Kiddie luxe is still alive and well

By Helaine Olen for The Big Money

October 15, 2009 / MSN Money

When Fairchild Publications announced in 2005 that it was launching Cookie, a magazine for the high-end parenting market, it felt like ideal zeitgeist timing. You couldn't walk down the streets of a major American city without getting run over by a perfectly coifed and dressed yummy mummy pushing an infant in a $900 Bugaboo stroller and with a $200-plus diaper bag slung over her shoulder.

"There's a lot of product out there that is looking for a sophisticated audience," explained Fairchild's then-President Mary Berner in an interview with The New York Times.

And Cookie celebrated it all. The magazine promoted a never-ending stream of high-end, luxurious products for the under-5 set, from architecturally designed changing tables for infants to cashmere sweaters for toddlers.

Then came the recession. Putting a child in hand-me-downs went from social faux pas to hip parenting statement in elite urban parenting precincts. Luxury baby sales are declining across the board, with name brands such as Bugaboo rumored to be suffering double-digit sales declines.

And now Cookie itself is no more, unceremoniously shuttered by current owner Condé Nast, a victim of the severe advertising contraction and changing mores in the parenting world.

Yet while it would be nice to think Cookie's demise signals the end of conspicuous consumption and over-the-top parenting, that just isn't so. As it turns out, the kiddy luxury market has morphed, protean-like, in response to new conditions.

"Cookie is a bellwether, and it's not surprising that it would close this year," says Alan Fields, a co-author of "Baby Bargains." "But it's not like everything collapsed at the higher end of the market. The luxury market is not universally dead."

Observers generally agree that the high-end baby-and-children's market has probably contracted between 10% and 20% since late 2007, as the housing crash, stock market losses, rising unemployment and the continuing recession put the kibosh on much kid-related discretionary spending.

But areas of the high-end children's market continue to thrive. What's hot: virtuous spending on Junior. "Green is the new black," observes Field, pointing to the huge number of manufacturers and retailers who have turned to environmentalism to keep the red ink at bay.

Take the sudden prominence of stroller maker UPPABaby, whose high-end Vista stroller features a sun shade that provides baby with SPF 50 (recommended retail price: $669.99) and is selling briskly.

"We use organic products whenever possible," says spokeswoman Sarah Hines, who adds that the fabric used in the company's bassinet is lined with "organic soybean fiber and cotton."

An investment in social capital

The Web sites of many still-successful upscale manufacturers proclaim their commitment to making the Earth a better place for parent and baby. Diaper-bag maker Fleurville points out it uses "environmentally friendly fabrics and technologies" in its products, while rival Petunia Pickle Bottom promotes an "organic snuggle set."

Another technique involves adding a seemingly low-end line. "The sky is no longer the limit," says David Jacobs, the owner of Mini Jake infant-and-toddler supply store in Brooklyn, N.Y. Luxury infant furniture manufacturer Oeufnow has a crib it sells for less than $600, a discount of 30% from the original "classic" crib but still a heck of a lot more expensive than a crib retailing from $100 to $200 at Target or Wal-Mart. Even high-end Bugaboo got in on the trend, adding a relatively low-cost $529 stroller dubbed "The Bee" to its $600-$1,000 product line.

Michael Silverstein, a retail analyst at the Boston Consulting Group and the author of "Women Want More," points out that millions of Americans are producing two children at most, and having them at older ages, which increases their desire and capacity to spend money on them.

Silverstein says marketers successfully reach parents with the message that buying PVC-free infant furniture or enrolling a kindergartner in high-end tutoring represents an investment in the child's future social capital. "I don't buy that we have a permanent decrease in consumption or lifestyle choices. People will continue to invest in their children," Silverstein says.

Pitching education offerings is a strategy undertaken by exclusive New York parenting gathering spot Citibabes, which opened its doors in 2005. Sporting a $2,000-plus annual membership, it advertises itself as a luxury oasis for moms and their tots, a SoHo House for the infant set. This year, Citibabes closed its beauty spa and turned it into a tumbling room. Membership is up, and a second location recently opened in suburban Scarsdale, says spokeswoman Kelley McMillan.

Companies with access to equity seem to be positioning themselves for the next great parenting splurge. Specialty retailer Buy Buy Baby has stuck with its expansion plans through the recession, opening four stores in the first half of its fiscal 2009. It plans to open eight outlets in the year's second half. Higher-end Giggle opened two stores this year (in Chicago and Washington, D.C.) and plans additional expansion. On the goods side, parenting-product powerhouse Maclaren recently acquired the boutique modern-nursery-furniture company Netto Collection.

Bugaboo, too, seems to be anticipating a return of free spending in the infant-and-toddler market. It debuted a version of the Bee at the annual ABC Kids Expo in Las Vegas. Bugaboo told The Big Money it was weighing what to charge for the revamped Bee, but those who saw it at the trade show say they were told that it will feature a significantly increased price, bringing lowest-end Bugaboo back above the $600 mark. Perhaps Cookie crumbled too soon?

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