0:09

Welcome back to material world. We're

0:11

digging into the stories behind all the things

0:13

you buy. I'm Lindsay Rupp, I

0:15

write about retail for Bloomberg News. And

0:17

I'm Jenny Kaplan. I cover the beverage,

0:20

tobacco, and cannabis industries at Bloomberg.

0:24

Recently, we've got babies on the brain.

0:26

That's because one of our amazing producers, Magnus,

0:29

just went out on paternity leave. There's no question

0:31

that having a baby is one of the biggest

0:33

changes, maybe the biggest, in

0:35

a person's life, and new parents are

0:37

a gold mine for companies. People

0:40

buy things for babies that they would just deem

0:42

ridiculous for other people, and

0:44

let them do things that you would never let another

0:46

person do. Here's an example from comedian

0:48

Jim Gaffkin. Because

0:52

babies are magic. They are because

0:54

they're the worst roommates. Like, if you had a

0:56

roommate that did one of the things that newborn

0:58

does, you'd be like, you're moving out. You

1:02

can't even reason with the baby, you can't be like,

1:04

what the hell was going on last night? Eight?

1:07

You were hitting the bottle pretty far and

1:10

you started screaming and you threw up

1:13

on me. Then you passed

1:15

out and white yourself. I

1:18

went in the other room to get you some dry clothes.

1:21

That come back. You're all over my wife's breast,

1:25

so you've gotta move out. I mean, new

1:29

parents have always been major targets for companies,

1:32

but that might be truer now than ever. So

1:34

let's talk about babies in

1:40

case having a baby sounds great to you

1:42

right now, here's some statistical birth

1:44

control. The cost of raising a child board

1:47

through the age of eighteen is about two hundred

1:49

forty five thousand dollars, according to the U

1:51

s Department of Agriculture. That

1:54

doubles if you live in Manhattan. For

1:56

a childboard in nineteen sixty, the average

1:58

was about hundred ninety nine thousand

2:01

dollars. In the first year.

2:04

A baby costs an average of thirteen thousand

2:06

dollars. For the lowest income group

2:08

in the US, the first year averages nine thousand,

2:10

and for the highest twenty one thousand. Do

2:13

you know what else you could buy for thirteen thousand

2:15

dollars in two thousand thirteen, Well,

2:17

a three bedroom house in Detroit, one

2:20

carrot, Tiffany's engagement ring, or

2:23

a Chevy Spark. According to a BuzzFeed

2:25

article. That's a lot of money,

2:27

So it's no wonder people are waiting longer to

2:29

have kids. Overall, they're also having

2:32

fewer of them. Birth rates around

2:34

the world have declined about between

2:36

nineteen sixty according

2:39

to the World Bank, and yet

2:41

people are still procreating, and

2:43

in places like Manhattan, children have become

2:45

a status symbol. According to a much talked

2:47

about memoir called Primates of Park Avenue.

2:52

We've

2:55

examined some common catalysts of change

2:57

in past episodes, technology,

2:59

the changing roles of women millennials,

3:01

plus the explosion of artisanal products.

3:04

Are those same themes building up baby

3:06

spending. Today, we're taking a look

3:09

at baby mania and looking at how the

3:11

baby product industry is changing and

3:13

why. First, let's examine

3:15

the industry perspective. The number of companies

3:17

vying for parents attention has multiplied.

3:20

It's not just Huggies versus Pampers

3:22

anymore. More. Parents are turning to

3:24

upstarts like The Honest Company or small

3:26

producers on Etsy. It's a big

3:29

crowded industry. Baby food

3:31

and formula sales alone reached approximately

3:33

thirty billion dollars, and the

3:36

global diaper market exceeded twenty nine

3:38

billion dollars that year, according to data from

3:40

Nielsen. I've

3:50

been a little surprised that some of the bigger

3:52

companies haven't been quicker to adapt,

3:55

and Jay and Jay acknowledge that very

3:57

publicly, that they are losing

4:00

market share to some of these new companies

4:02

like the Honest Company,

4:05

and they better do something

4:07

or they're going to continue to lose consumers.

4:13

That's Lauren Coleman Lockner. She's on her

4:15

team at Bloomberg and she writes about consumer

4:17

products like the ones made by Procter and

4:19

Gamble and Johnson and Johnson. She

4:22

also writes about retailers and distress. You'll

4:24

hear more from her later. As times and

4:26

trends change, companies have to adapt.

4:29

Danielle Senior Elie, chief marketing officer

4:31

at Rashki and Roshchi, came in to talk

4:33

with us about how her company has managed to

4:36

stay relevant. Rashti and Roshti

4:38

is a family owned private company that makes

4:40

apparel, blankets, and plush toys

4:43

for newborns. It's been around for four

4:45

generations or nearly seventy years.

4:48

It doesn't sell directly to consumers, but

4:50

rather it sells its brands in all the major

4:52

big box stores. In other places you'd find

4:54

baby things. That's

4:58

a really long time to be in business in the same

5:00

business. I'm sure you guys have seen it evolve

5:02

as a company over the last seventy years.

5:05

Could you walk us through some of the major

5:07

changes that have taken place or or

5:09

if it's shifting right now, what's what's

5:12

happening, what you're seeing. There are definitely been

5:14

changes in the industry. I would

5:16

probably say the biggest changes

5:18

come from technology. When you're

5:20

dealing with product that is sold

5:23

in stores, there are

5:25

lots of changes in how the retail

5:28

environment works and you have to kind of respond

5:30

to that. We now

5:33

have seen such an increase in online sales,

5:36

whereas before the large

5:38

multi chain department stores

5:41

and retailers were sort of king

5:44

I mean, are you seeing more

5:46

new competitors pop up because you

5:49

can start a business and make those

5:51

connections online more easily. I

5:54

think there is definitely

5:56

a shift in the

6:01

different companies who offer new products

6:04

online allows that uh

6:06

entry much easier. There

6:09

are options for smaller

6:11

startups to partner with larger

6:14

established companies, such as

6:16

licensing deals other things,

6:18

in order to create an infrastructure.

6:21

Partner in order to get that product out

6:23

companies like ours,

6:25

Although we create a lot of new product ourselves,

6:28

we are always open to innovative

6:30

ideas from new people.

6:33

Moms today create their own products,

6:35

and to come up with a mom created

6:38

product that we can produce

6:40

and distribute into this market into

6:42

the market is really a win win

6:44

for both. You mentioned that there are

6:47

a lot of mom inventors that they're

6:49

inventing what they what their babies

6:51

need. Is that new? I

6:53

mean, are there more moms inventing than

6:56

in previous years? You

6:58

know, invention always start, it's from

7:00

necessity, so I'm sure all along

7:02

there's always been moms saying, oh

7:04

I need this. I think today, though,

7:07

access to information is so

7:09

much more readily available that if a mom

7:11

has an idea, she can actually

7:14

go out there and figure out a way to get it

7:16

made. I think years ago that may

7:18

not have been so easy. Um. And

7:20

then also, once you come up with the idea,

7:23

how do you get it out there? How do you get

7:25

the idea out there? I think again, years ago,

7:28

moms really with it. Unless it's their small

7:30

community of friends, they really

7:32

had no way of getting that idea

7:35

to the public. Today, with social

7:37

media being so popular with

7:40

online sales. Websites

7:43

such as itsy and Amazon

7:45

allow individuals to sell product.

7:48

I think the idea of

7:50

disseminating the idea is

7:53

much less scary to moms and much more

7:55

accessible. So coming up with those

7:57

ideas and giving them a try, I

8:00

think is something that moms are willing

8:02

to do today. I also think that

8:04

mom's being a little bit older

8:06

and more educated, have the

8:10

knowledge that you need

8:12

to sort of get into business today,

8:14

or they already have a pre existing business

8:17

background, so the

8:19

idea isn't a scary I'm curious about

8:21

your experience. I mean, you're a relatively new mom.

8:24

What's it like working at this baby company

8:26

and having a baby, and and are

8:28

there holes that you see or the products

8:30

that you you want that you can't find

8:32

or I don't know, I you know, I being

8:35

coming a new mom myself has

8:37

definitely changed my perspective. I

8:40

used the product for my son, you

8:42

know, I found the

8:44

product was definitely everything

8:47

that I said it was supposed to

8:49

be, which was great.

8:52

But then at the same time, I realized

8:54

that some things aren't

8:57

always what do you think they are until

8:59

you use them. My husband, for example,

9:02

a lot of the garments would have snaps down the front,

9:05

and he at night, when he would try to change

9:07

the baby, he would fumble

9:09

with these snaps. He'd be complained that his

9:11

fingers are too big to do these little,

9:14

little, tiny snaps. So he liked

9:16

zippers personally. I never really

9:18

thought about snaps Her zippers

9:20

as a employee of the company,

9:23

but when I actually got

9:25

to use the product and heard comments with my husband,

9:27

I said, oh, wow, zippers can

9:30

really help a new mom late night changes.

9:32

It's you're getting up, it's dark, you want to

9:34

make it quick. A zipper might

9:36

be, you know, another better

9:39

option than a snap all the time, you

9:41

know, for night time. So that

9:43

perspective has certainly changed

9:47

through experience. I just think

9:50

that maybe UM.

9:52

One of the other changes UM in

9:54

the industry too is UM

9:58

the expectation of social

10:01

responsibility UM.

10:03

Whether it's through ethical

10:05

sourcing UM on a

10:07

retail level, it could be reducing

10:10

a carbon footprint. I think

10:12

people care about these things, and their expectations

10:15

of companies have

10:18

risen. They it's

10:20

not even a matter of paying more for these

10:22

products. They expect companies

10:25

to automatically UH

10:28

incorporate philosophies that

10:30

are humane, that you know,

10:32

are good to in the environment, are good

10:35

to people, And I think

10:37

those are things that people are

10:39

more educated about today. Consumers

10:41

want to know that the companies

10:44

that they work with, that they purchase from

10:46

um are open

10:48

with their policies and are very

10:51

transparent about how they

10:53

treat the world and how they manufacture

10:55

and produce. It

11:05

can be hard to really understand consumers

11:07

needs until you are that consumer, Like

11:10

Danielle said about infant onesies with zippers

11:12

instead of snaps. Kira Coher

11:14

actually thought of her business idea before

11:17

she got pregnant. She saw an opportunity

11:19

based on her own interest in fitness and the

11:21

lack of information out there about pregnancy

11:23

and working out. Fit Bump is a self

11:25

funded company that posts editorial content

11:28

and sells maternity athletic apparel.

11:30

Kirat also has a newborn, so she can

11:32

speak to being a new parent as well as being

11:34

a business owner. How

11:39

and why did you get into

11:41

this? I mean, why did you decide to start fit Bump?

11:43

So I had a PR agency

11:46

in the city that I've had for nine years, and

11:48

I had been working on a lot of mommy

11:50

baby brands and fitness brands

11:53

and doing a lot of research,

11:55

and I saw a lot of my friends,

11:57

a lot of women the older

12:00

generation of millennials, getting pregnant

12:02

and having been very active

12:04

throughout growing up in college

12:06

and just had different needs,

12:09

and I saw a lot of things that weren't meeting

12:11

those needs. There were at the time when I

12:13

started researching this, there wasn't really active

12:15

where there was an education. It was still

12:19

really pre Instagram stage, where

12:21

I think now people can see,

12:24

oh maybe I don't know anyone who's running while they're

12:26

pregnant, but I see a lot of people on social media who

12:28

were doing in there's this community around that.

12:30

But even three or four years ago, I think women were

12:32

still getting the side eye at the gym

12:35

when they were on an elliptical or lifting

12:38

when they were pregnant. And

12:40

now it's become a little bit more

12:42

of a norm and a lot of studies are coming out

12:44

promoting that. So we offer educational

12:47

resources fitness and addition to the clothes,

12:49

as well as education around nutrition for pregnancy.

12:52

Wow. So in terms of the

12:55

industry in general of products

12:58

relating to pregnancy, and I know

13:00

you have a newborn, so even baby

13:02

products more specifically,

13:05

how have you seen the industry change. I

13:07

think it grew exponentially

13:10

over the last i'd say eighteen

13:12

months, and I think that has a lot to do with social

13:14

media and a lot of brands.

13:16

Bigger brands have been jumping into the game, like

13:19

Athletic and Gap and Old

13:21

Navy. UM. I think they see

13:23

that market. I think because the athleisure market

13:25

has grown so extensively, everyone's just

13:27

kind of doing that. And then I think

13:30

with more studies coming out that fitness

13:32

during pregnancy is is really positive

13:34

and helpful, and

13:37

um, they're being more pressed around

13:39

women doing CrossFit pregnant women spinning

13:42

during pregnancy. I think

13:44

just the overall knowledge

13:46

around it has created

13:49

kind of a comfort zone for people saying, Okay,

13:51

I can trust my body, I know what to do

13:54

my doctor, Okay is it I can get

13:56

back into it right. Yeah.

13:59

So you mentioned that you were working UM

14:02

marketing a lot of mommy and baby

14:04

companies. So was it just

14:06

from that experience or did you have kids at

14:08

the time what? Um, I did not

14:11

have kids at the time. I currently

14:13

have a four week old. Congratulations.

14:17

That's really interesting. We've heard from

14:19

some people here that, you know,

14:21

it seems like more and more people are starting businesses

14:23

when around like their own personal

14:26

experiences. It's interesting, is that something

14:28

that you see among the competitive

14:30

landscape? I think so, I think so,

14:32

yeah, not just in fitness,

14:35

but in other I think a lot

14:37

of nutrition of what people can't

14:39

find in terms of everything

14:41

from trying to get pregnant during

14:43

pregnancy, post with lactation,

14:47

all those different types of things. I think it's a lot

14:49

of what mom's experience try to

14:51

look for on the market, can't find and then

14:53

fill fill a gap. Since

14:56

you mentioned you do have a new born, how

14:59

how do you feel like you're or do you feel like

15:01

you're spending on baby products

15:05

is different than like your

15:07

mom's or you know, generations before

15:09

you Oh my goodness, I

15:11

think my family is totally baffled that,

15:14

Like the amount of product that's

15:16

now available from when like

15:19

I was a baby in the seventies, in the late

15:21

seventies, Like you know, there's

15:23

things like warmers for the wipes

15:26

so your baby doesn't have to have a cold touchett

15:28

when he's getting change.

15:32

That is something

15:34

to think about. I mean, there's something

15:36

for everything. Looking

15:39

kind of more broadly, do you see a

15:42

lot of people like yourself

15:44

who I know you said there are people

15:46

who are looking and finding needs based

15:48

on their personal experience, But so do you think that the industry

15:50

is really being populated more by startups

15:53

now? I mean they're huge. I think

15:57

yes. I think there's huge, giant companies

15:59

that most people it's

16:01

the go to. But I see on Instagram

16:04

daily new businesses popping

16:06

up that start with mom

16:09

who couldn't find ex solution

16:11

for X baby or pregnancy, your parenting

16:13

problem. So I think it's

16:15

a lot of a lot of small businesses

16:17

populating this area.

16:22

The biggest question I have in all this is

16:24

why are things changing? Having babies

16:27

is clearly not a new thing, So why are

16:29

parents now choosier than the parents who

16:31

have come before? This

16:33

is your first child, how

16:35

has it been gearing up? It's

16:39

uh, that's both a very literal

16:41

and figurative term. That's

16:43

Libby McGowan. She's the US

16:46

team leader for our Daybreak product

16:48

here at Bloomberg. She's currently pregnant

16:50

with her first child. I would say

16:52

it's been very interesting. You know, at the

16:54

beginning, you're just so excited and you're

16:57

not like thinking about logistics,

16:59

and then you start thinking about logistics

17:01

and you're like, I guess I need a stroller. Well,

17:04

I'll just go look online and all

17:06

of the sudden you're sucked into this vortex

17:09

of different models,

17:11

and there's just so much research

17:14

out there and so many different

17:16

considerations and things that you've

17:19

really never thought of, you know, the

17:21

length of the sunshade, and does

17:23

it convert into a double stroller? Does

17:26

it fit toddlers and babies? Oh

17:28

my gosh. I will say the mom community

17:32

is powerful. There are endless

17:34

logs and and these women do exhaustive

17:37

research. And one thing that I

17:40

found was that through of course social

17:42

media Instagram

17:44

and you know, Facebook, you can find these

17:46

amazing communities. And one

17:49

group that I found which is hilarious

17:52

is the Upper east Side Mom's Group

17:55

in New York City. And these

17:58

are I mean moms that know they're stuff.

18:00

It's it's eight tho

18:03

women, I think. And it is this exhaustive

18:06

pool of Like any time I've had a question about a

18:08

baby product, like do I want to register

18:11

for this? Do I really need this? So

18:13

you can search the topics of discussion

18:16

and all of a sudden, there will be fifteen

18:18

posts on this one product, you know, with

18:21

thirty forty replies people

18:24

either swearing by it or hated

18:27

it. I think where baby gear

18:29

in particular differs is that

18:33

parenthood is stressful for moms.

18:35

For dads, it's stressful and you're

18:37

learning a lot, and it's a learning curve. And

18:39

so if there's a product that allowed

18:42

you to put the baby down happily

18:44

for thirty minutes and get something done, or

18:46

that allowed you to get an extra hour or two of

18:48

sleep, you're gonna swear by it. You're

18:52

gonna recommend it to every mom you know, you're

18:54

gonna you know, an extra hour of sleep is

18:56

a really big deal. Yeah. Our

19:02

friend Lauren has a daughter out of college

19:05

and a son in college, so we asked her

19:07

about her personal thoughts on the industry. Have

19:09

things changed? So what we're

19:11

seeing all over the world really is

19:13

that there's a growing preference

19:16

for natural and organic and that's

19:18

obviously a trend that we've seen in other

19:21

areas of the consumer world the most notably

19:23

food, but also um

19:26

premium personal care and

19:28

products overall. So it's not just for babies.

19:31

People are willing to spend money, They're willing to

19:34

always spend money on their kids, but there's

19:36

so much more choice now there's so

19:38

many new companies that certainly

19:41

were not on the scene. When my kids,

19:43

who are now out of the house, were were

19:46

little, um, it was pretty much the basics.

19:48

For us. It was JA and J was the dominant

19:50

thing. You know, when I came home from the hospital with

19:52

my kids, you got a little goodie bag

19:54

from Jay and J. I don't know if they still do that

19:56

anymore. There weren't a lot of

19:59

organic, natural alternatives

20:02

out there. Do you think that the you

20:04

know, as consumers being more informed. I

20:06

would assume that has a lot to do with the Internet. But also,

20:08

you know, we were talking about this, people are waiting

20:10

a little longer to become parents, they're a little

20:12

older. I mean, what do you think is making

20:15

consumers educate themselves

20:17

and demand higher quality stuff. I

20:19

do think it's an outgrowth. I do

20:22

think that younger shoppers are more

20:24

aware that their preferences.

20:26

They're more interested in sustainability,

20:29

They're more aware of social responsibility

20:32

and companies doing good. So

20:34

I think that spills into their

20:36

preferences and informs their preferences

20:38

once they start families. Do

20:41

you think that parents buying patterns

20:43

have changed? Well, we're seeing it and

20:45

it was really notable when Jay and Jay

20:47

had a recent conference called the Jay and Jay

20:49

was actually pretty out in front

20:52

in terms of identifying some

20:55

concerns consumer concerns

20:57

about some ingredients in their products,

21:00

so they reformulated some of their stuff.

21:02

I believe it wasn't quote

21:05

me on that these shoppers are

21:07

looking for active natural ingredients,

21:10

so colendula, for

21:12

example, that's known to have a calming effect.

21:14

So it's not just we took the bad stuff

21:17

out. We're putting in active, effective,

21:20

natural ingredients into these products. And we're

21:22

going to highlight that you

21:24

mentioned when we were talking earlier about the

21:26

global baby marketplace is

21:28

changing. So we've talked a lot about the US,

21:30

but what are we seeing for these bigger companies

21:33

that have dominated the marketplace for so long?

21:35

What are we seeing for them? Sure, so even

21:37

some of these developing markets

21:40

which are very very important to companies like

21:43

J and J and P ANDNG and UNI lever and

21:45

we know that the growth in some instances

21:48

has slowed down. But in a place like China,

21:50

which is obviously also going to be driven

21:52

by some of the policy changes, now you

21:55

still have a rapidly growing

21:57

economy and a rapidly growing middle class

22:00

and they want premium

22:02

products for their babies. This was

22:04

something that P ANDNG acknowledged in recent

22:06

calls that they had sort of missed that trend, that

22:08

they didn't have enough of

22:10

the high end product like the

22:13

ultra than diapers, and I you know,

22:16

it's escaping me the specific brands, but

22:18

you know, they've all kind of stepped up and

22:21

started offering these premium diapers Kimberly

22:23

Clark as well, and they're doing well. For these

22:26

companies. They didn't really identify

22:28

the demand in China and

22:30

they are now trying to fix that. Do you think

22:32

we're seeing a shift where people are willing

22:35

to trust some of these smaller, newer

22:37

players who cater to a specific market

22:39

more so than they trust Johnson

22:42

and Johnson or Kimberly Clark,

22:44

which you know, those used to be those

22:46

you were loyal to those brands, you know,

22:48

oh, I always use Pampers. I

22:51

think there's been an absolute shift. I

22:53

think that people millennials.

22:57

I hate to lump everybody, but I

22:59

mean I think there's a

23:01

tendency now not to

23:03

be brand loyal those those names don't

23:06

mean the same things to younger

23:08

shoppers that they did not even

23:10

in my generation, but probably to my parents generation,

23:13

there is an absolute

23:16

willingness to try new brands because

23:19

they hate to use this word authentic,

23:22

but I mean there's a story and you

23:24

can, you know, read about the two founders

23:26

that you know started the business in their kitchen when

23:28

their kids were young, and there's more of a connection,

23:32

um, more of an entrepreneurial story

23:34

to tell. Do you think consumers are

23:36

less brand loyal now? I think they're absolutely

23:39

less brand loyal. I just don't think

23:41

that some of these

23:43

legacy brands that we grew up

23:45

all grew up with or is meaningful to people.

23:48

To be fair, I would be shopping differently

23:50

now if my kids were that age.

23:59

It seems like all the usual suspects are

24:01

involved here. Technology, millennials,

24:03

craft, organic products. All

24:05

of these things are impacting the baby business,

24:08

but demand and premium quality products

24:10

means increasing baby expenses even

24:12

beyond they're already astonishing levels

24:15

from a company standpoint. Technology

24:17

makes it easier for people to order products

24:19

online from the big players and also

24:21

makes entrepreneurial ventures more realistic.

24:24

People are having babies later, so parents

24:26

with interesting ideas already have business

24:28

experience and they know how to go after what

24:30

they want as consumers. Those

24:33

older parents are more educated and have more

24:35

money to spend on their kids. They

24:37

also just have more information. With social

24:39

media and particularly mommy groups,

24:42

parents can get reviews and opinions from

24:44

eighteen thousand peers rather than just

24:46

turning to their parents or real life

24:48

friends. But the pressure to keep

24:50

up with the best gadgets and the most healthy

24:53

ingredients could legitimately drain all

24:55

of your resources. On the one hand,

24:57

people want higher quality ingredients.

24:59

On the other they also have to consider

25:01

the fact that these things are probably short term

25:04

use only. Meanwhile, the kid

25:06

you have to keep after that first year of

25:08

thirteen thousand dollars, you still have two hundred

25:10

and thirty two thousand to go, and that

25:12

only gets you to college. Still,

25:15

my guests parents would say ending up with the healthy

25:17

and happy kid makes it all worthwhile.

25:21

That's it for this episode of Material World.

25:23

Thanks for listening. For more Material

25:25

World, check out Bloomberg dot com or iTunes

25:28

dot com slash material World. You

25:30

can also follow us on Twitter. I'm

25:32

at l c Rup and Jenny's

25:34

at Jenny m mccaplan. Find

25:37

out what's new with fit Bump at fit Bump

25:39

Lauren Coleman Lochner at Lauren Lochner

25:42

and Libby McGowan at liub McGowan.

25:44

If you like what you heard and feel so compelled,

25:47

please rate and review our show. Also

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check out our sister podcast, game Plan, for

25:52

all the dues and don'ts of office life. We'll

25:54

be back in two weeks. When

26:01

I first started the company three or four years ago, I would

26:03

have women say to me like, I'm really worried

26:05

the baby is going to fall out. And

26:07

I would say, you're gonna wish the baby

26:10

just falls like

26:12

you're not doing a squat and the baby is not going to fall

26:15

out, And yeah, that feels I

26:18

mean