Gymboree Mounts Challenge to GapKids
Gymboree Corp., which operates stores for infants and young children, will graduate to the preteen apparel market and challenge GapKids by launching a chain called Zutopia early next year.
The Burlingame-based operator of Gymboree and Gym Baby stores has been trying to develop an apparel store concept for older children but had not announced a name for the chain. Signaling its plans to move forward, the company said Wednesday that it will open 10 Zutopia stores during the first quarter of 1999.
Gymboree hopes the launch will rejuvenate flagging sales and give it access to a growing market--children ages 6 to 12. The leader in this retail segment, Gap Inc.’s GapKids chain, is well-entrenched, but analysts say there’s room for new competitors.
“It’s a hot demographic,” said John Pitt, a retail analyst at LJR Redbook Research in New York. “This ‘tween market between young children and teens is becoming a more well-defined retail sector. Kids in this age range are becoming more self-conscious--with needs and an identity of their own. Increasingly, they are making their own buying decisions when they shop with their parents.”
Gymboree is launching Zutopia because it wants to respond to the growing fashion independence of these preteens, said Dawn Dover, a spokeswoman for the company. She said the chain will offer trendy private-label merchandise for boys and girls at the mall-based stores.
“A new retail concept can create opportunities for the company in this age group,” Dover said.
Gymboree has had a difficult year, with sales up only 2% at stores open at least a year. Net income was $3 million for the 39 weeks ended Oct. 31, compared with $24 million for the same period a year ago.
Much of the dramatic slide in earnings is due to heavy price-cutting at the company, a response to rising competition from department stores and from Gap’s BabyGap and GapKids chains, analysts said.
GapKids caters to Gymboree’s infant-to-6-year-old market, as well as to children ranging from age 6 to early teens.
Gymboree will also use Zutopia to challenge the Limited Too chain, which is operated by Columbus, Ohio-based Limited Inc. Gymboree will also have to compete with the children’s lines of designers such as Tommy Hilfiger, Ralph Lauren and DKNY.
Gymboree is only the latest specialty apparel retailer to move into a new market. Foothill Ranch-based Wet Seal Inc., which caters to teens and young women, earlier this month in Florida launched its Arden B. chain, which targets women ages 20 to 45.
San Francisco-based Gap has also begun to venture into the intimate apparel business, challenging Limited’s Victoria’s Secret chain with its new GapBody stores.
Specialty chains are looking for new markets because consumers want more choices, said Sheryl Leff, an apparel executive at New York-based Doneger Group, a retail consulting firm.
“There is a sameness to stores because of all the retail mergers in the 1990s,” she said. “Specialty chains can create excitement and additional sales by finding new niches.”
