So you want to start your own business. But do you know which market you want to target? Finding a lucrative market can be tough. Be Your Own Boss has taken the guesswork out of the idea hunt by exploring five markets that are hip, hot and happening. Who knows? Combining statistics with some creative thinking could generate the business idea that finally sparks your new path in life. So without further ado, here are our top picks for today's five hottest markets.
Hot Market No. 1: Parents/Kids
They say "Mom knows best." Well, moms also control 80 percent of U.S. household spending, plunking down an estimated $1.6 trillion annually on products and services for their families.
There are many ways to tap into today's parenting market, says Maria Bailey, author of Marketing to Moms: Getting Your Share of the Trillion-Dollar Market. She sees a wealth of opportunity in financial services that let parents set up "kid accounts" to teach money management and secure Web sites that offer parents instant test results and reports from schools. An estimated 2 million American families are home schooling, creating a new and untapped product and service niche. To generate ideas, look at how parents might use your product or service idea differently, Bailey says. For example, a video-production entrepreneur could consolidate baby videos into video "baby books" and create a profitable business in the process.
Children's fashion is another hot area. Carolina Zapf is founder of Baby CZ, a New York City company that sells a luxury line of cashmere clothing for infants up to 24 months. Zapf, 35, who spent 14 years in the fashion industry, invested $15,000 to start the company and got $40,000 in orders at her first trade show. "It was far beyond our expectations," she says. Baby CZ's sales now near $1 million annually, and its products are sold through www.babycz.com and at 80 stores nationwide, including Bergdorf Goodman and mall boutiques. The company is expanding into shoes, clothing for 3- and 4-year-olds, and high-end baby lotions and powders.
Tweens-kids ages 7 to 12-and teens are another hot market. U.S. kids ages 12 to 19 spent $175 billion in 2003 on everything from fashion and sports to technology, and the population of U.S. teenagers will reach 35 million by 2010, says Michael Wood, vice president of Teenage Research Unlimited, a Chicago market research firm. Tweens and teens are personalizing jeans, lockers, shoes-you name it-creating new business opportunities, too. "The product or service has to be tied to a need they have," Wood says. First among teen needs are rebellion, fitting in and conquering awkwardness. Remember being 14? Ponder it, and you could profit from it.
Plus-Size and Pets
Hot Market No. 2: Plus-Size
Americans are big and getting bigger. In fact, two-thirds of us are now overweight, according to the Centers for Disease Control. The women's plus-size clothing market alone generates $22 billion in sales every year, according to market research company NPD Group. And the overall plus-size market will grow 15 percent over the next four to five years, says Marshal Cohen, chief industry analyst at NPD Group.
Celebrities from Mary-Kate and Ashley Olsen to Queen Latifah and George Foreman are responding with plus-size clothing lines, and Old Navy launched a plus-size line in July. At least 800 Web sites now offer plus-size items, ranging from lingerie and pantyhose to promwear and wet suits up to size 4X. Torrid, a mall chain that carries plus-size clothing aimed at women aged 15 to 29, has grown to 52 stores nationwide.
Today's plus-size person wants to be just as fashionable as anyone else, says Lisa Alpern, founder and creative director of Beauty Plus Power, a New York City online style magazine focused on twentysomething women wearing sizes 12 to 24. The real growth "is in junior-plus merchandise," she says. "They're starting to make the clothes younger, hipper [and] with a more body-conscious silhouette."
Kim Camarella-Khanbeigi, 30, is co-founder of Kiyonna, an upscale clothing company with five employees that caters to women sizes 10 to 32. Based in Huntington Beach, California, Kiyonna just launched a lingerie line, and sales are expected to grow from $1.2 million last year to $1.8 million this year. Eighty percent of the company's business is generated online, with the other 20 percent coming from sales to 120 boutiques across the nation and overseas. "Our main focus is on selling directly to the consumer," Camarella-Khanbeigi says.
Of course, this market is more than clothing. Bearsville, New York, company Amplestuff sells plus-size products, including fanny packs and airline seat belt extenders. Freedom Paradise Resort in Riviera Maya, Mexico, is the world's first getaway for plus-size people. And there are opportunities in everything from plus-size furniture to wider shoes, says Schuyler Brown, a trend spotter with ad agency Euro RSCG MVBMS Partners in New York City.
Kids and teens are another emerging plus-size market. A Duke University/Foundation for Child Development study found that nearly 16 percent of kids aged 12 to 19 were obese in 2002, making room for fitness and nutrition programs and electronic gadgets aimed at plus-size youth. Says Cohen, "If you build it, they will come."
Hot Market No. 3: Pets
The U.S. pet market is projected to generate $34 billion in sales this year, according to 2004 figures compiled by the American Pet Products Manufacturers Association (APPMA). Compare this figure to 1994, when the U.S. pet market was worth $17 billion.
Reasons for the explosive growth include empty-nest boomers doting on their pets as well as a wide array of products-from timed feeders to automatic water dishes-that make it convenient for anyone to have a pet. The pet industry "is growing and getting stronger," says Bob Vetere, APPMA's COO and managing director, who gets calls from VC firms seeking investment opportunities in the pet market.
Harley-Davidson touts a line of leather dog jackets, Paul Mitchell has a line of pet shampoos, hotels such as Starwood Resorts offer pet-friendly rooms, and Japanese pet-toy company Takara has introduced Bow-Lingual, a device that translates dog barks. Anything that makes Fido feel like family is hot, and prices in the pet category range from bargain to go-all-out luxury. Emerging products and services range from the luxurious (pet spas, massage services, toys and grooming) to the offbeat (pet therapists, acupuncture treatments, liposuction, full-scale funerals and urns).
Doug Grabe is barking up the right tree. Grabe, 38, launched Atomic Products two years ago with Alan Curtis, 53. The company's growing pet products division, Atomic Pet, carries a line of battery-powered Glowtronix products, including glow-in-the-dark safety collars and leashes for dogs that retail for $15 and $20, respectively.
Grabe projects $3 million in sales this year for Atomic Pet. His advice? Define your market, and attend events like the APPMA trade show, which featured 604 pet companies and nearly 600 new pet products at its most recent trade show in March. "You'll find people who have made the jump," Grabe says. "It's a great way to prove your idea can be done."
Seniors and Hispanics
Hot Market No. 4: Seniors
America is turning gray. In 2003, 35.8 million Americans were older than 65; this year, 36.1 million will be older than 65. By 2022, the number will reach 57.5 million, says MarketResearch.com, an aggregator of published market research.
"This market is going to be the fastest-growing population in the country over the next 20 years," says Don Montuori, editor of Packaged Facts, the Rockville, Maryland, consumer goods and demographics publishing division owned by MarketResearch.com. In 2002, MarketResearch.com estimated U.S. consumers older than 65 had $713 billion in buying power. By 2007, their buying power is expected to increase to $974 billion. With child rearing and house payments a distant memory, "[seniors] spend more of their income than other age groups," Montuori says. An added bonus: Senior citizens are more receptive to ads and fliers. "They have more time to read," Montuori says.
The older-than-65 demographic, however, is overlooked in our youth-obsessed marketing culture, leaving money to be made for companies that target it. Consider TV network CBS, which has gone against the grain to target an older demographic with shows such as Joan of Arcadia and consistently has programs ranked in Nielsen's top 10.
Medical services is another hot area of this market. Two years ago, Laura Berry invested $10,000 and won an SBA loan to start Soundview Medical Supply, a company that sells home health-care products-from incontinence items to nutritional supplements-aimed at seniors. The Seattle company grew 36 percent per quarter last year and 2004 sales are expected to exceed $1 million. "We had astronomical growth in 2003," Berry, 42, says. "And we're still growing."
Today's grandparents like to spend money on their grandkids-according to sales and marketing information firm NPD Group, grandparents' purchases accounted for 16 percent of the $21 billion-per-year toy industry-and companies such as Grandtravel, a Washington, DC, company that provides exotic travel opportunities for grandparents and their grandchildren, are tapping new market opportunities. For some older Americans, however, time with the grandkids isn't limited to Sunday visits: Nearly 400,000 grandparents over age 65 now have the primary responsibility for grandchildren who live with them, according to government statistics. Think creatively, and you could have a "senior moment" that turns into a lucrative business.
Hot Market No. 5: Hispanics
Hispanics have become an economic force: Thirteen and a half percent of the U.S. population is now Hispanic, according to the U.S. Census Bureau, and 1 in 5 new births in the United States are to Hispanic families. By 2020, 1 in 4 Americans will be Hispanic.
U.S. Hispanic purchasing power in 2004 will hit $700 billion, according to HispanTelligence, the research arm of Hispanic Business magazine. "If this number is reached, the Hispanic market will surpass the African-American market in purchasing power," says Rosanna M. Fiske, principal of Rise Strategies, a Miami marketing and communications company focused on the U.S. Hispanic marketplace. By 2010, Hispanic spending could reach $1 trillion.
National department store chain Kohl's carries clothing by celebrity Daisy Fuentes, while Kmart hawks a line by Mexican singer-actress Thalia. In April, Perry Ellis International launched two Latin-inspired lines, Cubavera and Havanera, the latter to be manufactured for J.C. Penney. Hispanics "are making more money, and they're spending it. This has the attention of the big companies," says John Terry, who recently researched the Hispanic market as an adjunct professor at Southern Methodist University's Caruth Institute for Entrepreneurship and partner with management consulting firm Churchill Terry, both in Dallas.
Rafael Jimenez is founder of Republica Trading Co., a New York City company that produces Latino-inspired shirts, hats and denim sold at Bloomingdale's, Fred Segal, hip boutiques nationwide, and through the company's web site. Jimenez, 36, projects his company will hit $1 million in sales in 2004. "You can't get around the numbers [in this market]," he says. "It's only going to get bigger."
Financial services, technology, translation and wire services-even college camps that help young Hispanics assimilate from a tightknit family culture into college life-present hot opportunities. "Twenty years ago, the Hispanic market was a product-driven market," Fiske says. "It's turned into a services-geared market." It's also a young demographic-67 percent of U.S. Hispanics are less than 34 years old, Terry says.
Although Cubans, Mexicans, Puerto Ricans and many other Hispanic nationalities speak a common language, they have different cultures. A blanket marketing approach won't attract Hispanics, who become very loyal customers once they find products and services they like. "It's a complex market because of its diversity," Fiske says. "[But] this is going to be the market to watch."
For more information on how to reach today's 5 hottest consumer markets, Try these helpful resources:
- The Great Tween Buying Machine by David Siegel, Tim Coffey and Greg Livingston
- Kidfluence: The Marketer's Guide to Understanding and Reaching Generation Y-Kids, Tweens and Teens by Anne Sutherland and Beth Thompson
- Teen Research Unlimited
- Beauty Plus Power
- Real Fitness for Real Women by Rochelle Rice
- Sewing for Plus Sizes by Barbara Deckert
- American Pet Products Manufacturers Association
- American Veterinary Medical Association
- Careers With Animals by Audrey Pavia
- How to Start a Home-Based Pet Care Business by Kathy Salzberg
- Ageless Marketing by David B. Wolfe and Robert E. Snyder
- American Association of Retired Persons
- The National Council on the Aging
- National Institute on Aging