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No Kidding – Children Are Consumers, Too!
NPD's data underscores why marketers shouldn’t underestimate the influence of kids age 12 and younger
Get details . . .
It still comes as a surprise to many that kids – even those age 12 and younger – have enormous spending power in the United States. And with birthrates rising, it’s a market that grows every year. The increasing retail importance of this age segment leaves companies with a daunting task: getting to know these young consumers and uncovering what engages them most.
Several NPD reports – including the new Kids Market Monitor – deliver comprehensive information about kids and the products they’re buying. This suite of reports is helping marketers and retailers make sense of what kids want, explore kids’ increasing focus on technology, and uncover ways to instill kid-oriented products with that elusive “cool factor.”
Toys: kids still love ‘em
While the toy industry has remained relatively flat in previous years, sales to kids under 12 have experienced moderate growth. Sales of toys to kids 12 and under comprise nearly $17.3 billion of the $22.3 billion toy market. Most of the industry declines have come from kids 13 and older, and from a decline in purchasing by toy collectors.
In fact, the younger the kids, the more engaged they are with toys: 96 percent of kids between the ages of two and four play with toys every week, compared to 81 percent of kids between the ages of five and 12.
“Toys based on licenses from movies and TV shows play a pivotal role in the toy industry,” said Anita Frazier, NPD toys and games industry analyst. “While licensed sales remain a steady 25 percent of all toy sales each year, the category of toys that is impacted the most changes depending on what property is hot that year. In 2005, action figures and accessories reaped the benefits from ‘Star Wars,’ while in 2006 the vehicles category rose from ‘Cars: The Movie’ licensed toy sales.”
Sales of Total Traditional Toys to Kids 12 and Under
Total U.S. Dollars - In Billions
Source: The NPD Group/Consumer Tracking
Games make inroads
Total video games and PC games sales reached $13.5 billion in 2006, a marked increase of 18 percent over 2005. Kids age 12 and younger represented 34 percent ($4.3 billion) of 2006 dollar sales – a slight decline from 36 percent ($3.8 billion) in 2005.
As industry attention turned toward next-generation console introductions, the Wii and PlayStation 3, during the 2006 holiday season, surprisingly it wasn’t the newer systems that drove the increase in kids’ video games sales. Instead, the largest sales growth came from sales of a “previous-generation” system, PlayStation 2, and handheld systems Nintendo DS and Game Boy Advance.
“The PS2 should continue to be a contender for kids’ time and dollars going forward,” said Frazier. “These systems are now very affordable and software is favorably priced relative to the newer platforms, making them a natural choice for kids. That said, we expect that the Wii will gain momentum in 2007 as a reasonably priced, family-oriented game system.”
Apparel, footwear and the “cool factor”
The kids’ apparel market represented approximately 18 percent of the $190 billion U.S. apparel industry in 2006. Overall dollar sales increased 8 percent for kids ages 12 and under, outpacing the 5 percent growth rate for the total apparel industry.
In footwear, kids under 12 accounted for 15 percent of the $43.7 billion 2006 U.S. footwear industry. Overall dollar sales increased 7 percent for kids in this age segment, outpacing total footwear industry growth of 5 percent.
“Private-label brands are a key segment within the kids’ apparel and footwear industries,” said Marshal Cohen, NPD’s chief industry analyst. “Within both apparel and footwear, top brands such as Disney, Carter’s, Nike, and Skechers are mixed with private label brands from Wal-Mart, Target, Payless, and J.C. Penney. But when it comes to sales for kids, what matters most is what’s considered ‘cool’ among peers.”
CDs, DVDs . . . and digital
Most kids are still acquiring movies and music in physical formats (DVDs and CDs); however, by the time kids are seven years old, more than 10 percent are downloading music or video content.
Approximately 30 percent of kids between six and 12 are using a portable digital music player. These digitally-savvy kids not only listen to music an average of five hours per week, but they also purchase an average of three songs per week. NPD data shows many of these kids are also listening to music on their own personal digital music players (90 percent) and PCs (42 percent). In addition to watching DVDs the old-fashioned way, about 20 percent are watching movies on their PCs, portable digital music players, or video game systems.
Russ Crupnick, NPD vice president and entertainment industry analyst, said, “The future is in flexibility and portability, if kids and teens are an indicator. They don’t know boundaries on obtaining or using music or video. And portable devices and their accessories are an important status symbol for our youngest customers.”
Food: beyond PB&J
The majority of all meals eaten by kids are prepared and eaten at home. Older kids (ages six to nine) and Tweens (ages 10 to 13) are more likely to eat “carried meals” (i.e., “brown bag” meals) on weekdays. Fruit is the top food included in these meals, followed by chips, peanut butter and jelly sandwiches, cookies, and crackers.
“Kids younger than 10 are motivated to choose foods in large part because they’re perceived as fun and they want a treat or reward,” said Harry Balzer, NPD vice president and food industry expert. “Kids account for almost one-third of all consumption of snack-oriented, convenience food products. Among those products, fruit is the top choice consumed by kids, but consumption frequency for fruit declines markedly as children age.”
When kids eat meals prepared away from home, many of their choices resemble their in-home choices. Among the fastest growing foods consumed away-from-home by kids are chicken, fruit, bread, hot dogs, and macaroni and cheese.
What’s in store?
Many of the industries targeting the youth market are enjoying healthy growth, and growth in this segment often outpaces overall industry growth. As kids become even more active consumers of hard goods, soft goods, food products, and entertainment, NPD expects this growth to continue. With the forecasted increase in the U.S. birthrate, kids 12 and younger will continue to be a crucial consumer segment for manufacturers and retailers.
To learn more about the new Kids Market Monitor and other reports focused on markets that appeal to kids, contact your account representative or Charlie Camaroto at 866-444-1411 (contactnpd@npd.com).
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