Which Canadian Children's Clothing Manufacturers Are the Largest?
From Toronto to Montreal, a number of distinctive children's clothing brands have emerged. Rather than following the fast fashion playbook, they focus on quality, sustainability, and design. In the shadow of giants like Gap and Carter's, how do Canadian domestic children's clothing brands survive—and even thrive?
Canadian children's clothing brands carve out their niche through quality and sustainability
Market Size and Competition
The Canadian children's clothing market was worth approximately CAD 2 billion in 2024, but behind this seemingly modest pie lies a brutal reality: over the past five years, industry revenue has been declining at an annual rate of 1.6%, while the number of enterprises has been growing at 3.7%, with approximately 1,444 companies now competing in this space. The pie is shrinking, but more and more people are trying to get a slice.
Market dominance is firmly held by two American companies: Gap Inc. and Carter's Inc. IBISWorld data shows Gap is the largest company by market share in Canada's children's clothing market. Carter's is even more of a behemoth—this 160-year-old Atlanta company holds about one-fifth of the U.S. children's clothing market (according to Trellis market reports), with 2023 sales reaching USD 2.8 billion. Its OshKosh B'gosh brand operates a vast network of stores in Canada. Baby Gap, similarly, has captured about one-fifth of the U.S. infant apparel market share.
These two companies' advantages lie in economies of scale and omnichannel distribution. Carter's owns over 1,065 retail stores and has established wholesale partnerships with major retailers like Amazon and Walmart. They can drive down costs through massive purchasing and reach consumers through stores everywhere and powerful e-commerce platforms. Canadian domestic brands have almost no chance of winning in this kind of scale competition.
However, IBISWorld predicts industry revenue will grow 6.1% in 2024, reversing five consecutive years of decline. Post-pandemic consumer recovery? Or are new consumer preferences reshaping the market? It's hard to say, but change is happening.
The competitive landscape is dominated by major American retailers
Local Brands
Hatley: From Aprons to Global Brand
A transformation story from North Hatley, Quebec
In 1986, in the small town of North Hatley, Quebec, artist Alice Oldland hand-painted a batch of farm animal-themed aprons in her gift shop for a charity auction. Her husband John thought these items had commercial potential and took 200 of them to kitchenware stores in Toronto for a trial sale—they sold out that same day.
Many successful companies have this kind of serendipitous beginning, and Hatley is no exception.
But what really transformed Hatley from a family workshop into an international brand was a series of strategic decisions made after three brothers—Chris, Nick, and Jeremy—took over in 1999. The Globe and Mail ran a detailed report: over two decades, the company grew from 8 employees to 325, established more than 30 direct retail stores, with products entering 4,400 active accounts in 37 countries, and an annual revenue growth rate of approximately 14%.
Online return rate of just 0.04%—a figure from The Globe and Mail. This ratio is almost unbelievable in the apparel industry. The secret lies in their in-house team of illustrators and designers who create original patterns each season, with strict quality control throughout every stage from design to production.
There's also the counter-intuitive retail expansion. Just as industry analysts declared physical retail dead, Hatley accelerated store openings, adding 15 new stores over the past three years (again, according to The Globe and Mail). Why? In their own words, "We found that people like to shop while on vacation; shopping is part of the vacation experience." So they specifically chose locations near ski resorts, such as Vail in Colorado and Mont Tremblant in Quebec.
Their global strategy is also quite shrewd. Chain Store Age magazine reported that Canada imposes an 18% import tariff on clothing, while the U.S. and some other countries have much lower tariffs. Hatley uses the Canadian government's Duty Deferral Program and has established subsidiaries in Australia, the UK, and the U.S., achieving competitive pricing without needing to set up warehouses in each location. Currently, Hatley sells products at 3,200 global sales points, with major wholesale partners including Nordstrom, John Lewis in the UK, and David Jones in Australia.
This company also spent nearly two years fighting a trademark infringement lawsuit in Chinese courts—and ultimately won. This kind of persistent attitude toward brand protection is not common among small and medium enterprises.
Souris Mini: The Quebec Legend That Fell and Rose Again
A story of resilience and generational connection
When Annie Bellavance founded Souris Mini in 1989, she had just finished teaching art to young children and was passionate about fashion. Initially, she simply sold her own designed children's clothing at her daughter's daycare center. In a brand profile by Canada Post, she recalled: parents wrote their needs on paper: "must be easy to wash," "fabric should dry quickly," "add patches to knees and elbows." She visited different daycare centers each workday, recording all this feedback.
This user-need-driven design approach later became the brand's core competitive advantage.
In 2002, the first Souris Mini boutique opened in Quebec City, achieving great success. Rapid expansion followed, and in 2005, they even launched a school uniform collection. But rapid expansion also planted hidden dangers. In December 2017, the company had to apply for creditor protection, subsequently closing 8 stores, reducing some headquarters staff, and selling two-thirds of its shares to businessmen Michel Cadrin and Denis Dussault.
This restructuring kept the brand alive. According to that Canada Post report, today Souris Mini operates 18 stores in Quebec, with products sold in Canada, the U.S., and other countries.
Our mission has remained the same: to offer durable clothing that can be passed down from one child to another. Pieces that can be shared, collected, and borrowed, without losing their quality or charm.
— Souris Mini Brand Mission
What is Souris Mini's most unique asset? I think it's generational inheritance. In many Quebec families, the Souris Mini that children wear was worn by their parents or even grandparents. The brand stated in interviews, "Our mission has remained the same: to provide durable clothing that can be passed from one child to another." In 2022, the company launched an official secondhand resale platform, allowing old clothes to circulate within the community—both an environmental practice and a reinforcement of brand community spirit.
The charity project "My First Beanie" has donated over 226,000 hats to newborns since 2009. Such initiatives are hard to measure by ROI, but they build an emotional connection that makes Souris Mini part of family stories.
Other Notable Local Players
mini mioche has a very clear positioning—GOTS-certified organic cotton, gender-neutral design, entirely made in Canada. They claim their products can withstand more than 400 washes while maintaining quality. "Made in Canada" is the core selling point, but it also means higher costs. In a price-sensitive market, they choose to serve consumers willing to pay for their values.
Deux par Deux was founded in Montreal in 1983, initially as an importer of French girls' smock dresses. It transformed into an original brand in 1986 and opened a store in New York by 1990—quite aggressive for a new brand. The design team travels to Morocco, Cuba, Iceland, Peru and other places for inspiration, finding ideas in the faces of local children.
Roots children's line needs no introduction. As one of Canada's most well-known lifestyle brands, the children's line continues the casual athletic style. The iconic beaver logo is highly recognizable, with extensive use of organic cotton and recycled fibers.
Supply Chain and Production Challenges
The Canadian textile industry has over 150 years of history, primarily concentrated in Quebec and Ontario provinces. But honestly, this industry is no longer what it once was.
A study from Innovation, Science and Economic Development Canada mentions that before the 1980s, Canadian clothing production was mainly conducted domestically. As globalization progressed, production gradually outsourced to developing countries with lower labor and manufacturing costs. Data from Global Affairs Canada lists the top five countries importing textiles and clothing to Canada today: China, the United States, Vietnam, Bangladesh, and Cambodia.
Local manufacturing faces significant cost and supply chain challenges
The challenges facing local manufacturing are multifaceted.
Local apparel consultancy virtue + vice has analyzed this issue: while Canada produces some textiles (particularly excelling in high-quality knit fabrics such as French terry, fleece, swimwear, and athleisure fabrics), it remains an importer of many materials necessary for clothing or accessory production. Most fabrics still come from overseas, meaning supply chains can be affected by external factors like shipping delays, product shortages, and production disruptions.
They also mention a practical issue: manufacturing clothing in Canada is expensive, with higher labor and production costs compared to overseas. You can never compete with a $5 T-shirt produced in Vietnam or Bangladesh.
The Innovation, Science and Economic Development Canada report also points out that as manufacturing continues to move offshore, domestic clothing suppliers (textile companies, label producers, thread companies, etc.) will face greater challenges; these suppliers will likely continue to face consolidation and closures; as the supply chain erodes, clothing companies wishing to manufacture domestically will find it increasingly difficult to achieve this goal.
This is a vicious cycle: the fewer local manufacturers there are, the harder it is for remaining companies to find supporting suppliers, costs rise, and more companies are forced to relocate overseas.
For brands committed to "Made in Canada," this presents both challenges and opportunities. The challenge lies in cost pressure; the opportunity lies in differentiation—when most competitors produce overseas, "locally made" itself becomes a selling point.
Regulations and Compliance Requirements
Selling children's clothing in Canada requires compliance with a series of strict regulations, centered on the Canada Consumer Product Safety Act (CCPSA).
Children's sleepwear has specific regulations: sleepwear in sizes 14X and smaller must meet specific standards for either loose-fitting or tight-fitting types. A 2018 amendment expanded the coverage of lead-containing consumer products regulations to clothing or accessories for children under 14 years of age—meaning stricter material testing requirements for children's clothing manufacturers.
Labeling requirements under the Textile Labelling Act: Must indicate fiber content and dealer information, and must use both English and French languages. Quebec province has additional French requirements. CA identification numbers are not mandatory but can replace names and addresses on labels, with an application fee of CAD 100.
The Fighting Against Forced Labour and Child Labour in Supply Chains Act (Bill S-211), which came into effect in 2023, has added new compliance burdens. McCarthy law firm has interpreted this bill: it requires entities broadly connected to Canada to report on measures they have taken to prevent and reduce the risk of forced labor or child labor being used by them or in their supply chains. This places higher demands on supply chain transparency.
A Global Affairs Canada study found that for participating Canadian apparel companies, tracing the supply chain beyond finished garment production (Tier 1) is a challenge, due to insufficient resources, difficulty tracing to raw material production levels, and suppliers potentially not providing accurate information.
Survival Strategies for Local Brands
Facing giants like Gap and Carter's, how do Canadian local brands survive?
Hatley's playful designs and original patterns, Souris Mini's generational inheritance philosophy, mini mioche's organic certification—all are avoiding price wars, instead building competitive advantages through emotional value and ideological identification. Trellis industry observations mention that major brands are cautiously embracing resale, repair, and recycling content, and chemical safety is gaining attention, but local brands often move earlier and more thoroughly in these areas.
Local brands differentiate through sustainability and community connection
Channel strategies also differ. Large companies rely on economies of scale, spreading volume across major shopping malls and e-commerce platforms. Local brands often choose boutiques, resort areas, and community stores, emphasizing shopping experience over convenience. Hatley's strategy of opening stores at ski resorts is a typical example.
In supply chain control, Carter's can drive down costs through massive purchasing, but local brands have advantages in supply chain transparency and traceability. The Global Affairs Canada report mentions that SMEs can leverage their size advantage—while large companies deal with thousands of manufacturers and suppliers, SMEs deal with far fewer, which can reduce complexity and allow them to focus on improving transparency.
There's also community building. Souris Mini's secondhand resale platform, Hatley's long-term support for Lake Massawippi conservation projects, various brands' charity programs—these initiatives build a sense of community belonging that fast fashion brands find difficult to replicate.
That said, this strategy also has its limitations. After all, nearly 70% of market share is still captured by mass-market brands. Mordor Intelligence industry analysis says something similar: kids grow fast, clothes change frequently, and most parents still have to watch their budgets. Consumers willing to pay for values are ultimately a minority.
Competition pressure from international fast fashion brands does exist, the disruptive impact of e-commerce channels continues, and the dilemma of high local manufacturing costs is difficult to change in the short term. But consumers' pursuit of sustainable, high-quality, locally-made products provides survival space for distinctive brands.
Hatley focuses on playful design and has done well with global expansion. Souris Mini takes the path of family inheritance and community operation. mini mioche is committed to organic certification. These brands take different paths, but they share one thing in common: none of them tried to become the next Gap; instead, they found their own position.
Canadian children's clothing brands continue to find their place through quality, sustainability, and authentic brand stories