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Baby product categories feel the price pressure

Baby product categories feel the price pressure

Price, convenience and nutritional value are driving sales of baby products as consumers increasingly turn to these channels online.

In a February survey of 1,000 consumers conducted by research firm Jungle Scout, Walmart’s brick-and-mortar stores were consumers’ favorite destination for baby products, cited by 10 percent of consumers. Amazon followed closely behind at 8 percent, and Walmart.com at 7 percent. Target stores and Target.com were each cited by 4 percent of consumers.

The research also found that baby products were one of the fastest-growing categories on Amazon in the first quarter, with sales growing 9% year-over-year at the online retailer.

Total dollar sales of baby care products across all retail segments rose 2% to about $19 billion in the 52 weeks ended May 4, compared with the prior year, according to research firm NIQ. However, unit sales fell 5% in the period as the average unit price rose 7.3% from year-ago levels.

Among the largest categories, dollar sales of diaper needs increased 3.6%, with unit sales of 1.4%, showing minimal impact from inflation. Within the diaper needs category, disposable diapers saw dollar sales gains of 2.8%, with unit sales of 0.7%, while baby wipes increased 7.1% in dollars and 2.9% in units.

Baby food was more impacted by inflation, with dollar sales up 1.3% but unit sales down 6.2%, amid unit price inflation of 8%. Dollar sales of infant formula rose 6.9%, but unit sales fell 7.3% amid unit price inflation of 15.3%.

A recent McKinsey & Co. study found that sales of baby products were set to decline by about 4% in 2023 across both grocery stores and large retail outlets, while sales on online platforms were about flat. Of those consumers who said they were buying fewer baby products, most said they needed fewer than the year before, but 25% said they were buying less because prices had risen and 18% said they could not afford as many products for economic reasons.

The nutritional factor

While price and convenience are important factors in the baby product categories, parents are also increasingly interested in the nutritional value of the foods they buy for their babies and toddlers, said Christine McNerney, VP of merchandising operations and home, health and beauty categories at online retailer Thrive Market.

“Parents are looking for snacks and foods that provide a nutritional boost, with features like high protein and low sugar, but are also on-the-go and convenient,” she said. “Thrive Market members are looking for better alternatives to the conventional products they grew up with, and for more convenient formats like pouches, snack packs and bars.”

Thrive Market’s baby and infant nutrition sales have grown by high double digits over the past two years, McNerny said. In addition to the sales growth in the baby food categories, the online retailer has also seen high double digit growth in baby and infant supplements and personal care.

“We expect to become an all-encompassing destination for families,” she said.

According to McNerney, Thrive Market’s membership base is increasingly shifting toward new parents and young families, now making up about 65 percent of the company’s new members.

“Ensuring we can meet all of our parents’ needs at every stage of life is a top priority for us, and we plan to continue expanding the range to achieve this,” she said.

Building Long-Term Loyalty

Grocery store competitors like Target and Amazon are also looking to become one-stop shops for baby care. They want to not only provide baby food and other baby essentials like diapers, wipes and HBC products, but also support new and expectant families.

“I think retailers are looking for loyalty,” said Jen Saxton, founder and CEO of Tot Squad, a platform that connects young and expectant families with experts who offer services such as sleep advice, nutrition counseling and car seat installation. “If Amazon can be the destination where you can not only get the products you need, but also the support and the services, then they really become that one-stop shop where you can find everything you need, and that drives loyalty for them.”

Tot Squad launched its services, often given as baby shower gifts, at Target last year and has quietly launched on Amazon, with plans for an official announcement in June.

While Tot Squad’s services aren’t currently available in traditional grocery or drugstores, Saxton says she sees both retail channels as potential partners in the future.

“I definitely think there’s opportunity there,” she said, noting that one of the company’s most popular services is advice on diet and nutrition strategies.

These services can range from helping expectant mothers choose the right prenatal vitamins to providing proper nutrition for nursing mothers and for the babies themselves.

“We expect many of our diet and nutrition services to fit more into the grocery sector in the future,” Saxton said.

Mother’s Day Ties

Some retailers used the recent Mother’s Day holiday to strengthen their position as a destination for young families.

At Jewel-Osco in Chicago, for example, the Albertsons banner launched a new campaign earlier this year to honor moms, culminating in an awards ceremony just days before Mother’s Day. As part of the campaign, which was sponsored by Huggies, Kimberly Clark, Kraft and Mondelez, Jewel-Osco donated $20,000 to the Junior League of Chicago for its Bundles for Babies diaper drive.

The MOMents promotion was created by Tina Browen, senior marketing director at Jewel-Osco, a Jewel-Osco spokesperson said Supermarket NewsThe campaign encouraged customers to nominate deserving moms for the chance to win prizes and groceries. MOMents received more than 10,000 entries during the four-month online nomination process, and from those entries, surprise grocery deliveries worth $500 were awarded to 50 local moms. Another 50 women were selected for the May 9 MOMents celebration at the Four Seasons Chicago. Other prizes included a $500 Jewel-Osco gift card, a pair of Justin Timberlake tickets and a night at the Four Seasons.