The New Carriage Trade

Alexa is an 11-year-old residing in Southern California with a passion for softball. As she prepared to travel to Moreno Valley in her home state earlier this month for the Amateur Softball Association national tournament, Alexa packed her customized team bat bag?retail price about $50?with two to three high-end bats ($250 to $300 each) and a children's batter's helmet (priced in the $70 to $100 range). Meanwhile, Alexa's cousin Brianna, a high school freshman, prepared to board an airplane to fly from California to Michigan to participate in a club water polo tournament. Airfare: $850.

In the midst of stock market fluctuations and ongoing economic concerns about cutbacks in consumer spending, sporting goods retailers and vendors report that one segment of the business remains solid: sales of children's goods. Industry members say that specialized products such as team sports equipment and backpacks, along with niche categories such as skate and surf, remain resilient to the economic downturn broadly reported in concert with dot-com layoffs and decreased corporate earnings.

And while sales of high-end and designer-named apparel for children are down?reflecting a movement toward value over prestige?early reports on the back-to-school business indicate that solid sales in basic apparel items assure the industry of registering increases of 3 percent to 5 percent from last year. Parents may be opting to purchase kids' apparel at mass merchant and mid-tier price points, but higher volume is compensating for the lower average price, affording the children's sports apparel market small but enviable gains in a retracting economy.

"I don't see sales of the expensive [equipment] slowing down [and] I don't see people changing their buying habits one iota [when purchasing team sports gear for kids]," explains Jim Chick, president of the eight-unit specialty business Chick's Sporting Goods in Southern California, and proud grandfather of the young athletes Alexa and Brianna. "We're just not having any problems selling upscale equipment. We don't see that price is an issue."

While Chick concedes that his stores cater to an "upscale customer," he says parents will "put aside spending on a lot of other things" prior to telling an aspiring Derek Jeter that a $300 bat may not be necessary when playing in a youth championship tournament. Nonetheless, when it comes to sports and "lifestyle" apparel, Chick expects viable increases of between 5 percent and 10 percent in his annual back-to-school tent sale held in August, with parents shopping in full force for bargains.

"We sell a ton of kids' and boys' apparel for back-to-school," explains Chick, noting that he aggressively bought closeouts of spring apparel merchandise at markdowns of 25 percent to 40 percent in preparation for the tent sale?savings that in part are passed on to consumers while still affording Chick reliable margins of about 40 percent. "[Parents] are more price-conscious in the small, youth sizes. There is more price sensitivity in the 8- to 12-year-old [market]."

Chick anticipates sales of beach apparel?also referred to as California lifestyle apparel?to be up a "few points" as parents purchase top brands such as Quiksilver and Billabong versus "designer" brands such as Polo or Hilfiger.

"We'll sell [beach] t-shirts at $15 or $16 and sweatshirts from $40 to $50," notes Chick. "It's upscale and still good fashion, but compared to Tommy Hilfiger and Ralph Lauren Polo, it's less expensive."

Other retailers likewise report that sales of kids' team sports equipment remain consistent, or show slight increases, while children's apparel and footwear sales are vibrant in items with a classic or basic look. Gone are double-digit sales of apparel with sophisticated graphics and excessive logos.

"The kids' business is up?no question?in equipment and footwear," says Mickey Newsome, president and CEO of Hibbett Sporting Goods, the Alabama-based retailer with nearly 300 stores primarily in the Southern states. Youth baseball is up almost 4 percent from one year ago, Newsome reports, while sales of youth soccer gear such as cleats, balls, and other equipment is up almost 5 percent and "still growing."

Classifying the "youth" market as ages 12 years and under, Newsome says sales of footwear?especially with the leading brands in the basketball and running categories?will be up about 4 percent. The average retail price point for boys' basketball is $50 to $60 while running shoes are selling for about $50. And while sales of higher-end kids' apparel are down, unit sales of mid- and lower-priced apparel are strong.

"I think the softening economy has softened the [market] for logoed jerseys and lowered price points [of apparel]," reports Newsome, noting that the average price point on apparel in his stores has dropped about three points. "We're definitely selling more units but at a lower price point. The question is whether this is due to the economy suffering so consumers are spending less, or whether fashion is changing. People want plain, basic items and not the big logos. The trend toward understated apparel could be the [force] driving down price points."

Eric Goldenberg, executive vice president of MC Sports, which has 70 stores in the Midwest region, says the kids' market is proving resistant to economic pressures.

"The children's business is affected the least by the economic situation going on in the country today," states Goldenberg, who categorizes MC's children's market as ages 5 to 12 years. "We expect to exceed our numbers from last year."

While sales of children's goods account for the smallest segment of MC Sports' business?an estimated 3 percent to 5 percent of total sales?Goldenberg says the retailer's focus on functional and basic goods rather than fashion will result in a nearly 3 percent sales increase in kids' product.

Although the overall footwear business is soft, sales of kids' back-to-school shoes will be even from last year, Goldenberg says. Apparel basics, such as a "basic soccer short," he adds, priced at about $10 from Vital, is one of the top back-to-school sellers.

On the hardgoods side, sales of sports equipment for the teen market has never been especially strong, but the industry reports that back-to-school sales of specialty categories such as backpacks and skates are exceeding expectations with double-digit gains. JanSport, for example, has targeted its product assortment and advertising campaign to 12- to 24-year-olds. The result has been a 36 percent increase in sales in the first quarter of this year from the year-ago period, and double-digit gains in the early weeks of this year's back-to-school season.

"Teen spending is up 10 percent more than last year," cites Todd Spaletto, vice president of sales for JanSport and Eastpak, referring to an independent study contracted by the brands' parent company, VF Corp. "Our product category used to be viewed by kids and teens as a school supply. Now it is a lifestyle statement. Our core consumers own three or more packs at a time." Consequently, he adds, JanSport is introducing more backpacks above the $100 retail price. Moreover, Spaletto reveals that five years ago Jansport's average retail price point was $30; today it is $45 plus.