FRENCH TOY MARKET CHALLENGES – LA GRANDE RECRE TO CLOSE 53 STORES IN FRANCE
For those who don’t know the French toy market so well, it is one of the major toy markets in the world (somewhere around the 5th or 6th biggest toy market globally depending on which figures you read!).
One of the major trends in the French retail space since I entered the toy business c. 20 years back has been the gradual reduction in market share from the mighty hypermarché (generalist grocery & non-food mass market retailers, as close to Walmart as it gets in France) including Auchan, Leclerc & the behemoth Carrefour (ranked 6th largest retailer in the world). While the hypermarché can drive huge volumes comparatively, they tend to take a narrow range for most of the year and to heavily price promote towards the back end – the implication being that they can be a). very demanding in terms of trading terms/pricing etc. and b). they can be a challenge to the rest of the toy market in France. While they still represent at least 1/3 of the total French toy market, there was a time when their market share was approaching half of the market. As a career toy man, I find it hard to se how this market share dilution can have been anything other than helpful for the toy business in general!
The winners over the last decade or two have been primarily the toy specialist chains (as well as online/Amazon admittedly). The toy specialist chains have delivered as much as 40% of the total market recently. Therefore the recent struggles of Toys R Us and Ludendo/La Grande Récré are troubling for the French toy market, and therefore for the global toy industry as a whole.
Ludendo has now been in receivership for 2 months, and just announced that they will close 53 of their worst performing stores. As Ludendo accounts for around €400m of toy sales per annum, this would at first glance appear to be bad news. However, the news is not catastrophic – how many times have we seen retail chains keep expanding until they have a bottom 25% of stores which may be driving up topline sales somewhat but which really can’t be adding much by way of profit? I always feared for Woolworths in the UK when I visited small hardly vibrant towns in the North of England and saw a Woolworths store with hardly any customers in every town!
Ludendo have announced closing of 53 under performing stores vs 252 stores in total in France. A quirk of the company is that nearly 90 of the total store are franchised, and are unaffected according to the recent announcement. So the group would keep the most viable 109 stores going. This therefore is not dreadful news – we have firm action towards addressing the challenges for the company but with promise of a smaller but stronger group emerging from the debacle, with the majority of stores in tact – here’s hoping this is enough to turn things around and keep this much valued toy retailer trading.
For a quick snapshot of the data for the French toy market, check out the excellent website of the FJP – France’s toy association: http://www.fjp.fr/info/marche/le-marche-du-jouet/
by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com, a leading toy expert consultancy to toy companies around the world. Services include Sourcing/factory finding especially in India & other ‘new’ manufacturing economies, toy business consultancy and product representation.