$650 Dresses for Toddlers?

Her mother, Dara Sandler, says she dresses her daughter in the latest fashions because Juliet is a reflection of her — even though her daughter can't spell the names of the designers, let alone pay for their clothes.

Top fashion designers are pushing more expensive duds for the increasingly lucrative affluent toddler demographic. This fall, Oscar de la Renta, Dolce & Gabbana, and Marni launched collections for the pint-sized. Luxury stores Nordstrom and Bergdorf Goodman are expanding their children's areas to make room for the newcomers, many of them with higher price tags. Late last year, Gucci, which launched a children's collection two years ago, opened its first children's store on Manhattan's Fifth Avenue.

Some designer houses like Oscar de la Renta and Marni say they're careful to keep the clothes appropriate for kids. But there are plenty of miniature versions of the adult looks that raise eyebrows because of their eye-catching prices and sophisticated styles.

American households are expected to spend an average of $688 outfitting their children for school, says the National Retail Federation, and that includes supplies like pencils and notebooks.