Interview with Jan Remus, Clementoni: Increased...
The Covid-19 pandemic presents challenges, not only for the German subsidiary of the Italian toy manufacturer Clementoni. However, Jan Remus, Managing Director of Clementoni GmbH in Frechen since the end of 2019, sees a great opportunity in it for the toy industry to dare to cooperate more.
Mr Remus, in pre-corona times, we were living in a period of growth and unlimited dynamism. Do we now need to change our thinking? Some people are already talking about a major transformation. What conclusions have you reached? Will anything change?
Jan Remus: The crisis will surely lead to businesses reflecting more profoundly about structures and business processes. I see that as an opportunity. We have already identified aspects that we want to change, such as possibilities for new, further-reaching cooperation and partnerships with retailers – and also competitors.
Does the coronavirus mean a possible end to globalisation?
J.R.: No, if anything, I believe that it will lead to a questioning of certain characteristics of globalisation. For example, if we take the topic of sourcing, which concerns a lot of people at the moment, the issue affects Clementoni less because we already have the majority of our production in Italy. Individual components do indeed come from Asia but this supply chain functions really well. Globalisation does also have its advantages.
Italy has been hit particularly hard by the pandemic. How badly has it affected your parent company in Recanati?
J.R.: In the current crisis situation, we are basically facing two challenges. Firstly, there is the continuous and timely availability of products and, secondly, there is the potential impact on the Italian toy market and therefore on the business of our parent company. Products are available in spite of a few minor constraints, especially because of the disproportionately well built-up stock in our central warehouse from before the crisis. In addition, our production in Italy is now starting up again gradually. When it comes to the Italian toy market and the potential effects of the crisis, it is barely possible to make assessments and forecasts at the moment. We remain positive, however, and we are sure that our colleagues will be able to restart the business again in the near future, on the basis of a "new normal".
Germany has put together a gigantic rescue package for the economy. What are Italian companies able to expect?
J.R.: In comparing the two countries directly, of course I see differences. The package of measures in Germany is significantly more comprehensive. However, there is also very specific support for certain sectors in Italy.
The German toy market grew strongly in the first quarter of 2020. Is that a flash in the pan or will the sector come out at the end of the year with a nice positive result?
J.R.: In sales, we were able to post a clear increase of 42% in a market with an 8% plus for this period. That also correlates with an increased demand in certain categories like puzzles, games and arts & crafts. What we are certainly seeing very clearly is that customers have been focusing on channels like online retail, but also supermarkets, and buying there. This changing consumer behaviour is not new, but it is speeding up noticeably because of the current situation. In principle, there is a lot that speaks for the toy market being perfectly able to close with a positive result in spite of significant challenges. In crisis years, as was also demonstrated by the financial crisis, the budget per child generally increases. This is especially the case when people do without – or are forced to do without – expensive purchases or holidays. However, we are remaining realistic because we can only assess the negative effects of a possible recession at the close of the year.
We will come back to these developments but, first, let’s go back to the same question again. Is it a flash in the pan or is the industry also, in perspective, profiting from the crisis?
J.R.: Yes, the increased demand not only comes from children having to be kept occupied at home but also because adults are increasingly reaching for puzzles and arts crafts. The awareness for toys, and also how much time parents and children – and also adults – spend with classic toys, has generally risen and, from our point of view, this is going to last.
The catchword is "changed consumer behaviour". Does this mean that specialist retailers are now coming under even more pressure?
J.R.: There will probably be a counter movement as soon as stores have adjusted to the new normal. As of today, that is not yet the case. I actually take a very sceptical view. The pressure on this distribution channel has further increased. The negative trend will certainly accelerate once more; you can't argue that one away. As an industry, it is now about strengthening new concepts and developing new ones. As a partner, we see it as our duty to play a part in this.
Games, puzzles and craft materials, in particular, are experiencing a boom. Games for children and families, as well as puzzles, are the second strongest segment for you. Has Clementoni been able to benefit from the state-imposed cocooning?
J.R.: Yes, precisely this segment, primarily Galileo, experiments and arts & crafts, are benefiting disproportionately but certain product groups were already doing very well before the coronavirus. The challenge for us now is to keep pace with the increased demand.
You have been Managing Director of Clementoni GmbH since December. Revenues climbed from €12m to €18.7m between 2015 and the end of 2019. Clementoni is in 25th position on the German market. You want to leverage further potential. Where do you see this?
J.R.: I definitely see potential in the growth segments like puzzles, Galileo experiments and magic sets. We are also going to provide a boost to all segments through suitable innovations.
The success of Clementoni is determined to a large extent by licensing. You are adding more to this in 2020 with The Masked Singer and Money Heist. What do licensed toys bring to your revenues?
J.R.: Licensed toys make up 75% of our portfolio. However, we have to differentiate clearly here. It is true that our business is driven by licensing but Galileo and Ehrlich Brothers are not a classic licensing activity for us. Instead, they are long-term "licensed partnerships". We develop the products largely by ourselves and then decide together with our licensing partners when and how we will introduce these onto the German market. A corresponding, closely coordinated, marketing strategy also plays a decisive role.
Do you not view this as being too dependent? A competitor once said that when it comes to licensing, besides having a nose for it, you also need a good portion of luck.
J.R.: No, because the collaborations with Galileo and Ehrlich Brothers are long-term partnerships. As I said, they also need to be viewed separately from the traditional licensing business and are significantly less dependent on the strength of a trend at any given time. With classic licensing themes, i.e. if it is precisely about these trends, you also need "the right nose" and have to make the right decision at the right time. In percentage terms, this business also makes up a significantly smaller share for us.
What will be a "must" amongst licensing trends this year? What are you placing your greatest hopes on?
J.R.: From May, we are offering an exclusive Play for Future puzzle range with Disney. Play for Future stands for a sustainable concept that we are counting on strongly. There are a few challenges at the moment with the classic licence themes because, for example, there are significant delays with the cinema release of films due to the crisis. Minions 4 is one example here. This is why we rate various Netflix series as being very strong licence themes; they depend less on the current situation.
Mr Remus, thank you for talking to us.
Interview published with kind permission of the German trade journal planet toys international. You can read the whole interview in the next edition 3/20 – May/June.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of Spielwarenmesse eG.
Expert knowledge, the newest trends and latest developments of the industry. Stay well-informed with the monthly visitor newsletter of Spielwarenmesse®: subscribe now