From toys to apparel: Inside the growing market for children’s products

The global toys and games market was estimated at $324 billion in 2023. (Image: Pixabay)
The global toys and games market was estimated at $324 billion in 2023. (Image: Pixabay)

Summary

As India embraces dual-income households and younger parents become more aware, children are the emerging cohort for consumer brands. 

From educational toys to healthy snacks, consumer brands are tapping into a fast-growing opportunity in children’s products, driven by modern parents’ willingness to invest in high-quality, safe, and innovative offerings.

Brands such as Peak XV-backed toymaker Skillmatics, kids apparel-focused Includ, and entertainment firm Green Gold have seen their businesses grow due to interest in a fairly underserved category, the founders told Mint.

Skillmatics’ global revenue touched nearly 500 crore in 2024 while its India business doubled in the same period compared to the previous year, its founder and chief executive Dhvanil Sheth said. India is the firm’s second-largest market after the US.

“I’ve been in the space since 2017 and I haven’t seen this kind of demand from India. With e-commerce and quick commerce becoming a way of life, the demand for kids products has just exploded," Sheth told Mint.

Includ, which raised $1.5 million in seed funding from Incubate Asia Fund along with Escape Velocity and Abhishek Goyal (Tracxn co-founder) last year, has scaled to an annualized run rate of 72 crore in less than two years since inception, its founder Ashwin Rastogi added. Apparel has become the second-highest in terms of spending among many households with children, he said.

Listed players are also looking closely at the space, with jewellery and personal care brands jumping on the bandwagon. Titan-owned CaratLane has kids' jewellery collection like earrings inspired by popular cartoon characters like Peppa Pig and Disney Lion King. The company has been taking it with seriousness in recent years as it accounts for nearly half of all gifting purchases on the platform, according to the firm’s chief operating officer, Atul Sinha.

“The kids' category has demonstrated exceptional performance, with revenue growing by over 30% in the past year. Earrings and nazarias (evil eye) are among the most sought-after products with IP-based designs contributing significantly to the category’s success," Sinha noted.

Last year, Dabur India announced its foray into kids toothpaste. Stationery maker DOMS India acquired a majority stake in Uniclan Healthcare, a producer of baby hygiene products like wipes and diapers, in September.

Given the massive market size and growth potential, children have emerged as a strong target cohort for brands. The global toys and games market was estimated at $324 billion in 2023 and is expected to grow at a compound annual growth rate of 4.3% from 2024 to 2030, according to a research report by Grand View Research.

In India, the market for kids' apparel alone reached $22 billion in 2023 and is expected to hit $26.5 billion by 2032, exhibiting a growth rate (CAGR) of 2.28% during 2024-2032, as per estimates by market research firm IMARC Group.

Naturally, investors are taking note. Early-stage venture capital firm Fireside Ventures sees children’s products as a high-focus area as an underserved category, co-founder and partner Dipanjan Basu told Mint. “Many firms are now attempting to build innovative products in the space and I’m confident that in the next three-five years many strong brands will emerge," he added.

Fireside has invested in healthy foods brand Slurrp Farm and children’s personal care brand Tuco Intelligent.

Also Read: Why q-commerce is driving more new-age brands to tap alternative financiers

Frequent purchases

Brands selling children-focused apparel enjoy the distinct advantage of high repeat purchase patterns because children outgrow clothes, footwear and even accessories like bracelets and bangles quickly, according to Fireside’s Basu.

Moreover, as dual-income households become common, parents are willing to spend more on discretionary items like children’s goods.

The average order value (AOV)is, naturally, high. Toy maker Skillmatics sees an AOV of nearly 2,500, while apparel brand Includ’s stands at 1,500-1,600. Green Gold Animation, which makes merchandise for popular Indian cartoon Chhota Bheem, witnesses 20% of its customer base make repeat purchases, according to its chief executive officer, Rajiv Chilaka.

Interestingly, while most products are built to suit the comfort and functionality of a child, the real consumer in the category is the mother, who tends to be the decision-maker in most households.

“The tastes and preferences of the Indian mother are also evolving. They are now reading the fine print on labels to ensure that their child consumes only the most nutritious food. In apparel and accessories, comfort and safety are top priorities," Basu added.

And brands are adapting to the changes. Includ’s Rastogi said that mothers are now buying “looks" which means brands have to expand their collection to make sure it’s a one-stop shop for everything, right from hats to socks.

“An adult may pick a top from one brand and bottoms from another. But not mothers. They are most likely to pick everything from a single brand based on how she wants the child to look. It’s an interesting purchase pattern," Rastogi said.

Skillmatics’ Sheth added that urban mothers today are more informed than in the past, ensuring the child gets access to only the best-quality products even if it is priced a little high.

“We keep the mother/parents in mind for all our products. A mother prefers to buy merchandise with utility value such as a school bag or tiffin box or a T-shirt, whereas a kid would like to pick up a toy that he just wants to play with and in many cases he just wants it because his friend has it. Today, we are trying to offer both utility and entertainment," Green Gold’s Chilaka said.

Also Read: Quick commerce is rocketing. So, are kiranas on the way out?

Price-sensitive market

While the Indian market is showing green shoots of growth, the real test lies in creating a long-term and sustainable business, according to Fireside’s Basu.

“Anything to do with children requires a deep innovation, something most Indian brands haven’t been able to do yet. Even a toy needs to be engaging and at par with what’s available worldwide. Consumption patterns of children are connected to trends on social media. The bar for product-building is high," he added.

Moreover, India remains a price-sensitive market which makes sustained premiumization in the category tough to achieve.

To this end, Skillmatics’ Sheth said that the brand has managed to bring down the price of its products by 40% in India compared with the US. “The idea is to offer products of international quality at affordable prices," Sheth added. 

Also Read: A quick-commerce correction on the radar for consumer brands

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