By  on August 27, 2007

These are good times if you're in the children's apparel business, a sector that's getting a lift from small, family-run companies with fresh ideas about how to dress junior.

Children's apparel sales are expected to increase 10.4 percent to $44 billion this year, far outpacing the 6 percent growth in 2006, said Marshal Cohen, chief apparel industry analyst with The NPD Group.

Children's apparel sales are so strong that they are expected to grow almost twice as fast as the 5.4 percent increase expected in adult apparel sales this year, according to NPD. Typically, the gap between adult and children's apparel sales is much smaller.

This fact is even more surprising when the limitations of the market are considered. The children's apparel market in the U.S. represents just a sliver of the overall $180 billion in annual apparel sales. At any given time there are only 1,000 kids' fashion vendors supplying retailers. Additionally, the universe of specialty, mass and department store chains selling kid fashions is tiny — just 47.

Another part of the equation: The children's apparel business is typically cyclical, trading places every few years with adult apparel as top dog in the industry. Cohen forecasts the current upswing in kids' apparel to last for about another year. Next fall "the adult market should shift to 7 percent growth and kids should drop down to 3.5 to 4 percent," Cohen said, adding that the slowdown is inevitable since "no one's doing enough in the industry to sustain the momentum," Cohen said.

However, such forecasts don't seem to quash enthusiasm among the small independent kids' apparel vendors who are fueling the current boom.These vendors are succeeding by tapping into demand from young parents and Baby Boomer grandparents for hip and playful kids clothing you can't get everywhere, Cohen said.

A good example of the trend is Knuckleheads Inc., started two years ago in Vancouver, Wash., by new parents Trent and Melissa Nash. They now have 500 boutique customers in the U.S. and abroad, selling $40 outfits of retro-design T-shirts, shirts and pants inspired by skateboarders, motorcycles, pirates and bowling. This fall the couple is launching an infants' line.

"Parents love to spend money on their kids," said Melissa Nash, in an e-mail. "I totally get it."Similar inspiration steered textile designer Faez Fathi and his wife, Jen Bright-Fathi, to launch Bunny and Bee last year in San Francisco. The company sells cotton

T-shirts and sweatshirts with whimsical but edgy graphic designs of flowers, animals and fruit, for around $30 retail. Producing the designs locally, and with their two toddlers as models for promotional photos, the couple is building business through its retail Web site ( and 20 boutique accounts in the Bay Area, Chicago and Canada.

"Dads love our stuff. He might be a guy who works in a band or a skateboarder with tattoos. But I also have dads from [posh] Pacific Heights in San Francisco," Bright-Fathi said. "They don't want to see their girls in frilly pink all the time."

Cohen views this trend in sociological terms.

"Kids' fashion has become the great vehicle to communicate your well-being," Cohen said. "It's not about practicality, it's about imagery. In many cases they are dressing their kids to convey the image of being above it all."

Natasha Levin, whose Orlando, Fla.-based Micro Me kids' clothing line sells in 100 boutiques, sees demand for infants and toddlers wearing all black, skull-print skirts or tattoo-style graphic T-shirts as part of fashion's evolution.

"People who are interested in rock 'n' roll, are surfers and skaters, are all having children. To me it makes sense we would need something a little different than we had when we were children," Levin said.

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