Entering the European market for baby wear

Some of the world’s most interesting apparel markets are in Europe. This report will help you understand what the most important requirements are to be successful in the European market for baby wear, which is known for its fashionability. Collections and designs are generally very detailed and challenging to manufacture. You will find baby wear buyers in every channel and market segment. However, be aware that there may be different requirements in styling and quality among buyers from different EU countries.

1. What requirements must baby wear comply with to be allowed on the European market?

If you want to sell baby wear in the European market, you need to comply with several requirements, some of which are mandatory, whether they are legal requirements or not. Others are voluntary, but meeting them can give you a competitive advantage. Some requirements only apply to certain niches in this market.

Mandatory requirements

There are several legal requirements you need to comply with if you want to export baby wear to Europe, including requirements concerning product safety, the use of chemicals (REACH), quality and labelling. Additionally, many buyers have created non-negotiable terms and conditions for all their suppliers to comply with. These requirements are not required by law, but still mandatory.

Product safety

Any item of baby wear for sale in the EU must comply with the EU’s General Product Safety Directive (GPSD: 2001/95/EC). European Union Member Countries will check if your product meets the applicable safety requirements.

If your buyer has supplied the product design, it is their responsibility to make sure it is legally safe for consumers to use. However, if you have any doubts about whether a design is not compliant with the EU’s General Product Safety Directive, discuss it with your buyer before you start the production process.

Special requirements for baby wear

The EU has a specific standard for the safety of children’s and baby wear. This standard contains requirements to ensure that cords and drawstrings are placed safely on apparel for babies and children up to 14 years. This is to avoid strangulation and choking hazards.

REACH

Any item of baby wear exported to the EU must comply with the REACH Regulation, which stands for registration, evaluation, authorisation and restriction of chemicals. This regulation restricts or prohibits altogether the use of many chemicals in apparel and specific materials used for trims.

Chemicals commonly used in apparel production, which are restricted under REACH include:

• azo dyes that may release one or more of the 22 aromatic amines listed in Appendix 8 to the REACH Regulation, nonylphenol and nonylphenol ethoxylates, and heavy metals, such as mercury, cadmium and lead;
• waterproofing and stain-repelling chemicals, such as perfluorooctane sulfonic acid and its derivatives (PFOS), which were originally restricted under REACH, but are now restricted under the Stockholm Convention (EU Regulation 2019/1021), as well as other persistent organic pollutants (POPs);
• certain nanomaterials used to make fabrics antibacterial;
• nickel, a restricted compound in metal trims and accessories, such as zippers, buttons and jewellery;

• polycyclic-aromatic hydrocarbons (PAHs) and phthalates used in plastic and PVC parts.
   

Restricted substances lists (RSLs)

In addition to REACH, many brands and retailers have formulated their own restricted substances lists (RSLs), which are stricter than REACH. They are often inspired by the guideline on the use of safe chemicals from the Zero Discharge of Hazardous Chemicals (ZDHC) foundation. Download the ZDHC Conformance Guidance to learn how to comply with the ZDHC guideline.

Flammability

The EU has no specific legal requirements regarding apparel flammability, but several EU Member Countries have their own, including the UK, Ireland, the Netherlands. Switzerland, not a member of the EU but part of the EU single market, also has its own requirements. The EU has a voluntary standard on fire resistance of the children’s nightwear, which may aid in compliance with the GPSD.

If you use flame-retardant chemicals in your apparel, be aware that you need to conform with the REACH Regulation for the use of chemicals.

Labelling your product

You must specify the material content of every item of baby wear that you export to the EU, in accordance with EU Regulation 1007/2001. The purpose of this regulation is to let consumers know what type of apparel they are buying.

Labelling the country of origin (‘Made in’) or labelling care instructions is not yet legally required in the EU. Including care labels in your baby wear is highly recommended though. Consumers expect it, especially because baby wear can become dirty quickly.

ISO 3758: 2012 is the preferred standard for care labelling. The care label symbols are property of the company GINETEX. You need to pay a fixed compensation to GINETEX for the use of these symbols.

Intellectual property rights

If you are selling your own designs in the European market, you must make sure you are not violating any intellectual property (IP) rights. If your buyer provides the design, they will also be liable in case the item is found to violate a property right.

Complying with intellectual property rights also means you cannot copy nor share designs from one buyer with another. European buyers expect you to handle their designs prudently.

Non-legal mandatory requirements

In addition to the legal requirements mentioned above, you may be required to comply with non-negotiable terms and conditions that buyers have created for their suppliers. Such requirements are not required by law, but they are still mandatory.

Sustainable production and social responsibility

Many buyers in Europe are increasing their demands in relation to sustainable production and social responsibility. At the very least, buyers will ask you to open your factory doors for them, so they can conduct personal inspections of your factory. Additionally, you may be requested to comply with the following independent standards:

• Standard 100 by Oeko-Tex is the most widely required standard regarding harmful substances and sustainable production. European buyers may also require standards such as the EU Ecolabel, BCI (Better Cotton Initiative), GOTS (Global Organic Textile Standard) and Bluesign.
• Regarding social responsibility, BSCI (Business Social Compliance Initiative) is the most popular certification that European buyers require. Other popular CSR standards include FWF, WRAP, SEDEX, ETI, SA8000, ISO 26000, and Fair Trade.

Garment care preferences

When selecting base materials for baby wear, go for easy-to-care fabrics that can be machine washed at high temperatures (60°C minimum) without the risk of shrinking or fading. This is one of the reasons for the widespread use of cotton in baby wear.

Packaging requirements

Your buyer will give you instructions on how to package the order in most cases. If you agree with your buyer that they will clear customs in the country of import, which is the norm in the apparel industry, it is their responsibility to make sure the instructions comply with EU import procedures.

The packaging instructions will be written down in a packing manual, where you will find all relevant packing instructions concerning:

• type and quality of the packing material you need to use;
• size of the packing material;
• information that should be mentioned on the packing material, including style references and numbers, size breakdown, number of pieces and colourways;
• placement and position of barcodes;
• way of stacking;
• maximum quantity in a box or polybag;
• maximum weight of an export carton;
• nominated suppliers for the packing material.

Your buyer will also appreciate any efforts you make to reduce the environmental impact and the financial cost of using packaging materials. First, you can make suggestions on how to use less packaging materials. Another option is to use environmentally friendly alternatives, such as recycled and biodegradable materials.

Payment terms

Normally, European buyers will pay you a percentage of the total sum of the order, for example, 30% of it when they place the order, and the rest (70% in the example) after the order is completed. The most used payment method in the apparel industry for such a transaction is the letter of credit (LC). An LC obligates a buyer’s bank to pay the supplier when both parties meet the conditions they have agreed upon.

In other cases, a buyer might ask for a telegraphic transfer (TT) after 30, 60, 90 or sometimes even 120 days. This means you, as a manufacturer, finish the production and hand over the shipment to the buyer, including the original documents before payment is due. The payment will be made after the number of days that you have agreed on with the buyer. This is a risky payment agreement because you take full financial risk.

Additional Requirements

In addition to non-legal, but mandatory requirements like standards and certifications, there are many services that buyers implicitly expect or at least highly appreciate if you want to do business with them. These requirements can differ from buyer to buyer.

Product design and development

Most buyers have their own design team and do not solely rely on the collections that factories present to them. Still, having your own ideas on product design and development will be highly appreciated. Buyers are always looking for special designs, materials and production methods to help them stand out in the market.

Features that European buyers of baby wear highly appreciate include:

• the use of chemical-free, hypoallergenic, sustainable materials;
• ease of washing at high temperatures;
• resistance to staining during wear;
• innovations in getting garments on and off easily.

Communication

Smooth communication is an implicit requirement of all buyers. Always reply to every email within 24 hours. Even if it is just to confirm that you have received the email and will send a more complete reply later. If you have a problem with a production order, immediately notify the customer and try to offer a solution. Another good tip is to create a T&A (time and arrival) of every order and share it with your buyer. This file will help you to manage expectations, monitor progress and is the best guarantee of on-time delivery.

Flexibility

Many factories focus only on getting convenient orders: simple designs, large quantities and long delivery times. However, if you want to start a business relationship with a European buyer, be prepared to accept complicated orders first. Buyers will want to test your factory before giving you large, easy orders. Make sure at the start that a buyer will not continue to place only difficult orders with you and convenient orders elsewhere.

Expect a European buyer to require in their first order:

• high material quality and impeccable workmanship;
• order quantities below your normal minimum order quantity (MOQ);
• a price level that is lower than you normally would accept for small quantity orders.

Niche requirements

The following requirements appeal to a minority of buyers in Europe, but they may give you a competitive advantage.

Sustainability

Check out parenting forums and blogs, such as Mother and Baby, for the latest information on sustainable brands gaining popularity. Investigate what their products have in common and look for niches where you can develop unique, distinctive products. Some smaller brands produce only baby wear or for babies and children up to their pre-teens. These tend to be premium, high-quality brands focusing on environmentally friendly materials.

Gender-neutral collections

Brands and retailers do not typically segment by gender. There is a growing trend for durable, gender-neutral clothing using quality materials, neutral greens and yellows, as well as prints that do not restrict use according to gender. John Lewis is an example of a private label brand moving towards more gender-neutral clothing for children. Hema also launched gender neutral children’s underwear.

2. Through what channels can you get baby wear on the European market?

Before you start to approach European buyers, you need to determine what market segment fits your company best and through what channels you want to sell your product.

How is the end market segmented?

European buyers of baby wear can best be classified by the price-quality level of their products. Other than that, each target age group is generally associated with product characteristics such as soft, chemical-free and natural materials for babies.

Table 1: Baby wear market segmentation

Consumer type	Price level	Fashionability	Materials	Functionality	Order quantities
Luxury consumer	Very high retail prices	‘Adult’, unique designs	Luxury materials	Very high requirements regarding washability, durability and fit	Low order quantities
Fashion conscious consumer	High retail prices	Styles in line with latest trends	Good quality, organic materials	High requirements regarding washability, durability and fit	Low to medium order quantities
Practical consumer	Medium retail prices	Practical, fashion conscious designs	Medium quality, organic materials	Requirements include easy-to-wash, safety	High order quantities
Price-conscious consumer	Low and extremely low retail prices	Use of licensed graphics	Medium-low quality materials	Requirements include easy-to-wash, safety	High order quantities

The luxury consumer

European brands in the luxury market like Burberry, Baby Dior, Fendi Kids and Dolce & Gabbana sell highly fashionable collections at very high retail prices. Buyers in this segment have extremely high standards regarding safety, washability, durability, fit and use of luxury materials, making this a very difficult market to enter. Order quantities are low. This market is growing primarily because European couples are starting families later in life and therefore tend to have higher disposable incomes when they have children.

The fashion conscious consumer

The upper-middle market caters to the fashion conscious consumer. It is home to brands and retailers such as Joules, Petit Bateau, Tumble N Dry and Bonpoint. Some cater to both adults and children, others specialise in children’s and baby wear. Styles are in line with the latest trends in colour and design. Retail prices are high. Focus is on safety, washability, durability, fit and high-quality organic materials. Order quantities are low to medium. This market is growing, for the same reason the luxury market is growing.

The practical consumer

Practical consumers typically shop in the middle market. Here you will find brands and retailers such as Zara, M&S, Benetton Kids and IKKS. They sell practical, fashion-conscious items, sometimes using licensed graphics. Focus is on safety, washability, durability, fit and medium-quality materials. Buyers will regularly require organic fabrics. Order quantities are high, retail prices low. Like many middle markets in Europe, this segment is stagnant.

The price-conscious consumer

The budget market has brands and retailers such as Tesco, HEMA, H&M and Carrefour catering to price-conscious consumers looking for non-branded, practical items and basics that are good quality, easy to wash and safe. Buyers often use licensed graphics in their designs. Organic materials are in small demand, with notable exceptions, such as C&A and Zeeman. Order quantities are high and retail prices are very low, so your margins would be too. This market is growing.

Table 2: Selected European baby wear buyers and their position in the market

Company name	Price-quality level			Fashionability			Order quantities
	low	med	high	basic	med	high	low	med	high
Burberry			x			x	x
Baby Dior			x			x	x
Fendi Kids			x			x	x
Dolce & Gabbana			x			x	x
Joules		x	x		x	x		x
Olivier		x	x		x	x	x
Petit Bateau		x	x		x	x		x
Tumble N Dry		x	x		x	x		x
Bonpoint		x	x		x	x	x
Zara		x			x				x
M&S		x			x				x
Benetton Kids		x			x				x
IKKS		x			x		x
Tesco	x			x				x
HEMA	x			x				x
H&M	x				x				x
C&A	x			x					x
Carrefour	x			x					x
Zeeman	x			x				x

Through what channels does the product end up on the end market?

The most marked difference among your potential buyers is their place up the value chain, because that will determine how they do business with you. Each type of buyer requires a specific approach. Always try to find out in what part of the value chain your buyer operates, what challenges they face in the market and how you can contribute to their sales strategies.

• If you want to target European end consumers directly, try selling via platforms such as Alibaba, Wish and Amazon. Most online consumers can be found in countries in Europe’s northwest. You will need to invest in a web shop, stock and order management, and customer service. Your biggest challenge will be return policies. The lack of brand awareness among European consumers, who appreciate baby wear for its consumer safety and sustainable qualities, will also make it difficult to find buyers outside the budget market.
• Online multi-brand retailers such as Zalando, Asos and Yoox sell baby wear brands and develop their own private collections, mostly value brands. They can detect market interest very fast and will immediately react upon sales data. Usually such companies will place a small test order first. If the item is selling well, they will place an actual production order. Fast delivery is a must.
• If you want to sell to retailers, the biggest names in baby wear are H&M, Zara and C&A. Many large supermarket chains also sell baby wear. A retail buyer can place an order relatively fast as they only need one development sample for order confirmation. However, their buying behaviour can be unpredictable. Order quantities are large when you service Europe’s large retail chains, but so is the price pressure.
• Baby wear brands such as Le Petit Bateau and Olivier typically develop a collection 12 months in advance. You will need a large sample room as brands require salesman samples (SMS) of each collection style. Every sample needs to be actual, meaning it must look exactly like the product will in the shop, with branded hangtags and accessories. It may take many months before orders are placed. Brands sell to retailers, but also directly to consumers via their own online stores.
• Intermediaries such as agents, traders, importers and private label companies, sell your product on to buyers up the value chain. They are price focused and require flexibility in quantities and qualities. Some are located near or in the production countries and primarily do sourcing and logistics, such as Li & Fung. Others, such as Dewhirst and Longratex work from Europe and also do market research, design and stock keeping. Their service level determines the commission rate they charge.

What is the most interesting channel for you?

If you are a small to medium-sized manufacturer in a developing country, intermediaries, brands and retailers are likely the most interesting types of buyers for you. End consumers are a difficult target group because of complicated customer service demands and your lack of brand awareness. European retailers can be a difficult channel because they mostly buy from brands and traders.

Intermediaries

Agents, traders, importers and private label companies are the most adventurous type of buyer and are usually the first to explore new sourcing destinations. By working with an intermediary, you will have access to many different buyers up the value chain and you can learn how to service them by following the trader’s instructions. At the same time, you avoid the risk and investment associated with directly supplying to a brand or retailer.

Brands

Many European fashion brands are trying to cut out intermediaries and source directly from manufacturers. Baby wear brands are no exception to this trend. Hence, brands can be an interesting category of buyers. However, working for a brand comes with greater risk, as requirements become more stringent the higher you go up the value chain. Your first difficulty will be to get nominated by a brand. Investigate your potential buyers’ target group and collections and try to offer a better product for a competitive price.

Retailers

Selling to a European retailer with a local buying office in your region gives you the advantage of doing business with a partner that knows the trends and requirements in the European market. The choice between doing business with an intermediary or a retailer mainly depends on the complexity of the product you produce. Basic, cheap items do not offer enough margin to justify working with an intermediary.

3. What competition do you face on the European baby wear market?

Large and small factories in Asia, North Africa and Europe are your main competitors. If you want to compete successfully, it is important that you can handle flexible quantities; that you have a reliable, transparent and preferably local supplier of organic materials; and that you have high efficiency and low wages. This is because prices for baby wear are lower than for adults, but labour intensity and wastage are usually the same or higher.

Which countries are you competing with?

China is the largest country exporter of baby wear to Europe. Technical innovation, high efficiency, excellent customer service and the local availability of fabrics and trims give Chinese manufacturers an advantage over competitors in developing countries. Most factories comply with European requirements regarding quality and sustainability, but high MOQs, rising labour and production costs and not benefitting from the Generalised Scheme of Preferences (GSP) that removes import duties to the EU, all work against them.

Producers in Bangladesh specialise in making cheap, basic apparel, including baby wear. The country benefits from a large, fairly well-skilled workforce, low labour costs and benefits from the GSP. There is little availability of local cotton. The biggest challenge for Bangladesh will be to increase technical expertise, facilitate smaller orders and get more factories to comply with international safety and sustainability standards.

India is a low-cost producer of apparel with a large workforce. India’s apparel production is generally divided into hubs based on product type, with the one around Delhi focused on womenswear and children’s wear. India, which benefits from the GSP, is the world’s largest producer of cotton and second-largest exporter, but many of its factories lack the service level that their competitors in China offer, and are struggling to meet increasing requirements regarding sustainable production.

Turkey has the main advantage of being close to Europe, which results in very short lead times. The country produces high-quality, fashionable apparel items in small quantities, including baby wear. It has local availability of cotton and a European business culture. Among other advantages, Turkish manufacturers will accept payment in euros, for example, but price levels are relatively high compared to countries in Asia.

Although Sri Lanka’s wages are increasing, it remains a low-cost sourcing origin with a skilled workforce and efficient, compliant factories. Sri Lanka’s producers focus on higher added-value products, including upper market casualwear, women’s lingerie and nightwear, swimwear, children’s and baby wear. Sri Lanka lacks locally produced fabrics, but it benefits from the GSP+ tariff scheme.

Cambodia is an upcoming production country for apparel, including children’s and baby wear. Many factories in Cambodia were set up by foreign investors from other Asian countries, who also bring their expertise. The country lacks locally produced fabrics, but benefits from the EBA tariff scheme. Sub-optimal production quality due to an inexperienced and relatively small workforce and the relatively high costs for importing and exporting fabrics and finished goods work against Cambodia’s producers.

Which companies are you competing with?

The Crystal Group is a large, well established manufacturing group with 20 factories in five countries (China, Bangladesh, Sri Lanka, Cambodia and Vietnam). Key to its success is what it refers to as its co-creation business model, which focuses on building long-term relationships with leading global apparel brands and working as a proactive partner in both innovation and sustainability.

The Crystal Group offers excellent service, including dedicated production teams to advise buyers on product specifications, raw materials, finishes, treatments and washing techniques, and even monitoring buyer’s stock levels at their warehouses.

China’s Jiangsu Guotai Huasheng Industrial Co. Ltd has seven production units in China and four in other countries (in Myanmar and Cambodia). One of the largest Chinese exporters of apparel, and part of a large group, Jiangsu Guotai is vertically integrated, producing its own yarn, fabric and trims. The company offers design and a sample making centre for fast turnaround of prototypes. It also has sales offices in European countries, such as the UK, France and Spain.

Sri Lanka’s Voguetex has a sales office in Germany, which provides the advantage of being close to buyers and to offer localised service and support. Voguetex focuses on customer service, including product development, design, in-house printing and embroidery, and marketing. Its website is professional and modern and is supported by an active presence on social media. The company clearly promotes its focus on CSR, including local community initiatives and certifications, such as BSCI, Sedex, Oeko-Tex and ISO 9001:2008.

Which products are you competing with?

Printed and embellished apparel items, particularly those with licensed graphics, fetch higher prices than solid items. The biggest emphasis on prints is in baby sleepwear, followed by tops. The most important product categories for comic book graphics are sleepwear, T-shirts and sweatshirts.

Short and long-sleeved T-shirts, leggings and sleepwear are worn year-round by all age groups. In the value and middle segments, a style is often sold in sets of 2, 3 or 5 colours or design combinations for a lower per unit price, particularly for babies. There is intense competition for very low prices in these categories. In other segments, margins are higher for value-added, embellished and sustainable products.

Organic materials are growing increasingly important for baby onesies, T-shirts, sleepwear, sweatshirts, knitwear and leggings. As the industry move towards other sustainable materials, such as recycled fibres, more opportunities for outerwear garments using recyclable synthetic fabrics open up.

Although largely seasonal, outerwear is a highly differentiated category focusing on both fashionability and functionality. Weatherproofing against both cold and wet conditions is important for all age groups with parkas, raincoats, puffer jackets and snowsuits in high demand. New materials and technologies are being introduced continuously, including shower resistance, water resistance, waterproofing and synthetic down.

Many of the top baby wear importing countries are cold-weather countries, which means that even in spring and summer, lightweight outerwear is required, making this a very interesting category for the European market.

4. What are the prices for baby wear on the European market?

The factory price of your product, which in the fashion industry jargon is your FOB price (for free on board), is influenced by many factors, including the cost of materials, the efficiency of your employees, your overhead and profit margin.

The challenge with manufacturing baby wear is keeping production efficiency high, even though the average fabric consumption may be lower than for adult wear, and the order quantities smaller. Because of this, most successful manufacturers specialise only in baby wear, maximising efficiency and competitiveness.

The following chart shows the average cost breakdown of a typical FOB price.

Chart 1: Breakdown of a typical FOB price

Note that these percentages may vary per factory and per order. Some factories accept lower profit margins during offseason periods or when order volumes are high. In addition, the percentages for labour versus fabrics may vary, depending on the efficiency and wage level of the workforce and the price of the materials. Efficiency goes up and material prices go down when producing large volume orders.

Retail pricing

The retail price of a baby wear item is on average four to eight times the FOB price, which is called retail markup. It follows that the FOB price is on average 12.5%–25% of the retail price of the product. Exceptions do exist. In the budget market, some large European retail chains may sell products for a markup of just twice the FOB price. Retailers mark the FOB price up four to eight times because they need to account for import duties, transport, rent, marketing, overhead, stock keeping, markdowns, VAT (15%–27% in EU countries), among other costs.

According to Eurostat’s 2018 comparison of retail prices for apparel, France has the highest price level among the top six apparel and footwear importer countries at 109.9 points compared to the European average of 100, followed by Belgium (106.4), the Netherlands (106.3), Italy (101.1), Germany (99.1), the UK (92.7) and Spain (92).

Note that brands and retailers that sell in multiple European countries usually keep prices equal or deviate only slightly from the standard retail price. Prices for older children’s garments are higher than those for younger children and babies. Some retailers even have a tiered pricing system for larger sizes within the same age group for the same product.

Online commerce, a strong budget segment and intense competition have made consumers in Europe accustomed to low prices. Focus on sustainability and higher production costs have, at the same time, put manufacturers, suppliers and buyers under enormous price pressure.

Prices are expected to remain stable in the next three years thanks to increased efficiency, automation and the trend of production shifting to low-wage countries. This trend, combined with the increase in average population age and consequent decreasing demand for baby wear, is expected to reduce average order quantities, moving part of the production towards nearshore countries that can offer most flexibility.

This study has been carried out on behalf of CBI by FT Journalistiek.

Please review our market information disclaimer.