From stuffed dolls to toy soldiers, there is a common thread running through almost all toys sold around the world: the âMade in Chinaâ label.
In India, the threat is even more serious. Unbranded products from the Asian neighbor represent up to 90% 1.5 billion dollars (around Rs10,500 crore) domestic toy market. The stranglehold of unorganized retailers has left little room for branded players like Funskool, Lego, Mattel, Hasbro and even the iconic Hamleys to gain a foothold in the country.
The Hamleys brand has now been put on the block by its owner C. Banner International and India’s Reliance Retail, a branch of the oil conglomerate Reliance Industries, would be in talks to acquire it. Hamleys had posted a loss of Â£ 9.2 million, across its global operations, in 2018. It doesn’t release specific numbers for India, but given Chinese dominance, it can’t be too bright.
Over the years, Chinese manufacturers have succeeded in reducing the prices of toys to the lowest levels.
âChinese cheap toys are either mass produced or scraps from other countries which are diverted to the Indian subcontinent (or) Africa. In addition, Chinese toys are toxic in a high proportion, âreads a July 2018 report from India. standing parliamentary committee on trade.
Mass production â China boasts of 10,000 toy manufacturers“And the failure to meet quality standards means that these toys can be sold, on average, at half the price of brand name toys in India,” said John Baby, CEO of Chennai-based Funskool, the largest manufacturer of Indian toys.
The only way to curb this is “to impose higher import duties on Chinese toys and introduce stricter rules to control illegal imports,” Baby suggested.
Although the most formidable, the Chinese threat is not the only problem looming for toy makers.
Organized toy retailers in India also face high rents, which affects their margins.
âRentals in major shopping centers can be as high as Rs 1,000 to Rs 1,200 per square foot. It is very steep and most of the time does not justify investments for income, âsaid Sandeep Bhardwaj, marketing expert and dean of Vivekanand Education Society Institute of Management (VESIM), Mumbai.
But stores are essential in increasing the visibility of a brand. âSingle-brand retail stores have become important for toy brands to increase their market presence and reach the right target audience,â Amit Kararia, senior regional sales manager for South Asia at Lego, said Mint last year.
Therefore, toy brands are always on the lookout for stand-alone stores that will also reduce their rent expenses. During the last years, Funskool launched 16 single-brand outlets in level 2 cities like Udaipur, Indore, Amritsar and Thane. It also intends to expand into smaller towns.
Sports equipment maker Decathlon is a successful example of the low-cost, single-brand retail model in India. The French retailer has eschewed the mall-based model and created warehouse stores with low prices. âThe toy market may be ripe for a similar disruption,â said Umashankar Venkatesh, professor of marketing, Great Lakes Institute of Management, Gurugram.
Then there is the growing popularity of video and online games, an area in which gamers like Hamleys are lagging behind. India’s online gaming market is expected to reach 11,900 crore by 2023, according to KPMG.
Taking note, players like Funskool and Mattel have been co-create products by engage with different age groups. They use targeted communication to market products that combine digital with physical tactility.
India’s toy market is expected to reach $ 3.3 billion by 2024, according to market research firm IMARC. How much of this will come from branded players is an open question?