Harrods will refit its babywear area in time for spring 08, after the department's sales so far this year soared by 35%.
The growth compares with a sales uplift of 40% in the department for the whole of last year.
Harrods managing director Michael Ward said the sales spurt was a result of a growing gifts market. He said: "Grandparents like to spoil their grandchildren, and many parents who choose not to buy into designer brands for themselves will buy for their children."
He attributed Harrods' success in the designer kidswear market to the department store being "four to five years ahead of everyone else."
He said: "We want authority from the cradle to the grave. The rest of the kidswear market needs to become more aspirational to survive."
General merchandise manager Kirsty Vinten said that another reason for the refit was to respond to the growing number of labels in the babywear sector.
She said: "Product in the babywear market is becoming a lot more classic, with an increasing number of brands now catering for children aged up to 18 months."
Designer brand Roberto Cavalli will launch a babywear collection for spring 08, which will be housed in the refitted department at Harrods.