Bugaboo Donkey: Would you pay $1,500 for a baby stroller?

Commentary about business and finance.
April 7 2011 1:31 PM

Bugaboo's Big Bet

Bugaboo pins its hopes for a rebound on a $1,500 double stroller.

Bugaboo Donkey.

Less than a decade ago, Bugaboo was on a roll. Following a prominent placement on Sex and the City, its strollers seemed to be everywhere—well, at least everywhere in places like the West Village and West L.A. With its distinctive, clean look and then-unheard-of prices (up to $1,000), Bugaboo dominated the upper-end stroller market. Then came the Great Recession, putting the brakes on Bugaboo's growth, and on the children's luxury-goods market.

Now, as the privately held Bugaboo launches its first new stroller in four years, everyone from executives at the Dutch company to owners of infant and toddler supply shops across the United States are hoping the firm can recapture the magic. The company's initial effort at a double stroller—the Bugaboo Donkey, priced at an astonishing $1,499 for the most commonly used model—is already getting good buzz. But the market for the Bugaboo is unlikely ever to be as strong again as it was in the middle part of the decade, and it's unlikely there is anything Bugaboo can do to change that fact. The company is, in many ways, a victim of its own good fortune.

When Bugaboo debuted its over-the-top stroller in 1999, its overwhelming success created a new niche in the world of infant and toddler goods for stylized luxury at high prices. At first, Bugaboo had this niche all to itself. If you fell in love with the Bugaboo style, your choice was a Bugaboo … and a Bugaboo. There was literally nothing else out there like it, either in price or in looks. It was a sporty stroller created for the city set, designed by an art student. It wasn't fussy or plastic. It was lightweight, and its aerodynamics were impeccable. Pushing a Bugaboo was the parental equivalent of driving a high-performance race car. "They didn't have to work very hard to sell themselves," admits Eli Gurock, owner of Magic Beans, an infant supply store in Boston. "The Bugaboo had no competition in the high-end stroller space."

Soon, however, other entrepreneurs exploited the niche Bugaboo had discovered. Numerous high-end companies entered the space, selling everything from strollers to cribs. Without Bugaboo, it's quite likely "baby mobility" companies such as Orbit Baby and iCandy would not exist.

Alan Fields, a long-time industry observer and co-author of Baby Bargains, says Bugaboo didn't respond aggressively to the competition, confident of its strollers' iconic status. That strategy worked as long as the economy percolated. But the downturn hit Bugaboo hard.

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Madeleen Klaasen, Bugaboo's head of marketing, admits the company was caught off guard by the suddenness and strength of the downturn. However, more aggressive competitors like Baby Jogger were able to capitalize, cutting costs and prices. Others, like Massachusetts upstart UPPAbaby, championed their environmental credentials. Bugaboo seemed stuck in the past, seemingly unable to move on, not even offering a double stroller or its own branded infant car seat—both of which were becoming increasingly important in the infant transportation market. Bugaboo also suffered a mortifying recall of one of its strollers, the Bugaboo Bee, for brake failure. Online reports claimed massive sales declines, though Bugaboo executives deny that.

Compounding Bugaboo's lower profile were changes on the retail end of the business. Many of the smaller mom-and-pop outfits that were staunch Bugaboo supporters from the start lacked the cash reserves to survive the recession. Early Bugaboo champions such as the Bay Area's Lullaby Lane and Florida's Baby Love closed their doors for good.

On the other hand, behemoths like buybuy Baby—part of the publicly traded Bed Bath & Beyond empire—were able to take advantage of poor retail conditions to expand operations, going from fewer than 10 stores in 2007 to more than 40 outlets today. Sure, they carried Bugaboo—but they also carried dozens of other strollers. Moreover, buybuy Baby might be well stocked, but, like all warehouse stores, it lacks the personal touch of the smaller outlets, where owners and longtime employees would spend huge amounts of time with customers, explaining minor differences between products and, not infrequently, pushing them toward more expensive ones.

As for the Donkey, it's both a beautiful and functional item: striking to look at, easy to push and steer, able to be used as a stroller/shopping cart as well as a children's two-seater. Bugaboo's publicity machine remains excellent: Fans mobbed gala events held this past week in New York, Chicago and other cities to introduce the Donkey. To intensity the hype and anticipation, the company is releasing the Donkey in limited quantities to select stores over the next few months, allowing waiting lists to build up before releasing the stroller more widely later this summer. No doubt a celebrity will be photographed wheeling her children in one within the next few weeks.

And Bugaboo's timing may be good. Wal-Mart might be stagnating, but luxury sales are up. Moreover, the children's goods market (covering everything from toys to changing tables) is also on healthier footing, increasing by 5 percent in 2010 to a record $18 billion in retail sales, according to market researcher Packaged Facts.

Nonetheless, the Donkey remains an expensive item in 2011, several hundred dollars more than other double strollers on the market. With that price, it is firmly defining itself as a product for the elite. Luxury consultant Pam Danziger, for one, thinks the Donkey will ultimately prove more successful at buttressing Bugaboo's other, (relatively) lower-priced products, its hefty price tag serving to make items such the Bugaboo black Cameleon (only $1,000!) seem almost reasonable.

Whatever happens with the Donkey, however, Bugaboo's place in stroller history is secure. Pre-Bugaboo, you would have been hard pressed to spend more than $400 on a stroller. Post-Bugaboo, $500 would come to be seen as a bargain.