The nation’s 77.6 million baby boomers are heading into their grandparenting years and retailers are primed.

The industry that already gave us Baby Gap, Pottery Barn Kids, Cargo Kids and Talbots Kids, plus independent local stores focusing on everything from baby clothes to his or her toys, has even more to sell.

Expect an explosion of stores and ads geared toward grandma and grandpa’s wallets.

The spending potential is huge. In 2002, baby boomers’ after-tax income was $2.5 trillion, and it’s estimated grandparents spent $23 billion on their grandchildren that year. By 2007, baby boomers’ post-tax income is estimated to reach $2.6 trillion.

"I guess you have a soft spot and get very emotional over the little rascals," said Terry Rudd, who says he and his wife, Mary Jane, spoil their five grandchildren, who range in age from 20 months to 4 years. They have a sixth grandchild due in November.

"We’re at a stage in our life when we can afford to do that," said Rudd, a retired IBM employee and founder of the Rudino’s pizza and grinders chain. "With grandkids, it’s more relaxed (than when raising your own children). You just want to have fun with them."

As more baby boomers such as the Rudds become grandparents, retailers say they are transferring their own purchasing habits - focusing on health, education and trendiness - onto what they buy their grandchildren.

"Billy Crystal is a grandparent now - he wrote a book about it," said Pamela Turner, co-owner of the children’s boutique Simply Spoiled in Durham, N.C.

Like clothes and other fashions, Turner said boomers are looking to celebrities to set grandparenting trends.

"You’ve got to have that diaper bag that Brooke Shields has," she said.

National chains have long had separate stores for children’s sizes and tastes. But now, more independents like Simply Spoiled and boutique chains such as Strasburg Children are getting into the mix.

And service-oriented businesses are aiming their efforts at children and the relatives who will pay for them.

Snip-its, a Massachusetts-based kids’ hair-cutting chain, fills its stores with fun cartoon characters and installs educational videogames for kids to play at each hair-cutting station.

Haircuts cost $15.99 at most locations, twice what they cost at other haircut chains. But company founder Joanna Meiseles said most of the parents and grandparents in her stores feel they get better quality.

"Every customer’s different," she said. "For the most part, people appreciate the attention to detail and the quality of service, so they’re willing to pay for it."

With wealthier grandparents willing to spend, the segment has attracted the attention of other industries as well, particularly travel and financial services, said Linda Scovill, publisher of Fifty Plus, a monthly publication based in Durham, N.C.

"They’re spending money on the intangibles," she said.

Even banks are targeting grandparents. Wachovia has recently been advertising its 529 college savings account specifically to grandparents.

"The parents are trying to make the mortgage every month, and most people we find are not putting away for the education," said Jack Clayton, regional president for the bank.

Clayton said he couldn’t say how many accounts were opened, but did say they are very popular.

"The parents will open it, but the grandparents will fund it," he said. "They might put money in for every one of the birthdays."

Expect the number of ads aimed at grandparents to grow as their numbers grow. Simply Spoiled owner Turner estimated just 20 percent of her current customers are grandparents, but she expects that to change.

"People will always buy for their children," she said. "As they get older, they will buy for their grandchildren, too."