Declining birth rates across Europe weaken the market for children and baby products

The anticipated baby boom in 2021 has not materialised; in fact, birth rates across Europe have fallen amid COVID-19, due, at least in part, to financial uncertainty and low consumer confidence. This aligns with the long-term trend – birth rates in Europe have been declining in recent decades as consumers are starting families later and there is therefore a smaller window to have many children, compared to previous generations. Demand for categories such as childrenswear, children’s homewares, and baby equipment is therefore not as strong as it once was, compounding the challenges faced by multichannel retailers operating in these markets, such as increasing online competition and the rising popularity of purchasing second hand.

Ahead of its demise in the UK at the end of 2019, Mothercare was losing customers to competitors that offered greater choice, affordability and convenience, such as Amazon. Mothercare’s reliance on its struggling UK business, as well as its presence in the Republic of Ireland and Turkey – two of the countries which have experienced the most severe decline in birth rates over the past 20 years – contributed to the 11.9% decline in group sales in its FY2018/19. German baby specialist Babymarkt.de is an example of a retailer which has done far better, owing not only to its position as a retailer which operates predominantly online, but also to its presence in various European markets including Sweden, Germany and Austria where the decline in birth rates has been relatively muted over the past 20 years. In 2019, the retailer’s sales rose 13.5% to €163.9m.

Birth rates are falling most quickly in eastern Europe, with Turkey, Republic of Kosovo, Moldova and Estonia suffering the steepest falls in births per 1,000 between 2005 and 2025, according to GlobalData forecasts. Children and baby retailers must therefore ensure that they do not rely too heavily on these markets. Demand for children and baby products is likely more buoyant in northern Europe; Sweden, Norway and Denmark are among the countries which will experience the least severe decline in births per 1,000 between 2005 and 2025.