A COVID-driven “baby boom that was predicted [by some] is just not going to happen,” says Janine Stichter, Senior VP of Specialty Retail, Apparel and Footwear at Jefferies & Co. And if you’re in the kids’ business, that’s a factor that will weigh on your strategy in the coming years.

Changing Plans
More than 40% of women reported that because of the pandemic, they changed their plans about when and how many children to have, according to a Brookings Institute study. A vast majority of those (34%) said they wanted to get pregnant later or have fewer children. U.S. unemployment alone is expected to result in a 5.5% decrease (206,000) in births, down from 2019, Brookings said.

In 2019, there were 3.75 million births in the U.S., the lowest total in 35 years, which declined further to 3.63 million in 2020 and is projected to fall to 3.4 million this year, The Children’s Place CEO Jane Elfers told analysts last week. It is expected to recover slightly to 3.5 million in 2022, before continuing its decline, she said.

“The longer the pandemic lasts, and the deeper the economic and social anxiety runs, it is feasible that we will see an even larger reduction in birth with an increasing share of them averted permanently,” Brookings said.

Smaller Families
A trend toward smaller families has been a long-term phenomenon. According to Brookings, women had an average of 4.7 children in the 1950s, but that had declined to 2.4 by 2017 and is expected to further fall to 1.7 by 2100.

Economics Professors Melissa Kearney (University of Maryland) and Philip Levine (Wellesley College) forecast a “baby bust.” Put simply, they write, “There is a well-documented cycle to the nation’s birthrate: When the labor market is weak, aggregate birthrates decline; when the labor market improves, birthrates improve. At the individual level, there is also a well-documented link between changes in income and births: When income increases, people often expand their families; when people experience job or income loss, they have fewer children.” Add the effects of the pandemic, and the numbers look even worse.

Confronting the Challenge
It’s a factor that marketers and sellers of children’s products are confronting. “While we recognize that projections can change over time, we are clearly not anticipating a baby boom anytime in the near future,” said Elfers of The Children’s Place. “So in the last 10 years, during one of the longest bull markets in U.S. history, the zero to 10 kids market has contracted due largely to the cumulative effects of persistent birth rate drops, lower average unit revenue and the liquidations and forced store closures of several struggling children’s retailers.”

The declining birth rate may force companies to reorient or diversify. For example, a supplier of baby formula has expanded into adult nutrition drinks. And on the agency level, Toronto-based The Licensing Shop is seeking to expand into corporate brands from its base in juvenile brands, says CEO Nancy Fowler.

“You are going to have to diversify because it’s not going to be business as usual” moving forward, says Fowler said.