Spielwarenmesse: An inside view on European toy markets – United Kingdom

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07. November 2014 / Market

An inside view on European toy markets – United Kingdom

from Steve Reece /  Show comments

This is the first of a three article series looking at the biggest toy markets in Europe (Germany, France and the U.K.).

The UK is often considered to be a bridgehead between North America and Europe due to the (nearly) identical language, while the U.K.’s membership of the European Union (for now at least!) effectively opens up the broader region to those companies making their first steps into Europe from afar.

The U.K. should not be taken for granted though, as it has several highly distinctive features versus other markets in Europe and North America:

Retail/Distribution

As per many other markets the grocery/hypermarket channel in the UK has a significant market share. The leading players in that channel from a toy perspective being Tesco, Sainsbury’s and Asda (owned by US giant Walmart). 

Where the UK differs is in the number one toy retailer, Argos, which is an almost unique entity. Traditionally Argos has driven its business via a massive printed catalogue of 1500-2000 pages, of which over 100 pages are toy or toy related products. This mammoth publication is rumoured to have a print run of 20million copies (that’s approximately enough for one for every UK household), plus a smaller but equally hard hitting Christmas catalogue featuring special seasonal offers. In recent years Argos has seen continual growth via online channels, split between reserve online then collect in store and home delivery purchases.

The other notable feature of UK toy distribution channels is the comparative weakness of independent toy stores. While there are some successful and longstanding independents, the channel as a whole is much less significant versus some other major markets where they can represent sizeable sales volume alone. 

There are 3 major chains of toy specialist retailers in the UK.

  1. Toys "R" Us which is very similar to TRU stores elsewhere in terms of operations, store formats and range approach. The Entertainer is usually based in high street locations in towns and cities, and has seen significant growth in recent years, especially since the demise of Woolworths.
  2. Additionally, Ireland’s leading toy specialist Smyths entered the UK market several years back and is also growing with a store format that could perhaps be described as being somewhere between the massive warehouse approach of Toys "R" Us and the tightly controlled space & footfall heavy Entertainer stores.
  3. Finally in the toy specialist space there is Hamleys, based in the centre of London’s main shopping area, and with multiple floors packed full of toys, Hamleys acts as an industry showpiece, as well as driving strong sales volumes for a single location.

Product

In terms of products, the UK market is comparatively more reliant on licensed products than some others. Plastic products tend to predominate versus products with perceived higher quality such as wooden products.  

Consumer

Sadly the UK often comes towards the bottom of the pile in Europe in terms of quality family time, with research suggesting that UK parents are more likely than their European counterparts to resort to ‘plasma parenting’ (whereby the parent allows free access to the TV to distract the child from pestering them) and to ‘palming off’ children with gifts, whether toys or other products instead of giving the gift of more parental time/focus on the child. Also, the UK toy consumer is more likely to buy a product because of the label/brand on the packaging than because of the product itself (versus other European markets).

Media

the UK has a fairly fragmented media landscape with specialist kids entertainment channels available via satellite/cable and with particular prominence for the BBC, a publicly owned broadcaster which utilises two particular brands for its children’s TV programming – CBeebies for younger children and CBBC for older children. ITV and Channel 5 are free to air commercial broadcasters with childrens TV programming blocks.

In terms of toy trade media, there are 3 established toy trade magazines/online resources.

  1. Toy News
  2. Toy World
  3. Toys n Playthings.

These magazines are a useful source of local market insight.

Practicalities

The UK toy market is often more difficult to enter than companies expect. There are several reasons for this. Firstly, the product and marketing mix are significantly more driven by brand/label than by quality of product and/or play experience. Therefore those companies who rely on user experience as a primary marketing method can find the UK more difficult to penetrate. Moreover, because the UK is the natural jumping off point for North American companies trying to enter Europe and because of the strength of several major UK based toy companies, the competition for listings can be fierce.

Finally, like many countries, the UK toy market tends to be a comparatively close community, and as such the hardest factor in terms of entering the market is often making the first steps successfully, once on the inside it usually becomes easier and easier to build momentum, even if business challenges remain.

 

Author of this article:

Steve Reece, CEO Kids Brand Insight

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