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Can Superdry crack the kidswear market?

Struggling Superdry is betting on a new kidswear collection to help turn the business around, but its success will hang on the strength of the product, industry experts have said.

Superdry Kids will launch for autumn 19 through wholesale accounts, online and in select Superdry stores. The collection will be aimed at children aged six to 12 and will comprise around 200 items, including T-shirts, jackets and sweatshirts for both sexes, polos and joggers for boys and dresses and leggings for girls.

Superdry chief executive Euan Sutherland said the launch was “incremental” revenue the business had not been taking advantage of: “If you look at our customer base, 25% are aged 16 to 25 years old, and 15% are under 16. We are under-serving that [younger] segment. We believe it is an opportunity to introduce the brand to a younger customer. I think it’s an incremental segment we have missed out on for years.”

He added: “Our wholesale partners globally have been crying out for a kidswear offer for some time. Following the overwhelming interest, we will be selling it into three times more wholesale accounts than we previously planned to.”

Analyst GlobalData reports that the UK childrenswear market is worth £5.4bn a year, and is forecast to grow 12.4% between 2017 and 2022. However, despite the opportunities, kidswear specialists and analysts have warned of the sector’s competitiveness.

“Kidswear is dominated by the value players, and it’s tough to compete with that on price,” said Kate Ormrod, lead analyst at GlobalData. “How are they going to justify their prices? They might be able to steal market share from Marks & Spencer and Next, but it will depend on the product. There’s plenty of opportunity and it’s one of the easiest ways for them to expand, but we’ll have to see once the product arrives. I hope it will focus on design and fit, and be a bit more fun than their adult offering.”

Frances Bishop, owner of kidswear independent The Pud Store, said the market is growing but remains challenging: “Everyone thinks childrenswear is easy – it’s not. Parents are very picky. They want to know the fabric composition, and the size charts have to be exactly right or they won’t buy.”

She added: “I think they’ll do well, but I’m surprised they’re not doing matching styles to the adult range. That would really appeal to influencers and get the people who are already brand ambassadors for them to buy into it.”

A spokeswoman for kidswear etailer AlexandAlexa agreed on the challenge to get the product right: “A clear marketing strategy and genuine point of difference is key. There is a real brand loyalty within the kidswear sector. Parents want to know their children’s clothing is built to last, made of fabrics that are suitable for kids, and not to mention brands and styles they will want to wear.”

The launch comes at a difficult time for Superdry. Underlying profits before tax for the 26 weeks to 27 October dropped 49% year on year to £12.9m, as a result of “unseasonably warm” weather and a weakening, discount-driven market.

Fiona Cincotta, senior market analyst at City Index, said the kidswear launch is a step in the right direction, but believes Superdry must focus on its fundamental issues: “This could be the start of something more interesting that could help the business.

“What’s happening at Superdry is not working. A lot of problems have led to profit warnings and the constant run of downgrades will only harden suspicions that the Superdry brand is simply no longer cool, even as the company expands into to new categories.”

 

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