Spielwarenmesse: Toy market Germany: consumers spend more on quality and educational toys

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Toy market Germany: consumers spend more on quality and educational toys

from Euromonitor International

Traditional toys in Germany benefit from the slightly higher birth rate and more generous parents. But especially digital toys are expected to have a thriving future. However, the German market remained largely immune from global trends, with consumers displaying a clear preference for domestically well-known, traditional brands.

Sales of toys in Germany experienced strong value growth thanks to the favourable consumer climate. Low interest rates stimulated growth in domestic demand, which resulted in a very high employment rate. Combined with the low global price of crude oil, this meant that German consumers had higher disposable incomes. This supported the generosity of German parents and grandparents with regard to spoiling their offspring, especially in light of busier lifestyles.

Toy market benefits from the favourable consumer climate

Over the forecast period, traditional toys and games will continue to benefit from the favourable consumer climate. Consumers’ spending confidence, particularly in dual-income families, is to expected to be strengthened.

Parents displayed a growing willingness to spend on more sophisticated, higher-priced traditional toys, such as robot dogs and intelligent dolls. Another positive impetus came from the slightly higher birth rate in 2014, which particularly benefited sales of traditional toys for babies (0-18 months).

Accordingly, scientific/educational toys and construction toys have amongst the best forecast growth prospects. Following the recent upwards trend in the birth rate, pre-school (3-4 year old) is also expected to post growth over the forecast period.

Attitude of parents hinders the stronger success of global licences

Unlike in other markets, such as the US or the UK, global toy licences enjoy very limited popularity amongst German consumers. Overall, the share of licensed toys amounted to 18% of value sales in traditional toys in 2014. Amongst the few popular examples continued to be Star Wars and various superhero characters by Marvel and DC Comics, including Spiderman, Batman and Superman, which particularly supported sales of Lego toys. Other global licences, such as Monster High and Frozen, saw only limited success amongst German consumers.

The main obstacle to the wider success of global licences in Germany is the attitude of German parents with regard to toys for their offspring. Determined to choose the most valuable toys and games in terms of safety and educational content, German parents have a keen preference for well-known, tested toys.
Well-established licences such as Star Wars and the various superhero characters that many parents remember from their own childhood will continue to see the best performances. Licences that appeal to the nostalgic sentiment of parents and grandparents, such as Maya the Bee and Sendung mit der Maus, are similarly expected to continue to perform well.

Market data

% Value 2014
Store-Based Retailing 72.8
- Grocery Retailers 7.5
- Mixed Retailers 7.8
- Non-Grocery Retailers 57.5
Non-Store Retailing 27.2
- Internet Retailing 24.1
- Direct selling 1.7
- Homeshoppping 1.1
- Vending 0.3
Toys and Games 6,089.8
- Traditional Toys and Games 3,056.6
- Video Games 3,033.2
LEGO GmbH 8.3
Mattel GmbH 3.9
Geobra Brandstätter GmbH & Co KG 3.8
Hasbro Deutschland GmbH 3.2
Simba-Dickie Group GmbH 2.9

Toys go digital

In light of the growing competition from digital means of entertainment that can be accessed through smartphones, tablets and similar devices, toys continued to witness a shift towards products with digital or electronic features.

With the wealth of digital games on mobile devices steadily growing, children’s attention is being diverted from traditional, non-digital toys and games at an increasingly young age. As such, six of the 10 most popular traditional toys and games incorporated electronic or digital features in 2014. Electronic and digital features not only supported the demand for traditional toys and games, but also enabled manufacturers to benefit from higher profit margins through unit price increases. Parents displayed a greater propensity to spend more on toys with complex animated functionalities.

Innovations are expected to primarily focus on more sophisticated digital features. Trade sources expect manufacturers to focus especially on products for the comparatively new target groups of young children and adults aged 40 and above. Both are growing user groups of digital toys. Connectivity will therefore play an important role, and the most successful toys and games are likely to be those that can be controlled via smartphone and tablet apps. Digital and electronic features will remain vital in fending off the competition from fully digital puzzles and other games.

Retailers pursue a multi-channel strategy

Whilst traditional toy stores remained the most important distribution channel for toys in Germany in 2014, internet retailing continued to gain popularity. This was supported by increasingly busy lifestyles, which drove strong demand for convenience, as well as by the attractive pricing strategy of internet retailers.

However, as German consumers continued to display a keen interest in visiting stores and testing products prior to purchase, pure internet retailers were reported to have registered losses. As such, more store-based and internet-based players pursued a multi-channel strategy, combining high street stores and an online shop.

This is an extract from Euromonitor International’s Toys and Games in Germany report. For more information, please click here.

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Euromonitor International

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