Recently, at the “2024 CBME Maternity, Baby & Child Industry Summit—Navigating China’s Fourth Era of Consumption,” CBME released the significant “2024 China Maternity, Baby & Child Retail Market Report.”

Informa Markets China (Hangzhou) General Manager Xiaoyuan Gu mentioned that the channel for mother and baby products in China is characterized as exceptionally distinctive on a global scale; there is no other country where the mother and baby channel is as strong. Therefore, CBME conducts research on the entire channel annually to share the data.

At present, China’s mother and baby channel is undergoing important changes. Xiaoyuan Gu said that in terms of the macro environment, the fourth era of consumption is characterized by a variety of trends already perceptible to many: slowing economic growth, demographic changes, diversification of consumption scenarios, and the application of digital technology.

Also, the consumer profile is evolving, from pursuing brand names and bulk commodities to a growing pursuit of simplicity and leisure, emotional value, and a shift from seeking basic material satisfaction to increasingly seeking spiritual contentment.

Regarding the maternity, baby, and child consumption market, the industry has moved from an initial period of rapid growth to a stage of refinement and quality, with constant emergence of new consumer groups and phenomena, which has also driven family consumption and the integration of all channels.

Additionally, emotional marketing and personalized services are becoming increasingly important in this era. To some extent, products can be differentiated, but the differentiation of products themselves is not that strong. Hence, enhancing differentiation through more emotional marketing and personalized services has already appeared in the industry, including the evolution of community economy and sharing economy models.

In this large context, what is the current state of China’s maternity, baby, and child channels?

The succession of new enterprises, new stores, and new people is still ongoing.

Three sets of data show that the succession of new enterprises, new stores, and new people is continuing. In every industry today, iteration is accelerating, and the mother and baby industry is no exception. Although many practitioners feel anxious about the current state of the industry, and some are exiting, in fact, more people are entering.

In this survey, one of the questions asked was whether the store was opened before or after 2020. The survey showed that 28% started their businesses and joined the industry after the COVID-19 outbreak.

As of July 10, the data from the pre-registration for the CBME International Maternity, Baby & Child Exhibition also revealed that there are more and more young practitioners, with post-90s and post-00s accounting for 51%, and new users making up 42%. New users are those who have never appeared in CBME’s past database and registered as our audience this year.

These figures also signify that new enterprises, new stores, and new practitioners are constantly entering the industry.

Moreover, compared to the same period last year, the number of pre-registrations for this year’s CBME International Maternity, Baby & Child Exhibition has increased by 30%+. This shows that many new practitioners from other industries are paying attention to this annual event.

At the retail end, the wave of store closures is indeed a phenomenon, but using its own database, industrial and commercial registration information, and Baidu map data, CBME found that the current number of stores is around 180,000. Many stores are still joining.

The mentioned figure also includes comprehensive mother and baby stores, and there are over 80,000 children’s clothing stores. Therefore, the mother and baby store is still a substantial group in the retail format.

In our survey, 54% of stores indicated that they would not change the number of stores this year, but 34% said they would still add some stores, and only 12% suggested they would downsize.

The sales of maternity, baby, and child stores have shown a rebound in 2024, the boundaries between online and offline are increasingly blurred

At the store operation end, based on the survey sample, sales of maternity, baby, and child stores in 2024 have shown a rebound, with 65% of stores maintaining or increasing sales, up 8% from 2023. There are still 35% of stores that have seen a decline in sales, indicating that the industry is rapidly iterating, and the stores that ultimately remain will be those with healthier operations and stronger profitability.

Timewise, those who entered the industry after 2020 tend to perform better; boutique mother and baby stores and stores in county-level towns tend to perform somewhat better.

Another gratifying phenomenon is that the recovery of gross margins in 2024 is better than sales. According to the survey, 62% of stores have increased or maintained profit margins, while this figure was only 49% in 2023. Mother and baby retailers are no longer solely pursuing sales growth but are also concerned about maintaining profits and ensuring more rational and healthy business status.

In terms of customer traffic, it cannot be denied that in-store traffic is still a significant challenge for the mother and baby channel. However, sales not resulting from in-store traffic are significantly increasing, averaging 22.9%, with new customers from non-in-store consumption averaging 18%, and the proportion of those bringing in more than 20% new customers from non in-store consumption reaching 34%.

This data indicates that stores are no longer confined to in-store transactions; the boundaries between online and offline have become increasingly blurred.

Looking at the channels for non-in-store transactions, community groups and mini-programs have the highest sales share, which points to the power of private domains. Of course, public domain channels including Douyin, group buying platforms, Xiaohongshu, Meituan/Ele.me, remain to be exploited by mother and baby stores for customer acquisition and transactions.

At present, boutique mother and baby stores and retailers who opened their stores after 2020 are more likely to use public domains like Xiaohongshu and Douyin.

Milk formula remains the largest category in store sales
Nutritional products are growing online and offline, children’s clothing and footwear need attention from mother and baby stores

Against the background of overall consumption downgrade, the maternity, baby, and child channel is also affected. The survey shows that 44% of stores have seen a decline in the price of best-selling products compared to last year. Not limited to offline channels, the average price of products online in the first half of 2024 also saw a decrease from the same period in 2023. Therefore, adding exclusive products and omni-channel services are some of the measures that stores have taken.

In terms of category structure: Omni-channel wise, the overall proportion of milk formula online and offline has slightly decreased, while nutritional products have seen some increase. The sales share of children’s clothing and footwear in stores decreased in 2024.

Looking at the specific channels, there is a significant difference in category structures between online and offline. The online platform captured data for the first six months from Taobao Tmall, JD.com, and Douyin to break down the structure. Overall, children’s clothing and footwear accounted for the highest proportion on these three major platforms online, followed by children’s carriages and toys, while in mother and baby stores, milk formula is still the core category.

Additionally, nutritional products, mother and baby items, and milk formula are currently the categories with the highest sales and profit growth in maternity, baby, and child stores. Children’s clothing and footwear rank fourth in the fastest growing profit categories and third in those wishing to strengthen operations, necessitating greater emphasis on the management of this category.

In terms of the trend of serving the whole family, the survey shows that 65% of stores want to enhance their products for older children and full family use, with family nutrition as the most emphasized category, followed by family daily chemicals, parent-child outdoor activities, etc. In the process of expanding age ranges and product categories, it is hoped that stores can combine their strengths for more differentiated expansion instead of developing in the same direction.

Of course, in this expansion process, mother and baby stores face some challenges, such as lack of customer habits, insufficient products, limited store space, lack of price advantages, and lack of one-stop supply chain platforms.

Therefore, catering to the whole family and older children is not suitable for all stores, and there are many challenges and issues that need to be addressed. In particular, the core of catering to the whole family and older children still needs good sales and customer stickiness in the mother and baby category. This is the foundation for moving up in age segments and serving the whole family. When stores face challenges even in fundamental mother and baby products, trying to expand further is clearly a pseudo-proposition.

To summarize, the current situation of maternity, baby, and child retail stores is focused on the following five aspects:

First, the number of new and old stores rapidly continues to replace one another, which can stay within a relatively stable range in the short term.

Second, there has been a slight rebound in businesses, and the rebound in profits is better than the sales, encouraging more attention to the healthiness of operations.

Third, the transaction prices have decreased, so stores need to have more cost-effective products or exclusive merchandise.

Fourth, in terms of the scenario, while there are challenges to the customer flow in physical stores, omni-channel capabilities are strengthening with more potential for growth.

Fifth, in terms of categories, it is crucial to strengthen one’s own differentiated secondary category and extensions based on preserving core categories.

There are two keywords here: suitability and differentiation. Regarding the future direction, everyone should avoid moving in the same direction, as this will lead to a lot of destructive competition.

Possibilities for the Future of China’s Maternity, Baby, and Child Channel

Combining the above, what possibilities there are for the future of China’s maternity, baby, and child channel we can envision?

Simply in the core sector of maternity, baby, and child products, whether integration is a trend, whether online or offline will be the core in the future, whether to diversify categories or to go deep into a single category, and whether to explore the possibility of more categories based on baby and child products – all of these are subjects ripe for imagination and discussion.

Moreover, with the addition of AI technology, when intelligent technology is applied to retail, there will be much room for imagination. Therefore, we strongly encourage practitioners in the baby and child industry to shift from the past pattern, where everyone followed a relatively similar model, to a future where a plethora of approaches coexists, maintaining the vitality and sustaining the development of the entire industry.

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