Due to the foreboding nature of the coronavirus pandemic, there has been a considerable decline in the 2020 birth rate. Along with this decline comes the loss of sales all over the world for companies that manufacture baby supplies, such as baby food, formula and diapers.
This particular phenomenon is thought to be happening because families are unable to afford the income level associated with having children, as well as the responsibility that comes along with it. The predicted pandemic-induced baby slump is coming as the United States and China have reached record lows in the number of births this year, according to CNBC.
The think tank Brookings Institution predicted that there will be permanent financial losses associated with the pandemic, which will in turn usher in a decline of births. Following that trending decline, consumers will purchase less child care supplies from diaper manufacturing giants like Procter & Gamble (NYSE: PG) and Kimberly Clark (NYSE: KMB) and formula makers like Nestle (NYSE: NSRGY) and Reckitt Benckiser (OTC: RBGLY).
However, the decline in births due to financial insecurity will mean that those who do choose to have children will most likely be richer, thus more likely to spend more. Companies are expected to try to attract consumers that would be interested in premium baby items, especially diapers which can vary widely in price points. Retailers like Walmart (NYSE: WMT) are seeing this estimated baby decline baby decline as an opportunity to dominate the baby care market, so they are investing more heavily in the production of such items.
This predicted baby slump is all depended on the direction of the economy. So if the economy turns around and starts improving, parents may decide to have more children. But as long as the economy remains in a recession, would-be parents may choose to delay having children.
It is predicted, however, that the birth rate will never be the same as it once was before the coronavirus, so the baby product industry will be looking to adapt alongside consumer needs.