Durable Juvenile Products PDF

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Durable Juvenile products in Europe...

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Durable juvenile product industry: baby strollers, safety car seats in China, US, and Europe Introduction A research conducted in 2014 revealed that the global market for durable juvenile products has continued to increase across the globe with Europe having the largest demand followed by the U.S. (North America). Although Europe has been on the top, its market growth for durable juvenile products has been shrinking by single digits in the recent years as a result of economic turmoil in the Euro zones. On the other hand, a sharp growth of the juvenile products market has been experienced in china in the last few years.1 The current report aims to understand the landscape of the baby strollers and safety car seats industry in Europe, China and U.S. and the dynamics in competition in each geographical zone as well as the market and penetration of this industry from various perceptions. A. Understanding the market size of durable juvenile products The durable juvenile market has experienced exponential growth regardless of reduced birth rates and economic crisis. Parents, more women in the workforce, emphasis on the need to increase child safety and wellness, growing awareness on the right ways of parenting among others are some of the factors that have contributed to the increased market growth.2 Each segment of the durable juvenile products has its own market size. Through presentation Azoth Analytics depicts the market sizes of these segments including the strollers and the safety belts.3 China enjoys a fast annual growth of about 14.8% in the past seven years. Such a momentum is expected to continue until 2020. However, China’s durable juvenile market is still under 1 https://www.prnewswire.com/news-releases/global-market-for-stroller-childrens-car-safety-seat--cribs-durablejuvenile-products-forecast-to-2018-266564401.html 2 Ibid. 3 http://azothanalytics.com/admin/samplepdf/19-09-16-07-42-30-sample-Global%20Durable%20Juvenile %20Products%20Market-%20Trends,%20Opportunities%20and%20Forecasts%20(2016-2021).pdf

developed when compared to Europe and U.S.4 It is hoped that the industry will continue to grow in china due to: i) increased birth rate, ii) increased acceptance of nurturing through science, and iii) high disposable income and increased parental attention due to one child policy.5 Moreover, Chinese parents have unanimously agreed on the need to use child safety seats in their vehicles due to law demands. Unlike Europe and U.S, China never had regulations governing the compulsory use if seat belts or even use of safety seats for children.6 Stroller forms about 48% of the market in China compared to other brands that stand at 31%. On the other hand, the children’s car safety seat accounts for small percentage in china market although it has high potential for growth. For instance, by 2014 it had grown to over US$ 45 million.7 In the US, the market has continued to grow steadily and accounted for over $4,700million by 2014. On the other hand, in the Europe, the market has grown steadily to over $4,600 million. In terms of the products, children’s car safety seats account for the largest durable juvenile products market in the US with over 23% of the sales arising from these products. In the Europe market, strollers represent the largest types of durable juvenile products with over 24% of the sales. B. Historical and current penetration in these areas Based on the types of companies disseminating the durable juvenile products, market penetration stands out at different levels with each having a different history. Therefore, understanding the historical and penetration aspects of these companies requires an effective analysis of the global key players such as Goodbaby among others. The historical retail sales of durable juvenile

4 http://www.hkexnews.hk/listedco/listconews/sehk/2010/1124/01086/EWPGBABY-20101105-09.pdf 5 Ibid. 6 http://en.people.cn/n3/2016/0226/c98649-9021742.html 7 http://www.hkexnews.hk/listedco/listconews/sehk/2010/1124/01086/EWPGBABY-20101105-09.pdf

products in china has tremendously increased from US$ 1,039 million in 2005 to over US$3,400 million in 2014. This is about 13. 8% increment between 2010 and 2014.1 By 2009 children’s car safety seats, cribs, bicycles and tricycles, e-cars and other durable juvenile products accounted for 13.1%, 0.7%, 23.9%, 22.0%, 10.1% and 30.1% respectively with the safety seats and cribs enjoying a rapid growth. Turning to US the history shows that there has been a steady growth in durable juvenile products particular in the retail sales. By 2014, the sales stood at approximately $4,700 representing a 5.5% increase from 2010.1 On the other hand in Europe, the durable juvenile products have gone through exponential progress to realize a projected growth of approximately US$4,600 by 2014. This represented a 4.4% increase between 2010 and 2014.1 Focusing on the penetration aspect, it essential to understand that it is based on several factors. A major form of penetration for the durable juvenile companies has been through acquisition. For instance, Goodbaby acquired two durable juvenile products brands in 2014 i.e. cybex and Evenflo. In order to gain penetration in Europe and US.8 Acquisitions has been the major foundation for building strong foundation in Europe and US. Mostly penetration is for foreign market. Goodbaby is well established in China. Thus, analyzing its penetration would be less significant. C. Who are the largest brands? what’s the market share? Currently the largest brand of durable juvenile products is Goodbaby international holdings although there are other brands such as Dorel and Britax. Goodbaby is the focal point as it has grown large due to acquisitions and even quite recently it announced that it will be acquiring the Oasis Dragon Limited.9 With Chinese origin, the company stands out to be the largest supplier of 8 http://www.cinda.com.hk/attachment/201507101118101_en.pdf 9 http://www.scmp.com/business/china-business/article/2103975/chinas-goodbaby-international-buy-affiliatebaby-products

strollers in both the US and Europe as well as China, covering about 70% of its sales in these regions.10 This brand still has the largest market share in china and recently, its shares closed up 10% to HK$3.60 after a month. Comparatively, in the overseas, that is, US and Europe, Goodbaby is working hard to dominate the market through a diversified client base, embracing more innovation and remaining active in its sales.11 D. what is the price point of these and how are they differentiated? The price point of both strollers and safety car seats vary depending on the brand. Parents may be willing to spend more in the notion of increasing of safety. For instance, Beyoncé’s daughter was spotted sometimes back around town with an infant car seat worth $440. This could be expensive to others as some go for even $44.12 In China, the spending is 60-70% below that of the US and Europe. All in all, there is no specific price point as most parents bother less about price in comparison to safety.1 So, parents willingly pay for high prices for much high quality products. Turning to product differentiation, it remains unique to each country. For example, Europe uses ISOfix for car seats while the US uses LATCH system. The standards system for European=LATCH system OR seat belt system + one other anchor point (either top tether or load leg). American seats lack the third anchor.13 More importantly and the most conspicuous difference is that a carseat lacks wheels and a stroller frame while the stroller comprises both. 14 E. What are the gross margins of the top companies producing strollers/safety seats Goodbaby is one of the largest producer of durable juvenile products with about 80% of its revenue coming from overseas. The global stroller market showed a 5-year CAGR of 6.4%. the 10 https://www.evenflo.com/news/news-2014-06-06a.html 11 https://www.kimeng.com.hk/upload/research_reports/Goodbaby_20130118_IC.pdf 12 https://www.nytimes.com/2015/06/27/your-money/car-seats-that-make-sure-the-baby-on-board-is-snug-andsafe.html 1 Ibid 13 https://mbeans.com/spillingthebeans/baby/car-seats/european-standards-vs-american-standards-car-seatedition/ 14 https://www.baby-logic.com/blogs/news/113336324-doona-it-s-a-car-seat-and-a-stroller

company estimated that its sales will grow by 8.9% in 2017. From 2014, the gross margin of Goodbaby has steadily increased annually from 25% in 2014 to 31% in 2017.15 F. Can you go to amazon and create a table on # of brands within different price range? Beginning with strollers the price depends on the brand and the type of stroller. The various types of strollers existing include joggers, lightweight, prams, standard among others. On the other hand, the brands include summer infant, Chicco, Ethan & Emma, gb, jeep, Graco, and Badger basket.16 Brand Price range ($) Summer Infant 50-80 Chicco 80-479 Ethan & Emma Currently 29-34 Gb Over 100-299 Jeep 4-105 Graco Over 50-280 Badger Basket 48 A similar case applies to car seats. The common types include other accessories such as car seat bases. While the featured brands include Baby Trend, Graco, Britax USA, Chicco, UPPAbaby, Doona, Diono etc. 17 Brand Baby Trend Graco Britax USA Chicco UPPAbaby Doona

Price range ($) 49-145 70-over 480 Over 150-almost 300 174-410 24-430 171-499

G. Market share and brand awareness of goodbaby, cybex, evenflo. 15 http://www.niuniuwang.cn/wp-content/uploads/2016/07/H3_AP201607060016417124_01.pdf 16 https://www.amazon.com/baby-strollers-tandem-jogger-double-triple/b?ie=UTF8&node=166842011 17 https://www.amazon.com/Infant-Car-Seats/b?ie=UTF8&node=166838011 15 Ibid 10 Ibid

Goodbaby has the largest market share in the sales of strollers and car seats. The net profit growth for this company is as a result of improvement in Cybex and Evenflo GPM (from 53% & 22% in 2014 to 58% & 24% in 2015).15 The Evenflo can reach a potential of 27% in 2017. Goodbaby acquired Cybex and Evenflow.15 These two after 2014 became the self-owned strategic portfolio brands of Goodbaby. Evenflo had a good market share in the US of about 70%.10 While Cybex was the leading producer of car seats in Germany. 18

18 http://www.dgap.de/dgap/News/corporate/goodbaby-international-holdings-limited-announces-annual-resultsestablished-onestop-vertically-integrated-business-model-through-successful-integration-cybex-and-evenflorevenue-increased-billion-with-accelerated-growth/?newsID=856803...