Bullish --> Spending On Babies

04/22/19 02:42PM EDT

Editor's Note: Below is an excerpt from "Trendspotting," one component of our world-renowned demographer Neil Howe's new product Demography Unplugged. Click the link to learn more about it and how to get 33% off a full year subscription.

Bullish --> Spending On Babies - zbaby

A new WSJ article debates the pros and cons of the latest crop of high-tech baby monitors. While these devices may not always function perfectly and are not yet regulated by the FDA, there’s no question that they help improve peace of mind for Millennial parents who would rather be safe than sorry. (The Wall Street Journal)

NH: Spending on babies is being pulled in two directions--downwards by demography (fewer babies being born per year) and upwards by quality and margins (more and fancier must-have gizmos). As we predicted two years ago, the upwards pull is winning out.

What's the winning marketing pitch? Just glance at this headline for a story on CES 2019 in Las Vegas: "'Family tech: gadgets appeal to parental anxiety." The first step is to prey on fear (omg, what if I'm not there and something goes wrong?), and then move on to optimization (10,000 scientists have ruled this is the best!), practicality (I will save so much time!), and scarcely credible ancillary benefits (wow, that programmable ducky will help my baby learn to code some day!).

Our summary bears repeating: "For first-time parents, the price tag is worth knowing that their child is healthy and safe—something the baby tech industry banks on. Industry experts agree that baby tech is sold mostly on fear, not practicality. This fear-mongering works well on Xers, whose earliest memories often don’t include parental supervision. Now as parents, they don’t hesitate to fork over their cash for a device that monitors their child’s every breath. For Millennials, these tactics play on their risk-aversion. It’s hardly a surprise that the generation that turns to Yelp to make decisions would want a data-driven app to guide them through parenthood."

Sure, the Owlet Smart Sock (a wireless oximeter that measures heart rate and blood oxygenation) sounds cool enough. But this year's CES featured even cooler and pricier devices--such as those using "contactless" radar and cameras to achieve the same purpose. (Gotta have one of those.) So are we nearing peak baby gadget? Not yet. On our calendar, we don't expect this trend to top out until the mid-2020s. But clearly we're past the rate-of-change inflection point.

From here on out, this crowded industry is likely to trade rising revenues for declining margins.

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