Given that the Indian toy industry is estimated at about 1.4 billion US dollars and till now, has generated only 0.5 per cent of the global market, toys are still contemplated as more of a luxury than a need. However, the growth, especially in the context of the growing middle class and increasing demand for quality and branded goods, is wooing brands from overseas to enter the Indian Market.
Retailer media caught up with Pawan Gupta, Director, Playwell Implex and Vice President, Toy Association of India, who shared insights of the industry, the changing consumer’s behaviour and the factors driving growth in this industry.
How has been the growth of toy industry in recent times?
The coming times are really bright for the toy industry. If you go back around 2010 or 2008, since then till now there have been a lot of developments in the toy industry. One can see a number of foreign brands entering into India.
Initially we had traditional toys, local toy manufacturers who used to make low quality products for the Indian market. But as of now, most of the branded toys, whether they are from US, UK, Germany or any other country, are being distributed from China. There is a very good development in the industry and variety is there now.
What are the challenges while retailing of toys?
Definitely, the quality products are expensive, which makes them to be thought of as luxury. But there are some India manufactured toys ranging from Rs 50 to Rs 300 which are of educational nature. Given that there is a huge emphasis on education, the toys in this category have huge market which is growing day by day.
As far as branded products are concerned, even today they are counted as a luxury, as the price point matches the level of upper-middle or the premium class.
What is the average basket size in this category?
It varies from city to city between metropolitans, Tier I, Tier II etc, but as a whole, it is around Rs 200 to Rs 250. As far as metros are concerned, this figure raises to Rs 400 to Rs 500.
Actually there is a lot of variation from region to region in India. For instance, there is a huge difference in basket size between South Delhi and East Delhi. There is a brand Lego, being imported by Mahindra & Mahindra. During 2000s, there were nearly 15 distributors of that brand in South Delhi, while only three were there in East, North and West Delhi.
Is the category of toys dependent on geography?
I would rather say that price-points depend upon geography.
What about the market for toys from Avengers vs. the regional markets?
Characters like Barbie or Avengers or Ninja Turtle are popular all over the country from Haryana to Delhi, irrespective of geography, reason being, media awareness and penetration of television. The main difference is pricing as spending power of parents varies from city to city.
In a not-so-urban city, a child buys a toy for say Rs. 100, while same character is being sold at some hypermarket for four hundred bucks. So it depends upon the purchasing power of the city.
What is your stand on penetration of eCommerce in toy industry?
It is growing gradually and currently around 5 per cent of the total market has been taken by eCommerce players. I won’t say that they are extracting share from the existing market, but they are expanding the market and creating their own share. They are developing and expanding the toy category because in tier II and Tier III cities, not many shops are available for toys, especially the branded ones.
There are brand conscious people even in rural areas. So, eCommerce players are reaching out to places where the physical outlets are not available, thus creating their own space.
What is the market share between brands and non-brands?
The toy market consists of both the local manufacturers as well as brands. The branded toy market is not more than 20-25 per cent like Simba, Cicco, Mattle so there are companies which are importing, making the brand and selling in India. They have got distributors, who distribute the product in retail complexes.
The local manufacturers have got more wholesalers and distributors and their products are distributed in a big way rather than the branded products. Distributors are very few for branded products as the price point is very high, while local products are comparatively inexpensive and hence, their reach s higher than brands.
Has there been any shift in the consumption pattern?
There has been a tremendous change in the last 5 years with consumers being more inclined towards toys. Due to the emergence of nuclear families and increased disposable income, parents are purchasing more toys, both recreational as well as educational value. The market size is increasing by at least 20 to 25 per cent.
Are the recreational toys selling more or the ones with educational value?
The recreational and outdoor toys are more in trend, but yes, there is a market for educational toys. So going by figures, the recreational toys count to70-75 per cent of total market, while remaining 25-30 per cent is for toys with educational value.
What about the play stations? Are they taking up the market space?
Definitely, the play stations and electronic gadgets have taken a share of board games, the jigsaw puzzles and not many outdoor activities are there as children are busy playing on the gadgets. Around 5-10 per cent share has been taken by the gadgets, especially in the category of 6-12 years.