more than doubled between 2013 and 2015 while the platform revenues more than tripled (source: PwC, 2016).
3. New business models develop as artificial intelligence and virtual reality ease daily lives and support consumers in their purchasing decisions.
4. Traceability and transparent sourcing drive millennials’ choices, so that more and more companies will offer education and leadership with clean, safe and sustainable products that distinguish them from the competition and will have to adapt processes and production practices accordingly.
5. It is proven that customization increases the product’s perceived value: 48 percent of consumers spend more when their experience is personalized, 90 percent of marketers believe personalization is the future, 74 percent of consumers feel frustrated when content has nothing to do with them.
6. Global demand for convenience is driven by urbanization, shrinking household sizes, crowded urban transport, evolving gender roles, generational needs, increasing uptake of technology. Growing demand for products and solutions which help to simplify lifestyles is having an impact across myriad industries.
7. Multichannel shopping is being replaced by omnichannel shopping, where all channels are available to the consumer and connected: the relevant retail strategy approaches sales and marketing by providing customers with a fully integrated shopping experience which unites brick-and-mortar to mobile-browsing and everything in-between. This way of transaction confers importance to Internet comments, which tend to be in large majority positive because the users want to communicate that they have made the right choice.
8. Digital product placement: a decisive advantage for advertisers, since the way of presentation determines whether the product leaves a positive or rather negative impression on the viewer.
9. While augmented reality is going from niche technology to must-have tech, the Internet of Things, which connects everyday objects equipping them with smart functions, is similarly destined to reach any sector or industry.
10. Regulations, especially safety standards, get tighter and tighter, affecting product development and manufacturing. At the same time, they can give opportunities, positioning the industry as brands and companies that care.
Concluding his speech, Guinaudeau offered some personal recommendations to the company managers attending the conference: “First. Remember you own the information. The industry should have a platform where the consumer must ‘naturally’ go when searching for information about baby care products. Especially as concerns the regulations. Second. Take over the second life market that is now speeding up. We live in a world economy where one can sell everywhere, moving the products to other countries. It would be better if the second hand products were sold by professionals, rather than by individuals, or if the industry recycle them acquiring back some of their value. Third. Use the new technologies: people will appear in the close future using the technologies to re-think the market. Be first and creative”.