Thinking of Buying a Children’s Wear Business in Australia? Here Are 3 Vital Questions to Ask
The Australian infants’ and children’s clothing retail industry generated $5.16 billion in revenue in 2025 across 1,248 enterprises and 5,087 establishments.
It employs more than 13,500 people, with industry profit margins averaging 8.4%, higher than the broader clothing retail sector.
However, revenue is projected to decline at 0.4% annually through 2031, to $4.9 billion, reflecting reduced birth rates, housing pressures, and intensifying online and discount department store competition.
1. Is the Business Financially Sustainable in a Declining Market?
Why It Matters:
Children’s clothing sales are highly sensitive to demographic and economic trends. Falling fertility rates and delayed parenthood reduce long-term demand, while rising costs of living push households toward cheaper alternatives.
What to Check:
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Revenue trends – Industry revenue has slipped 0.2% annually over the past five years, with sharp falls during cost-of-living peaks.
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Profitability – Premium fashion-conscious and eco-friendly brands enjoy stronger margins than discount competitors.
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Stock management – Excess inventory and heavy discounting during downturns have eroded profits for weaker operators.
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Resilience – Diversified offerings such as toys, prams, or bedding help offset weak apparel sales.
2. Does the Business Have a Strong Market Position and Customer Base?
Why It Matters:
The sector is fragmented, with Cotton On Kids holding just 3% market share, while most operators are small independents.
Reputation, convenience, and multi-channel presence increasingly drive performance.
What to Check:
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Customer demographics – Parents aged 35–54 are the largest spenders, accounting for nearly half of industry revenue.
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Product mix – Girls’ clothing represents ~41% of sales, reflecting higher variety and demand than boys’ clothing.
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Brand strength – Online visibility, loyalty programs, and sustainability credentials (e.g., organic cotton, recycled fabrics) boost appeal.
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Location advantage – NSW and Victoria dominate the market, accounting for over 56% of all children’s wear sales.
3. Is the Business Aligned with Retail and Consumer Trends?
Why It Matters:
The future of children’s wear will be shaped by online competition, sustainability, and affordability.
Operators who adapt quickly to shifting consumer expectations are most likely to thrive.
What to Check:
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E-commerce capability – Online retail continues to grow at 6.3% annually, drawing demand away from physical stores.
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Sustainability – Eco-friendly babywear and second-hand platforms are attracting cost-conscious, environmentally aware parents.
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Consumer sentiment – Rising disposable incomes post-2026 may encourage higher-value purchases, but housing affordability remains a headwind.
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Competition – Discount department stores (Kmart, Target, Big W) and online-only retailers (Temu, Shein) intensify price competition.
Ready to Invest in a Thriving Children’s Wear Business?
Despite demographic and cost-of-living challenges, Australia’s children’s wear market offers opportunities in premium, eco-conscious, and omni-channel retail.
Success depends on financial stability, strong brand positioning, and the ability to meet evolving consumer preferences for affordability, sustainability, and convenience.
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