Kiddie Couture: Designers Cash In on Childrenswear Boom

By Katie Little, Special to CNBC

NEW YORK ( CNBC) -- The clothes may be small, but designers are betting on big business as they launch childrenswear brands.

On Thursday, Diane von Furstenberg became the latest designer to venture into children's fashion as her signature wrap dresses and prints hit the racks at Gap Kids ( GPS) and Baby Gap in miniature sizes.

Ranging from $20 to $120, the pieces went on sale at U.S. stores today and will be available internationally on March 28.

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"Versace, Gucci, Oscar de la Renta -- they're all coming out with their kids' brands these days and targeting the U.S. market because it is becoming a new trend here as well," said Gina Rizzo, co-founder of Petite Parade.

While Europe has traditionally been a popular market for luxury childrenswear, the U.S. is now following suit.

"I think there's a lot more focus on the children's market design-wise, especially in this country, which was not that prevalent before," said Carolina Zapf, who designs the Baby CZ brand. "I mean historically there's been always a lot from Europe, but out of this country there are wonderful companies that are doing great, innovative things and fun things."

Zapf was one of 27 designers who presented on Saturday and Sunday during New York Kids Fashion Week, which was presented by Petite Parade and Vogue Bambini.

First launched in September 2010, the showcase went on a brief hiatus as the organizers mulled over the best time to hold it. Its organizers eventually decided to present the show at the same time as the Playtime New York childrenswear trade show.

In her tenure as Vogue Bambini's editor-in-chief, Giuliana Parabiago said the children's fashion market has "completely changed."

"At the beginning, it was a very classic market," she said. "Every season -- the same collection. Nothing changed -- all the same outfits."

Since designers have begun to enter the market, collections are no longer merely last year's adult fashions in miniature form, Parabiago said. Now, kids' collections incorporate their own unique trends also.

"With color and fabrication and detail and design, you can do so much more," Rizzo said. "Kids love anything that is eye-catching and bold, so I think in that sense, there's more room to play so to speak with children's fashion."