The Major Shows Are Cancelled, But The Show Must Go On

The Major Shows Are Cancelled, But The Show Must Go On

For decades the toy trade has congregated in Hong Kong, Nuremberg and New York in Jan/Feb at the start of each year. Sadly these 3 major shows are not going ahead in 2022 (just like in 2021). For a while it looked like we would at least get 2 out of the 3, but New York and then Spielwarenmesse in Nuremberg also fell by the wayside due to the omicron COVID wave. The UK toy fair is still on, and the expectation is that this under rated show will now play host to more European toy people since the Spielwarenmesse will now not go ahead.

The reality of course is that the majority of 2022 business is already mostly secured by these shows, so in terms of the overall market picture for 2022, the loss of these key shows is unlikely to act as a brake on the market in 2022. Virtual showrooms are already in place, and of course, virtual solutions already delivered an incredible (in the circumstances) 2021.

What we lose though without these massive shows is the heart and soul of the business. The coming together of the industry, the chance to catch up with old friends and make new ones, and to get some face-to-face time with our customers. For many countries, the relationships built and deepened at one of the many formal dinners or events surrounding the shows are fundamental to doing business. It’s ok to miss one year of shows but miss two and those relationships start to weaken a little more, and of course buyers move on, and their replacements need to be understood and persuaded to take our company and our product lines at least as seriously as our competitors.

The reality for 2022 is that the movie slate looks very strong, the logistic issues will continue but shouldn’t be quite so bad or quite so expensive, and therefore the business of toys will still thrive as ever, but our people need to get back face to face. For some of us, the BTHA’s UK toy fair will have to suffice, followed (presumably) by Distoy in London in Many, but beyond that we may not get to meet up again en masse until this time next year.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

CHINA’S BIRTH RATE DROPS TO A 61 YEAR LOW – IMPLICATIONS FOR THE TOY BUSINESS

CHINA’S BIRTH RATE DROPS TO A 61 YEAR LOW – IMPLICATIONS FOR THE TOY BUSINESS

The world’s 2nd largest toy market is going to have less children needing toys based on a recently reported drop in birth rate which sees this critical indicator for the toy trade drop to the lowest rate in 6 decades. The reasons for China’s ongoing issues with lowering birth rate and aging population are well reported, but in summary:

  1. The legacy of China’s one child policy lives on, with young adults in China today increasingly seeing the benefits of not having children.
  2. Cost of raising children has increased significantly in time, making it less likely that parents would choose to have multiple children.
  3. The demographic structural effects of the one child policy lead to many families preferring to have male children, this has left far fewer marriage age/child-bearing women versus available men.

China’s government has and is taking steps to address the issue of birth rate decline, with a strong push on reducing education and other child related costs, but nevertheless a serious demographic imbalance threatens to derail China’s unparalleled economic growth and rise in living standards.

More specifically from the toy industry perspective there are two key implications of this:

Firstly, the next generation of toy users (i.e. children!) will be a somewhat smaller group versus previous generations. Although this shouldn’t necessarily be seen as a catastrophe for the toy business, because there were still 10.62 million births in 2021, compared with a rough average of 3.5m to 4m each year in the USA. China then still has way more new children every year than the world’s number one toy market. Moreover, at the same time as we have seen a decline in birth rates, we have also seen a massive increase in standard of living – to put the demographic data in context, average wages in China have more than doubled in the last decade. In other words, we have a slightly smaller potential consumer base, but massively more money which could be spent on toys & games. Economic advancement is likely to continue for China’s people, and it seems likely that the Chinese government’s programs are likely to eventually curtail the dropping birth rate.

The second key implication for the toy business relates to toy manufacturing – as I have written extensively, one of the key trends in toy manufacturing is a gradual shift of some toy manufacturing away from China. What the current growth rate highlights is that the potential workforce will be smaller in 20 years time than it is now, while at the same time living standards and wage expectations are likely to continue to grow. This means that we are looking at a long-term situation whereby labour-intensive toy manufacturing will have a smaller pool of workers to access, and those workers are less likely to find lower paying factory work viable. Over that same 20-year period of course humanity is expecting yet another tech revolution caused by artificial intelligence and an accompanying increase in the capabilities and flexibilities of robotisation. So, in terms of toy manufacturing, it appears to be the case that China’s demographic situation will discourage toy manufacturing in China over time, unless AI & more advanced robots can plug the gap.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

 

How To Create & Build Brands In The Toy & Game Business

How To Create & Build Brands In The Toy & Game Business

There can be no doubt that the big money in the toy and games business comes from building and selling brands. Growing by acquisition is a proven formula for successful growth in this industry. Brands which get into retail each and every year also provide stability and security in a turbulent marketplace with massive annual product churn. It isn’t easy though to build a blockbuster toy or game brand, but here’s some thoughts on how to do it:

  1. Focus on building your own brands – this seems painfully obvious, but often companies get distracted by chasing easy win sales on licensed products or on jumping on saturated trends which will come and go leaving no ongoing legacy for the company. We need to do some of these things no doubt, because we need to generate revenue and pay our overhead, but while doing all this we also need to think about and ensure organisational focus on creating something ownable with longevity.

 

  1. Take a longer perspective – so often companies focus on the next annual selling cycle or even next quarter, but brand building takes tenacity and above all time. Some brands are flyaway successes from the start, but most take time to build. A good solid brand may take 5 years to build to maturity, so we might need to avoid heaping massive year 1 sales pressure on our own I.P. products. By focusing more on organic growth we can build brands and branded products with an upwards sales trajectory which will stick in market. If we follow the standard toy launch model of dump and run i.e. ship in as much stock as possible to retail and hope it sells through, then we are far more likely to kill our brands.

 

  1. Create compelling products with timeless appeal – there is a reason why certain things keep making a comeback i.e. Yo-Yos, fidget toys, slime/goo. That’s because the reasons why those toys were appealing in the past still apply. There are very few major brands in toys and games which don’t have really good products with proven play patterns.

 

  1. Create a clear, distinctive and ownable visual identity – to make brands ownable, you need distinctive visual identifiers i.e. logo, design style, fonts and all that good stuff. There are plenty of brands in the toy & game business which you would recognise just from a logo, design pattern or font.

 

  1. Use partnerships to level up your brands – for those trying to bootstrap their way up, partnerships can be really effective. A successful cross-promotional partnership benefits both sides and works best where there is an obvious fit between the products. For example, you can find Monopoly branded scratch cards in retail, which is an obvious fit with the classic Monopoly game brand being all about accumulating money. Needless to say, if you have a small hardly established brand you may not get a massive global deal, but with some ingenuity and persuasiveness you may be surprised what kind of partnerships you can create.

 

  1. Help your retailers build a point of differentiation – there are many retailers who hate having to sell the same products as the major mass market retailers who trash the price on everything and make it hard to maintain profitability. Can you find some exclusive iterations or brand extensions of your core products to help ensure retail support with smaller retailers who will better nurture your up and coming brand versus the mass market box shifters?

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

Z Is For Zuru, Zapf Creations & Ziv – Toy Industry A To Z

Z Is For Zuru, Zapf Creations & Ziv – Toy Industry A To Z

 

ZURU

Zuru co-founders Nick and Mat Mowbray started the company back in 2003, before being joined by their sister Anna. The company has since enjoyed hits including Robofish, Bunch o Ballons and X-Shot. The siblings recently purchased the most expensive house in New Zealand, their home country. By the end of 2020, Zuru employed 8500 people, had 26 offices and revenues of over $1billion.

 

ZAPF CREATIONS

Zapf Creations is a long standing and world-renowned toy doll company. Founded way back in 1934 in Rodental in Germany, the best-known products are Baby Born, Baby Annabell and Chou Chou. Baby Born has been in market for 30 years and was ground breaking at the time of launch for the lifelike look and functionality of the product with crying, urinating and eye action all part of a winning formula.

 

SY ZIV

Sy Ziv was a driving force for Toys R Us for 26 years between 1958 and 1985. He was involved in the development of the TRU format, and domestic and international expansion.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

PLAYING AT BUSINESS EPISODE 20 – How To Successfully Start & Build A Toy Company

PLAYING AT BUSINESS EPISODE 20 – How To Successfully Start & Build A Toy Company (Transcript)

To listen to this podcast episode, just click here: https://playingatbusiness.libsyn.com/how-to-start-a-successful-new-toy-business

 

INTRO

  • Hi, welcome to Episode 20 – Playing at Business podcast.
  • I’m your host Steve Reece.
  • Today I’m going to be talking to you about starting a new toy business and how to set it up for future success so you can keep on growing and growing!
  • Before we get onto that though, If you’d like to find out more about the toy & game industry
  • You can get news, analysis and insights via our toy & game trade blog sites:
  • You can sign up for our Free email newsletter on those Blog sites, sent out most Fridays with link to our latest published content including notification of new podcast episodes
  • If you find this podcast, or those Blog sites interesting or insightful, please do share them with your friends and colleagues in the business – we want to provide free to as big an audience as possible.
  • And if you need help to grow your toy or game business, you can check out our Consultancy services – we have worked with more than 100 companies to date, delivering $tens of millions in revenue growth and more than $10m in manufacturing cost savings additionally. To find out more about what we do and how we do it, please check out KidsBrandInsight.com/services
  • That’s the initial blarney out of the way, now onto our talk about how to successfully start a new toy business.

 

PODCAST SCRIPT

  • OK, so first let me outline some experiences we have in our company which are relevant to being in a credible position to advise on how to start a toy business successfully and to position it for future growth and success.
  • Two start up journeys, delivering $tens of millions – cumulative total revenues from these 2 ventures would be in the region of $60m USD.
  • We’re now heading into our 10th year of Consultancy to toy & game companies.
  • We have helped more than 100 companies to grow, and over half of them were fairly new companies.
  • We’ve seen lots of companies succeed, and we’ve seen far more companies not make it.
  • There are a number of key recurring elements we have observed in both failure and success, and that’s what we’ll be running through on this podcast.

 

  • Research the market, have a strategy showing you are delivering clear differentiation versus the million+ other toys out there
    • Research – visit stores (when possible, trawl online stores).
    • Think through your plan.
    • How are you different/better than everything else out there?

 

  • Develop a compelling company story to tell & get awesome at telling/selling it.
    • In the end you have to sell a product but telling a compelling story can be a powerful way to influence even the most cynical of retail buyers.

 

  • This is a product driven business, so whatever else you get right or wrong, make sure you develop compelling play experiences with a motivating commercial proposition for retailers & distributors.

 

  • Please, please, please – test your products with children & parents of the target age before you spend big money or start trying to sell.
    • Answer some really basic questions:
      • Is your product conceptually appealing to the target audience?
      • Is there already some other product they know like yours?
      • Can children use the product/do they find it fun?
      • And so much more – I ran over 1,200 focus groups with children and parents on toys, and never once ran a group where I didn’t discover something new.

 

  • Create effective sales collateral:
    • Catalogues which clearly show the products, benefits, functions, and key data e.g. age target
    • Videos which bring the products and brand to life when you can’t be there to present in person.
        • Sell!
          • A start up is not really in business until you sell something, and you need to grow the sales revenues to have any chance of building a successful business.
          • The most important department/function to begin with for a toy company is SALES!
          • Be realistic though, most people don’t sell to Walmart, Carrefour or Argos in Year 1. To grow international distribution, or to hit all key retailers in any one market takes time – usually 3-5 years minimum!
        • Finance/cashflow
          • Annual selling process = nearly constant cashflow strain & takes a long time until the next time money comes flowing in.
          • Be cautious on sales forecasts, actual sales are normally far less than sales projections for start-ups, because it’s freaking hard to sell, especially when there are thousands of other established toy and game companies out there already.
        • Be cautious on inventory
          • Excess inventory kills toy companies.
          • Cash tied up in stock is not helping your business.
          • It’s better to be just out of stock than massively over stocked.
        • You need a really strong team, with no weak links (especially at the beginning), and you need a good communication dynamic which blends strengths to balance out individual weaknesses. Finding good people you can trust is not always easy, but it is critical for creating & sustaining success in this business.
        • There is a lot more, but that’s enough to consider to begin with!

 

  • We’ve worked with a lot of toy and game start-ups, and seen many succeed and go onto big things, and also many fail, effectively managing the areas we discussed in this Podcast usually defines the level of success you can achieve.

 

OUTRO

  • Well, hope you enjoyed this podcast looking at How To Successfully Start A New Toy Business.
  • If you did, please give us a good review or rating on the podcast platform you are listening to, and a reminder again to check out our Blog websites: toyindustryjournal.com and www.boardgamebiz.com
  • Please share the podcast with your friends and colleagues in the industry and stay tuned for new episodes coming soon!
  • If you’d like to work with us on a bespoke toy and game trade marketing campaign, or if you would like to find out more about our Consultancy services, which we have delivered for more than 100 companies around the world at this point, please visit KidsBrandInsight.com/services
  • That’s all for now, I’ve been your host Steve Reece, this has been the Playing At Business podcast and we’ll see you next time.

PLAYING AT BUSINESS EPISODE 49 – The Four Lifestages Of Toy & Game Companies

PLAYING AT BUSINESS EPISODE 49 – The Four Lifestages Of Toy & Game Companies (transcript)

To listen to this episode, just click here: https://playingatbusiness.libsyn.com/the-4-lifestages-of-toy-game-companies

INTRO

 Hi, welcome to Episode 49 – Playing at Business podcast.

  • I’m your host Steve Reece.
  • In today’s episode we’ll be taking a look at the four lifestages of toy & game companies & why knowing which lifestage the company is in is critical to develop winning strategies for business, sales, product, marketing etcetera.
  • Before we get onto that, if you would like to find more news, analysis and insights on the toy & game business, check out:
  • You can sign up for our Free email newsletter – the Reece Toy & Games Report on those Blog sites, sent out most Fridays with link to our latest published content including notification of new podcast episodes
  • If you find this podcast, or those Blog sites interesting or insightful, please do share them with your friends and colleagues in the business – we want to provide free to as big an audience as possible.
  • We offer consultancy services to toy & game companies:
  • In particular, I work as a board adviser or non-executive director for a limited number of companies, check out kidsbrandinsight.com/services
  • We also provide Strategic Sourcing Consultancy via ToyTeamAsia.com
  • To find out about sourcing Toys & Games in India, check out ToyTeamIndia.com

 

  • OK, so with all that preamble out of the way let me first explain why it is important to identify the lifestage your company is at:
  • The reason being that companies tend to need a different attitude to risk, organisation, process, staff selection approach and much much more.
  • Your entire way of thinking and acting is affected by your lifestage.
  • Over the last 20+ years, I have worked for, with and observed from afar thousands of toy & game companies and people. What becomes very clear over time is that there is wisdom in the saying that you have to cut your coat according to your cloth…meaning that while as start-up may want to float on the stock market it is not a realistic short-term goal for a typical toy company start up.
  • Whereas a large corporate toy company finds it really hard to move quickly and to be truly flexible and entrepreneurial because they have so much existing structural baggage.
  • I liken it to a sports team which has a salary structure, so the entire squad has to fit within that structure, and even if they want to bring in a new star player, if they can’t fit that player into their structure they need to ether pass most prudent), or destroy the wage structure to get the player leading tot all the other players wanting a big pay raise as you already showed that your pay structure was rubbish!
  • Having set the scene, let’s take a look at the 4 lifestages of toy & game companies:
  1. STARTUP/PRE-START UP
  • At start up stage, a company usually has no sales (although if the founders are wise they will have set up some demand in advance of pushing the actual formal company launch button.)
  • Staffing is very limited, usually limited to the founders at launch in the toy & games biz.
  • It tends to take several sales cycles to establish new distribution, even for experienced industry people with contacts and relationships with key buyers and distributors around the world.
  • Therefore, the start-up phase in the toy & game business usually lasts for as long as two or even three sales cycles – that’s 2 or 3 years folks, which is a long time to have limited revenue and highly constrained cashflow.
  • That’s one reason why people who succeed with a start up in our business tend to either have significant funds put aside to pay themselves in advance before the company earns enough to pay them, tend to be young with low living costs or start the business as a side gig.
  • Many businesses are started by people who are really excited to be working in a fun industry on fun products which will usually benefit the lives and development of children. This excitement doesn’t always last long beyond the first painfully grinding conversations with the sharp end of the business i.e. retailers.
  • Successful start-ups in our business become adept at operating on a shoestring while developing ‘WOW’ products. If they are wise they will try to sell on an FOB only basis (even though this is harder) vs manufacturing at their own cost and risk, and then paying shipping and warehousing costs on stock they are not yet sure they can sell!
  1. POST START UP GROWTH PHASE
  • Once a company has successfully navigated the start-up process and has brought to market a number of products for which there is some degree of demand then they tend to embark on an exciting if challenging growth spurt.
  • Firstly, they start to recruit some of the larger national players who have seen how well the company’s products are performing.
  • The product line tends to expand with extensions of the launch product lines and perhaps new standalone products and brands.
  • Staff count starts to grow, especially with regards to the Sales & Commercial teams.
  • Successful companies tend to focus to some degree of success in their own market first before looking to rollout internationally. Many companies who get past start-up phase flounder at the next stage due to stretching themselves, their teams and their cashflow too thinly.
  • Cashflowing growth starts to take up more and more management time at this stage of the company’s development.
  1. ESTABLISHED MARKET PLAYER
  • The third phase of development is where the company heads towards being an established market player.
  • At this stage the company has usually backfilled departments and head count has risen significantly.
  • Customers are now purchasing habitually from the customer (with a push from the sales team).
  • International distribution is growing – with either direct retail relationships in most major markets or distribution partnerships at least.
  • The company starts to introduce more process in order to manage the ever-growing challenges of co-ordinating the team and outputting good saleable products.
  • The vast majority of toy & game market sales are delivered by Stage 3 companies.
  1. CORPORATISATION
  • The 4th and final stage of toy company growth is Corporatisation.
  • A very good relatively recent example of this phase would be Spin Master.
  • Founded back in the 1990s by college friends, Spin Master is today a stock market listed company with revenues of somewhere in the region of $1.5bn dollars.
  • In recent times the company has appointed corporate COOs or CEOs in order to adapt to the more corporate position of the company today, with a large global workforce, offices around the world, massive marketing spend and movies and other content/gaming executions under way.
  • Corporate companies, especially when stock market listed, tend to walk a fine line between driving quarterly earnings to pacify the stock market, while also having to plan more long term versus companies in the other phases due to the size and complexity of the company.
  • Decisions and market moves which would once have happened instantaneously tend to take longer at this stage due to the number of people involved in decision making. Wistful executives sometimes want to push through rapid projects or product developments which the company is no longer set up to execute on.
  • More positively though, corporate companies find it easier to access finance which increases the stability and security of the company.
  • They also tend to acquire other companies in order to fuel growth. By this stage they are normally long established in the key product categories where they have competence. Acquisition allows them to buy in existing brands to further secure the foundations of the company and to access new categories and markets.

So, that’s the 4 stages of toy & game companies. As you can see, the point is to be aware of what lifestage your company is at before setting new strategies or pursuing major new initiatives, because the likelihood of success may depend on fitting new projects to the position and stage of development of your company!

OUTRO

  • And that’s about all we have time for on episode 49 of the Playing At Business podcast
  • So, we hope you enjoyed this podcast if you did, please give us a good review or rating on the podcast platform you are listening to, and a reminder again to check out our Blog websites: toyindustryjournal.com and www.boardgamebiz.com
  • Please share the podcast with your friends and colleagues in the industry and stay tuned for new episodes coming soon!
  • If you’d like to find out more about our Consultancy services, which we have delivered for more than 100 companies around the world at this point, please visit KidsBrandInsight.com/services In particular, I work as a board adviser or independent director for a limited number of toy & game factories. So, if you would like senior level advice, resource and inputs to help you drive growth in your business, feel free to get in touch.
  • For information on our venture helping toy companies find manufacturing in India, just head to ToyTeamIndia.com
  • For Strategic Sourcing consultancy go to ToyTeamAsia.com
  • That’s all for now, I’ve been your host Steve Reece, this has been the Playing At Business podcast and we’ll see you next time.

 

THE OUTLOOK FOR LOGISTICS & SOURCING FOR TOYS IN 2022

THE OUTLOOK FOR LOGISTICS & SOURCING FOR TOYS IN 2022

For decades now the essential, but dull areas of logistics and sourcing have played second fiddle to the more exciting and high profile creative and commercial functions in the toy and game business. All this changed though in 2020 and 2021 with the COVID-19 pandemic. Massive counter seasonal consumer purchasing dislocated shipping containers, putting the entire container shipping industry out of sync. The result was a). massive container shipping increases and b). shortage of containers leading to issues shipping stock out of China and other Asian toy manufacturing hubs.

This pandemic caused disruption came about alongside another significant trend – that being the ebbing away of some toy manufacturing from China to other toy manufacturing locations. Vietnam, India and Indonesia have all benefited as China’s labour force no longer seem to want low paid production line jobs to the same mass extent they once did, and the resulting cost increases are making it hard to stay in the toy production business in China.

So now that we have (nearly!) got through the turbulent year that was 2021, what next? How will things pan out in 2022? Needless to say, there is a fair degree of unpredictability about things right now, with more covid waves rolling out, and yet another new variant. But despite this we do know that the shipping container issue has not been fully resolved. While demand has cooled as it always does post peak shipping across June to September, and while we have therefore seen a drop in container shipping prices, the outlook for 2022 is for a continuation of the shipping issues, but potentially (& hopefully!) to a lesser extent.

We do have Chinese New Year coming up of course, as well as some ongoing covid outbreaks in manufacturing hubs in China, which will reduce production and therefore also reduce demand for shipping during that period. So, there is a good chance that we will see some slack in the system. We also look unlikely to see full lockdowns around the world for an extended period as we had previously, which means the initial counter seasonal buying patterns are unlikely to be repeated on the same scale. In short, issues will continue but should lessen, at least a little.

On the Sourcing side, the medium-term trend for relocation of toy & game production away from China looks set to continue. If you want to know more about what is driving this, you can watch our presentation on YouTube: ‘Toy Sourcing: The Next 10 Years (Why Nearly Everything We Know Is Going To Change’ – https://www.youtube.com/watch?v=IR3kBOd12ss

Nearshoring is going to grow significantly over the next 10 years but starts from a very limited base, so is unlikely to pick up a lot of slack in 2022. Vietnam is somewhat bursting at the seams but will continue to grow nevertheless. India is the county with the largest latent industrial base and cheap labour in abundant quantity, and is also set to be part of the answer going forward – we are seeing more production move there for 2022 from major toy companies. Overall, as the toy business moves from a single-hub sourcing approach (i.e. China) to a multi-hub approach (including China) we’re going from a fairly smooth and relatively easy to manage sourcing function to a more fragmented and management intensive sourcing situation.

In conclusion, we expect toy companies will have to continue putting more onus on logistics and sourcing functions in 2022 and quite possibly beyond. It might not be quite as crazy in 2022 as it was in 2021, but it will be far from what we used to know as normal!

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

 

Asia’s Fast-Growing Economies To Drive Long Term Growth In The Toy Business

Asia’s Fast-Growing Economies To Drive Long Term Growth In The Toy Business

For the last 2 centuries or more the economic powerhouses in the world have been Western, Europe first, followed by the might of the USA. Looking further ahead into this century though, it is clear to see that future economic growth on this planet is going to grow most rapidly in Asia. Asian countries once viewed as 3rd world are now coming to the fore.

There are various data sources supporting the evident economic growth ahead in Asia, the one we will refer to in this article is Price Waterhouse Coopers ‘The World In 2050’ published report. That report shows clearly that the largest 5 economies in the world by 2050 will be (in order of size): China, India, USA, Indonesia & Brazil. Much has been written about China’s economic miracle since Deng Xiaoping’s ‘Opening up’ of China’s economy, but far less has been written about the massive economic growth prospects of India and Indonesia.

India is still today a country with many problems to resolve including massive infrastructure investment needed, terrible poverty for hundreds of millions of people and issues with public health which would be viewed as catastrophic elsewhere, but in India are just viewed as normality. At the same time though, India’s massive population is still set to grow further, unlike China’s current population trajectory. Additionally, having contributed so much to major global tech companies away from India, that trend is now reversing with India’s tech scene gathering pace. In terms of consumerism, India has a growing middle class of several hundred million people who are now finding they have disposable income and want to give their children more affluent upbringings than they may have had. The massive growth of Hamleys in India shows that India is no longer just a low quality, super low price point market, there is a growing appetite for ‘international’ standard toys.

Indonesia has around 275million people and is expected to rise above 300million sometime between now and 2050. Today Indonesia’s economy is the 15th biggest in the world – around the size of the Netherlands – just above $1 trillion USD. Yet by 2050 it will hit 4th biggest economy in the world. With economic growth typically comes an accompanying growth in consumerism.

Whereas Asia was once viewed by Western toy companies as difficult to access, difficult to scale up and therefore were often a lesser priority, this view can no longer be allowed to prevail. Lego’s massive store opening program in China (targeting 300 stores by end 2021) is just one example of a significant shift in focus for Western toy brands.

Over the next few decades, the economic fulcrum of the world is going to shift dramatically towards Asia, and alongside that will come increased sales opportunities for toy companies in the West, alongside a growth in Asian toy companies seeking to sell their toy lines into the West. Interesting times are ahead!

 

Do you need help to grow sales for your toy company? We help people from all around the world to sell more toys, both in their home markets and into export markets. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/

 

Y IS FOR YU GI OH, YNON & YO-YO – TOY INDUSTRY A TO Z

Y IS FOR YU GI OH, YNON & YO-YO – TOY INDUSTRY A TO Z

YU GI OH

Yu Gi Oh has been a massive thang in trading card games for a couple of decades or more. The franchise is centred around manga style animation content featuring a boy and a trading card game. To date the physical product trading card game has sold more than 25 BILLION (!) cards. This perennial brand doesn’t seem to capture quite the headlines of fellow Japanese animation franchise Pokémon, but nevertheless it has been a major force at the checkouts.

 

YNON KREIZ

Ynon Kreiz is an American-Israeli businessman who is in the process of successfully turning around Mattel’s global business after a few tough years. Kreiz succeeded former Google exec Margo Georgiadis, and in doing so took over a company with softening sales, an iconic flagship brand in Barbie which had not embraced and updated the brand image for the social media age and a company massively behind long term rival Hasbro in terms of transitioning from toy company to entertainment company. Since taking the helm of Mattel in 2018, Mattel’s fortunes have improved and Kreiz’s strategy and execution of strategy has made a major positive impact.

 

YO-YO

One thing you can guarantee in the toy business is that every few years Yo-Yos will make a comeback. But unlike most iconic toys we have today, the Yo-Yo did not come to the fore in the 20th century…in fact, according to Wikipedia, there is an ancient Greek vase which was found well preserved showing a child playing with a Yo-Yo way back in 44BC! Yo-Yos were also around in the 17th century where they were known as ‘bandalores’. The Yo-Yo therefore proves that classic play patterns are truly timeless.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

Sustainability In Toys: What Happens Next? Part 1, Plastic

Sustainability In Toys: What Happens Next? Part 1, Plastic

COP 26 has been and gone. (Most) of the world’s leaders have agreed that urgent action is needed on environmental matters, not least of which is addressing CO2 output and global warming. While some of the solutions to global warming are beyond the ability of the toy business to resolve, there are clearly some actions we can all take which will help.

As we head towards another year it is perhaps a good time to take a look at where we are at on sustainability in the toy business. In the first article in this series we take a look at plastic:

Clearly the majority of toy products on sale are either mostly made from plastic or contain some plastic. Plastic being derived from oil and causing significant ocean pollution and other challenges has been very much in the public dialogue in recent years. Toy companies are increasingly aware of this. The low hanging fruit has been excess plastic in packaging, because plastic is cheap comparatively it has always been a large component of toy packaging (including the ties and fittings used to secure product during transit in pack). Much of that type of needless plastic has already been removed, but there is more still to do on that front. Solutions include clever packaging engineering to remove or at least reduce plastic usage, using sustainable materials such as cardboard and removing unnecessary shrink wrap on some products.

Looking forward, there is of course a potential long-term successor to plastic derived from plastic – that is ‘plastic’ produced from sustainable materials. This ‘bio-plastic’ is already available and being used by some companies in products. Lego has made large strides in this area, and is committed to going much, much further. In 2015 Lego announced a $150m investment in formulating a biobased alternative to oil-based plastic bricks, and their pledge is to switch all Lego bricks produced from 2030 onwards (that’s some 60 billion bricks p.a.!) to bio plastics.

Without getting too far into material science, we do know that there are some drawbacks with bioplastics, at least currently. Firstly, they are not proven to be as durable or to hold their shape as long as oil-based plastics, but perhaps that can be addressed with science/technological advancements over time. We also know that bio plastics are considerably more expensive – from talking to people in the business, we have heard costs to be c. 30% higher. At this stage it is not clear whether this is a price variance which can be reduced over time with volumes of scale, but it is clear that consumers are going to need to be willing to pay more for a greener product, and that retailers are going to need to support that also to get mass adoption of toys made from bio plastics.

We predict big change ahead in this space – plastic is so clearly in the environmental firing line, that bioplastics are an inevitability. As always, some companies will lead the charge, and others will lag, following far behind, but over the next decade we predict a mass transition from fossil fuel-based plastics to bio plastics in the toy business.

Stay tuned for the next instalment of this series of articles on Sustainability in toys.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com