We’ve Come A Long Way Baby
Parents are continually searching for products that will make life with an infant a little bit easier, which these days include a wide variety of tech-enabled products and services meant to help babies sleep longer, eat better, and stay safer. As the juvenile products’ industry has increasingly embraced advancements in technology, new parents are faced with a litany of new product choices, including cradles that rock themselves, wearable devices that monitor sleep patterns, temperature, oxygen levels, and heart rates, and highly engineered baby monitors controlled by smart phones. While the dizzying array of evolving product options may be overwhelming for new parents, it continues to fuel growth in the U.S. durable juvenile products’ market, which grew to $6.4 billion in retail sales in 2016, according to The NPD Group.
Beyond growth driven by the emergence of tech-enabled products, several demographic and spending trends also continue to spur expansion in the market for goods and services for infants and children. Specifically, the category benefits from over 3.9 million annual births each year in the U.S., creating consistent demand for new products. Parents and grandparents prioritize the health and well-being of their children and grandchildren, often sparing no expense in purchases to ensure they have the “best of everything,” from cribs to strollers to car seats. While rising discretionary income contributes to the spend on these products, the juvenile products’ industry also remains less susceptible to economic downturns to some extent, as families are less willing to cut back spending on children versus other areas within a household budget.
As a result of these positive dynamics, the juvenile products’ industry is an area of continued interest for private equity investors, contributing to a robust M&A market within this attractive subsector of the broader consumer products’ industry. Strategic buyers in the sector are also focused on pursuing acquisitions of not only well-known trusted juvenile brands, but also emerging companies that have developed many of the new tech-enabled products that have revolutionized the market in the past decade. Companies with strong e-commerce platforms are of particular interest to potential acquirers, as Amazon and other online channels have become an increasing resource for new parents looking to find the newest, safest, and most useful products.
Ongoing demand for acquisition opportunities from both strategic and financial buyers bodes well for the innovative companies developing game-changing products and services to enhance the quality of life of parents and their children, as owners and entrepreneurs will have various options should they wish to pursue a sale of their business.
Source: The NPD Group