The $288B Baby and Kids Market Isn’t One-Size-Fits-All
The baby and kids market provides several customer segmentation examples, both for first-time parents and experienced parents.
This large market continues to grow, totaling as much as $288 billion. Product categories in the 2023 US baby and kid market include:
- baby and kid clothing ($28B)
- car seats ($8B)
- diapers ($7B)
- pregnancy and BABY skincare ($13B)
- strollers ($3B)
- cribs ($3B)
- IVF (in vitro fertilization) ($1-$3B)
- kids’ food and beverage $139B
- child care ($88B)
Retailers like buybuy BABY, Babylist and Babies “R” Us who operate stores that specialize in the baby products market are transitioning. Digital first Babylist opened its first store in 2023; Babies “R” Us will be opening stores in Kohl’s in 2024, and buybuy BABY is selectively operating stores in the Northeast.
buybuy BABY Customer Segmentation Example
The large baby and young child market is experiencing considerable disruption in its retail landscape with the 2023 closure of over 100 buybuy BABY Stores. Prior to the closures, buybuy BABY claimed to rank #1 in strollers and baby safety (e.g., baby monitors) and in the top five for car seats, travel gear, kids’ furniture, kids’ bedding and décor. This customer segmentation example shows that being #1 doesn’t insulate a brand from business woes.
Looking at customer segments, buybuy BABY’s store closings meant parents and gift givers who preferred to shop at “the most popular retail brand in America” were forced to pivot to other stores or online. Here’s a quote from one pregnant mom posting in a local-area mom’s group on social media:
“Hey all-knowing moms! Now that buybuy BABY is closed, where do people do their baby registries? I’m feeling lost, lol.”
Buybuy BABY shoppers looked elsewhere for strollers, furniture and apparel among other categories. According to Numerator, Target and Amazon were the top choices for new and expecting parents who previously shopped at buybuy BABY.
In 2020, buybuyBABY Investor Day shared this retailers’ estimates of the largest baby categories that they participated in as:
- Strollers, car seats, baby safety and travel gear ($10B)
- Kids’ furniture and kids’ bedding and décor ($5B)
- Toys and education (for babies) and baby clothing ($2B)
Later in 2023, eleven buybuy BABY Stores were reopened by new owner Dream on Me who purchased the buybuy BABY brand and its digital site. The buybuy BABY stores that are currently open are in the Northeast states of CT, MD, DE, NJ, NY, MA and VA, meaning that some parents now have access to buybuy BABY stores, but many still do not.
With a typical store size of 40,000 square feet, buybuy BABY stores promise:
“variety, quality and value in babyitems such as strollers, car seats, BABY furniture, BABY gear and more.”
Under its new ownership, buybuy BABY is focusing on a “thoughtfully curated assortment,” with more emphasis on brands and an “elevated branding experience.” The company also promises a streamlined online checkout, as well as “a digital and in-store education program” and seeks to become a “digital first, omni-always retailer.”
Customer segments that buybuy BABY attracts are:
- Variety and Value Seekers: parents who prefer to shop several brands in each category and are looking for good value. They appreciate the chance to see the product in the store, though they also do research online. This segment is the primary target for buybuy BABY’s retail stores.
- Creatives: Gen Z and Millennial parents ages 18-40. Younger shoppers who are looking to impress and move more frequently. The addition of a first time baby to this household will likely cause another move, if they can afford it. This segment was identified in a previous Bed, Bath & Beyond segmentation, and is a secondary target for buybuy BABY’s retail stores.
- Gift Givers: Friends and parents of the expecting parent(s).
Babylist Customer Segmentation Example
Digital first Babylist brand opened its first retail store in August 2023 in Beverly Hills. Babylist, founded in 2011, claims over half of first-time parents with a registry on its site.
At 18,000 square feet, the Babylist flagship store and the Babylist online site target:
“Expecting parents who invest 40+ hours researching to add products to their registry.”
Notably Babylist (28%) ranks well behind Target (82%) and Amazon (77%) for former buybuy BABY customer preference. This data suggests that buybuy BABY primarily appeals to different customer segments than Babylist.
Babylist promises its customers unbiased information, support and ease of finding and registering for what they need. The new Babylist flagship stores offers celebration, community and curiosity.
We recently reviewed Babylist’s brand strategy along with seven other retail brands.
Babylist’s customer segments include:
- Demanding Content Seekers: These first-time parents are highly demanding in their search for “the best” choice for their baby (and themselves). They invest over 40 hours researching products to add to their registry. They tend to be older parents (as first-time parents), who may have experienced difficulty getting pregnant. They are also more affluent. They are the primary target for Babylist.
- Online Variety and Value Seekers: parents who prefer to shop several brands in each category and are looking for good value. They prefer to shop online and will also buy online.
- Gift Givers: Friends and parents of the expecting parent(s).
While Babylist clearly targets expecting parents of both genders, 76% of online customers are women and 24% are men. For Babylist, most website visitors are 25-44 (58%), followed by 20% from 55+. Specifically:
- 38% from 25-34
- 20% from 35-44
- 16% from 45-54
- 5% from 18-24
- 20% from 55+ (likely gift givers)
In comparison, buybuy BABY’s website draws a similar age mix to Babylist, with slightly fewer women, at 70% women, 30% men.
Babies “R” Us Customer Segmentation Example
Babies “R” Us is another well-known retail brand making its return to stores. Babies “R” Us stores closed in 2018, along with Toys “R” Us. However, a new 10,000-square-foot Babies “R” Us retail store was scheduled to open in the American Dream mall in 2023. This customer segmentation example shows the power of a brand, even after years of dis-use.
WHP Global (owner of Babies “R” Us) announced a partnership with Kohl’s to offer Babies “R” Us shops that offer “baby gear, furniture, activity and more” in more than 200 Kohl’s locations by fall 2024.
Babies “R” Us shop size in Kohl’s stores will range from 750 to 2,500 square feet. For perspective, Kohl’s full-size stores are approximately 80,000 square feet, while its small format stores are 35,000 square feet.
The baby gear, furniture, feeding, safety and bath product offerings will “complement Kohl’s existing assortment of baby apparel.” Kohl’s baby apparel brands include: Boppy, Carter’s, Chicco, Delta Children, Fisher-Price, Graco and Skip Hop.
The stated goal for Kohl’s in opening Babies “R” Us is to attract a younger shopper for products they need.
Overall, Kohl’s primarily targets:
“middle-aged women who shop for their families and appreciate rewards and discounts.”
Babies “R” Us customer segments in Kohl’s include:
- Value Conscious Reward Seekers: This is a core consumer segment for Kohl’s overall, and some of these will overlap with expecting parents, and/or be parents of expecting parents. These consumers will like the fact that the Babies “R” Us purchases will count towards the Kohl’s rewards program.
- Gift Givers: Friends and parents of the expecting parent(s).
Luxury Stroller Customer Segmentation Example
Beyond big-box store brands, there are many customer segmentation examples in individual baby and kid product categories. Strollers are a highly visible category, with the brand name of the stroller easily identified. As such, they are like vehicles or clothing in that they can serve as badges that make a statement about the person using them in public. Recent work led by Insight to Action identified four segments of online luxury strollers and one off-line segment of luxury stroller customers. Note that this does not include the most price-driven consumer segments.
Customer segments in luxury strollers:
- Style & Innovative Trendsetters: Budget is not a concern, do research to find the best products with the features and aesthetics desired. Don’t compromise on style or functionality.
- Curated Experience Seekers: Shop differently and prefer to shop at smaller stores or websites that offer curated high-quality products.
- Convenient Quality: Time is money and look to save time by doing all research and shopping online, preferably in one site. Amazon does well with this consumer segment.
- Value Conscious: Like to get quality products for baby, but that doesn’t mean spending top dollar. They look for price and discounts to get the most for their money.
- In-Store Luxury Shoppers: Do some research online, but prefer to shop in-store and appreciate the expertise of sales associates to help make the right choices.
Tech-Enabled Parenting Customer Segmentation Example
Consumers’ interest in tech-enabled parenting provides another customer segmentation example.
Among new parents we’ve queried with $100,000+ annual household income, we’ve seen big differences on the interest in using tools like Owlet and SNOO, which we wrote about as growth strategy template examples.
- The Tech Parenting Rejecter: For example, first-time mom Josie describes why she avoided tech-enabled products.
“We bought 100% of our baby products online, including car seat, crib, and stroller. However, we decided against tech products like the heart rate socks. On first look, they are interesting. But after thinking about it, we realized could be kind of stressful, if it goes off by accident. You need to figure out how to trust your instinct. We also decided against the SNOO for the same reasons. We didn’t want to buy products we don’t need, and we have a small apartment. Still, one or two times when we were up all night we wondered if we made the right decision on the SNOO.”
- The Tech-Enabled Parenting Acceptor: First-time expecting dad Arron provides a counter example:
“We are down for anything that helps. We will get the SNOO and the Owlet.”
While we’ve found so far just two groups of tech parenting acceptors and rejecters, it’s likely that there will be additional segments emerging who find tech valuable for certain parenting applications and not for others, so that a more nuanced approach will be valuable going forward.
While safety and tech-enabled parenting are growing areas, Owlet 2023 revenues were $54 million, down from 2022 revenues of $69 million and 2021 revenues of $76 million. Happiest Baby, maker of the SNOO bassinet, reported revenues of just under $100 million in 2022, reportedly down from earlier estimates. These declines suggest consumers are balking at the price tag of some tech-enabled parenting brands (and, perhaps, the impact of technology on raising children).
Parent Customer Segmentation Example: 10 Approaches
We’ve identified 10 other customer segmentation examples and approaches for moms, which can also be applied to parents in general. Some leverage demographics, while others bring in additional variables, such as shopper type or a needs-based approach. These include:
- Parents by household income level. For instance: $100,000+, $75,000-$99,999, $50,000-$74,999 and under $50,000
- First-time parents vs. experienced parents
- Needs-based segmentation for a specific product category
- Shopper segments of parents, e.g., The At-Home Worker, The Care Provider, Freelance Gig-Worker, Small Business Owner, The Solitary Confined
- Single kid parents (i.e., parents with one child) vs. multi-kid parents
- Primary breadwinner parents vs. secondary breadwinner vs. non-working parents (i.e., working outside of the home for pay)
- Millennial parents vs. Gen X parents
- Parents by education level
- Parents by cultural and ethnic background,
- Single parents vs. married / partnered parents
- Parents with oldest child ages 0-2 vs. 3-5 vs. 6-9 vs. 10-12 vs. 13-17 vs. 18+ (this is the approach we recommended for segmenting moms in the book I coauthored, Tuning into Mom: America’s Most Powerful Consumer).
Baby Feeding Customer Segmentation Example
Moving away from demographic customer segmentation examples, Insight to Action worked with Beech-Nut to develop a motivational-based customer segmentation for baby feeding. While this work focused on moms, it could be adapted and updated to include dads. The ending samples included over 1,700 moms with children ages four months to 36 months.
In this customer segmentation example, two of the seven segments that emerged used very little baby and toddler food, cumulatively nine percent of category. Two customer segments were not actionable targets for new products. There were five prospective segments that offered marketing targeting and growth potential:
- Premium Seekers
- Career Moms
- Child Pleasers
- Picky Eaters
- WIC Moms
Picky Eaters (moms with children who are picky eaters) primarily were parents of toddlers (ages 12-36 months), making this group a logical target for toddler foods, along with the Child Pleasers segment.
The best customer segmentation examples will depend on the brand’s category.
The last time we quantitatively studied moms and dads, we found significant differences on the importance of various parenting activities, including child’s safety, healthy food/diet and child’s education. For instance, 71% of moms felt that a healthy food/diet for their child was important, compared with 54% of dads. Today’s more involved first-time dads are playing a bigger role in decision-making. Some dads are taking the lead in doing the research for purchases like car seats and strollers.
For more customer segmentation examples, check out the cat food customer segmentation, the minimalist phone customer segmentation, the hotel customer segmentation, or visit our resource page. Or bring your questions and share your perspective at an upcoming open office hours.
