Toy Retailing The Market Place Toy retailers carry a number of different products to suit the play needs of children. Small businesses may choose to specialise in certain toys or stock a wider range to accommodate children of all ages. Toys will range from rattles, squeaky toys and balls for babies (0-12 months); pull-along toys, dolls, finger paints, soft toys and crayons for toddlers (1-3 years); construction kits, train sets and puzzles for pre-school children (3-5 years); and bat and ball games, pencil sets, colouring sets, craft and hobby kits and musical instruments for children of school age (5 years and upwards). Children aged two to three receive the most toys. The current trend in all sectors of the market is towards electronic toys and computers. These are primarily distributed through electronic high street traders rather than independent toy retailers. While larger multiples such as Toys R Us stock video and computer games, the majority of toy specialists prefer to focus on traditional toys where profit margins are higher. However, sales of traditional toys and games have been relatively static over the last five years. The popularity of toys also follows cinema trends, such as Disney films launching spin-off merchandise. The growing cable and satellite television markets are likely to further contribute to this. Licensing is particularly important as demonstrated by the success of the Teletubbies. However, with fashion trends it is often difficult to predict what will be popular, and toy retailers are often left with a backlog of unwanted stock. Toy retailers must also compete with other sectors including fashion, sport, music and entertainment for leisure expenditure. While toy retailing is a crowded market, sales in the sector are rising, although this is attributed to the popularity of video and electronic games. The market is largely static until the pre-Christmas period, when the majority of purchases are made. There may also be a slight increase in interest around Easter and during the summer when children are on school holidays. Market conditions are subject to change and thorough up to date market research should be carried out before any business decision is made. Regardless of the type of toy shop you choose - most types find the trading pattern around the same: around 15% per quarter until the pre-Christmas period when you take around 55% of your turnover. Customers While very few children buy their own toys, today’s affluent pre-teens have the purchasing power over their parents. Children know what toys they like, and if a product doesn’t deliver they simply won’t be interested. As children are becoming richer and more sophisticated they are growing out of toys more quickly than they did some years ago. To accommodate this phenomenon, dubbed Kids Getting Older Younger, toys are being reworked, eg following his anatomical makeover, Action Man now has a tattoo. As a result, the potential of toy buying has narrowed. Where parents were once viewed as the customers in the toy market, the industry is much more consumer-orientated towards children. Parents and grandparents prefer to consider factors such as educational input, price, durability, brand name, toy safety and the suitability of the toy for various age groups. Expenditure on toys is likely to be affected by the significant rise in the number of working mothers, and a similar growth in the average age of women having their first child. These factors indicate that parents are, on the whole, more financially able to provide for their children. The elderly population is also expected to continue rising, and as many are in a higher socio-economic bracket, this could cause an increase in gift purchases for grandchildren. Adults may also buy traditional toys remembered from childhood (eg china dolls), although a small toy shop may choose to stock toys for play rather than decoration. Margins Margins are dictated by the type of product, what your competitors are selling it for, and how much it is hyped. Margins to strive for are around 40% to ensure you cover your overheads and allow for modest growth, but a TV-hyped product might bring in 20% - sometimes less. Key price 'controllers' are Argos. Check their catalogue if you want to match prices - you'll find your customers have done just that. And remember, that toy superstore might be 'out-of-town', but it's not that far up the road and car parking is usually free, so don't be fooled into thinking of competition as just around your immediate location. Competition The toy retailing market is broken up into multiples, department stores, mail order, catalogue showrooms and toy stores of varying sizes. In recent years the number of small, independent shops has declined. There has been a decrease in the market share of specialist retailers with variety stores benefiting. Argos, Woolworths and the US chain Toys R Us are the UK’s leading toy retailers. Other toy stores providing fierce competition are Children’s World, The Entertainer, Hamleys and the Early Learning Centre. Mixed multiples include Woolworths and WH Smith. Mail order takes a further portion of sales through GUS and Littlewoods, and catalogue showrooms such as Argos remain strong competitors. Supermarkets are also beginning to encroach on the sector, with Asda and Tesco strong in toys and games. While department stores also stock toys, eg House of Fraser and John Lewis, the first luxury department store exclusively for children opened its first branch in spring 1997 in London. This venture, Daisy & Tom, aims to sell everything for children aged 0-10. It focuses primarily on middle class customers, stocking top of the range toys, clothes and books. Due to growth in the sector, largely by multiples, the independent toy shop is finding it increasingly difficult to compete on price and breadth of range. As a result, smaller retailers have formed buying associations and are specialising in niche markets such as higher quality branded goods. Despite this, many small toy shops have been forced to cease trading. Therefore it is advisable to consult the Yellow Pages to gauge competition. Prices for toys should be measured against the Argos catalogue as this acts as a key price controller in the sector. Buying groups There are two both owned and controlled by their members: Youngsters Ltd. Lester Way Hithercroft Industrial Estate Wallingford Oxon OX10 9T H Tel: 01491 824031 Toymaster Ltd. Victoria House Newport Pagnell Road West Northampton NN14 7JJ Tel: 01604 674477 Both offer membership of the Association at a discounted rate. We believe most retailers of toys will only survive as part of a buying group Promotion Toy shops should be bright and attractive, displaying popular goods in the window. It will also help if the premises are accessible by public transport with parking facilities. Staff should be helpful, as many first-time buyers will seek advice on what toys are suitable. The business should offer a higher level of personal service than the multiples to encourage word of mouth promotion. Leaflets should be distributed to target potential custom, eg in ante-natal clinics, nurseries, doctors’ and dental surgeries and mother and toddler groups. The shop should advertise in Yellow Pages and perhaps in the local press in the run up to Christmas. Manufacturers usually provide colourful catalogues for customers and point of sale material. Membership of the British Association of Toy Retailers may be beneficial, as this is the recognised professional body intent on improving the standards of toy retailing. It is also recommended to attend toy fairs such as the British Toy Fair to keep abreast of developments in the trade. Start Up Costs The largest cost to be met will be purchasing or leasing premises. This will depend upon size and location, so a small independent toy shop may prefer a small outlet in a side street rather than high street premises. As substantial space may be required for storage and display, this will also affect property prices. The building may require sizeable investment to refurbish the workspace and comply with fire regulations. A till point is essential, and many shops are introducing EPoS (electronic point of sale) systems to monitor supply and demand. This costs approx. £2500-£5000. Ongoing costs will include promotion, insurance, electricity and heating. The cost of developing a core product range will depend on the target area of the children’s market, as this will determine the goods in stock. For example, if the business was to target one to three year olds, items in stock might include Barbie (retailing at £17). Older children, on the other hand, may prefer Monopoly (retailing at £15) or Jenga (retailing at £10). Pricing margins will be dictated by the competitors’ pricing strategy and the level of hype. Businesses are advised to consult the British Toy and Hobby Association’s (BTHA) Buyers Guide for a comprehensive list of suppliers (manufacturers, importers and wholesalers), or the British Toymakers’ Guild for hand-crafted or wooden toys. To survive competition in the market, it is recommended that independents join a buying group, such as Toymaster Ltd or Youngsters. Training and Qualifications No specific training or qualifications are required to operate a toy shop. The National Association of Toy and Leisure Libraries runs one day and three day courses for example, Learning Through Play which includes modules on Child Development and Toy Choice, Toys and their Play Potential and Play for Children with Differing Needs. NVQ’s/SVQs are available in Retail Operations, but these are unlikely to be industry specific. With the toy market being so crowded, only professional retailers with business acumen are likely to be able to overcome current trading difficulties. As advising customers is an essential part of the job, staff should be friendly and approachable with a basic knowledge of children’s play for various age groups. This should cover exploratory, constructive, energetic, modelling, pretend, social and skilful play. It is also important to have a genuine love of children, endless patience, tolerance, energy and a sense of humour. Legal All businesses are subject to a wide range of legislation and will be affected in different ways. This section is intended as a starting point and it is important to seek professional legal advice before business decisions are made. Relevant legislation includes the Toys (Safety) Regulations 1995 and Dangerous Substances and Preparations (Safety) Consolidation Regulations 1994 (as amended). Further regulations include the Imitation Dummies (Safety) Regulations 1993, containing guidelines for toys which could be mistaken for dummies by small children. There should be no sharp points or rough edges on toys likely to be in contact with young children, and soft toys should have well-sewn seams and secure eyes, noses and ears. Products failing to meet standards may be withdrawn from sale. The BTHA has also introduced the Lion Mark scheme to indicate that toys are safe and conform to current British and European Safety Standards. Approved Lion Mark Retailers all obey a strict code of practice on selling safe toys. All toys on sale in the EC must have the CE mark to indicate conformity with the Toy Safety Regulations. In addition, the toy manufacturer should provide a test certificate from a recognised body to prove the product has undergone appropriate testing. Any instructions for use of the product should also be checked, and there must be adequate user information for the correct age group. BSEN71 is the British standard controlling toys for children under 14 years old. These are concerned with the flammable, toxicological and mechanical aspects of toy safety. There is also an amendment under discussion which may affect the sale of extremely noisy toys. All toy retailers should have Product Liability Insurance. Public and Employer’s Liability insurance is also required. Consumer legislation includes the Sale and Supply of Goods Act 1994, Consumer Protection Act 1987, Workplace (Health, Safety and Welfare) Regulations 1992. There are also strict regulations governing television advertising of toys and games aimed at children under 15 years old. This relates to content, timing and misleading advertisements, and affects both manufacturers and retailers. Suppliers British Toy & Hobby Association – BTHA Handbook 80 Camberwell Road London SE5 0EG Tel: 020 7701 7271 Email: admin@btha.co.uk Website: www.btha.co.uk (Contains a comprehensive list of manufacturers and suppliers) British Toymakers Guild 124 Walcot Street Bath BA1 5BG. Tel: 01225 442440 Email: info@toymakersguild.co.uk Website: www.toymakersguild.co.uk (For hand-crafted and predominantly wooden toys) British Toy Importers Association Somers Mounts Hill Benenden Kent TN17 4ET Tel: 01580 240819 Fax: 01580 241109 Email: info@britishtoyimporters.com Website: www.britishtoyimporters.com Further Reading Toys ‘n’ Playthings Lema Publishing Ltd Tel: 01442 289930 (Trade Magazine) Toy News Ltd Intentmedia Tel: 01992 535646 www.toynewsmag.com (Trade Magazine) ‘Good Toy Guide’ National Association of Toy and Leisure Libraries Tel: 020 7387 9592 Tel: 020 7383 2714 www.natll.org.uk The Sale and Supply of Goods Act 1994, the Consumer Protection Act, Toys (Safety) Regulations 1995, Health & Safety in the Workplace - all available from your local HMSO Bookshop or by post from HMSO Publications Centre, P O Box 276, London SW8 5DT. The Single Market - Toy Safety is a free booklet from the DTI (Room 301) 10-18 Victoria Street, London SW1H 0NN Useful Addresses British Toy and Hobby Association (BTHA) 80 Camberwell Road London SE5 0EG Tel: 020 7701 7271 Tel: 020 7708 2437 E-mail: admin@btha .co.uk Website: www.btha.co.uk British Toymakers Guild 124 Walcot Street Bath BA1 5BG. Tel: 01225 442440 Email: info@toymakersguild.co.uk Website: www.toymakersguild.co.uk National Association of Toy and Leisure Libraries (NATLL) 68 Churchway London NW1 1LT Tel: 020 7387 9592 Fax: 020 7383 2714 E-mail: admin@playmatters.co.uk Website:www.natll.org.uk Toy Retailers Association Toy Retailers Association Gainsborough Waterfront Enterprise Centre Lea Road GAINSBOROUGH DN21 1LX Tel: +44 (0)8707 537437 Fax: +44 (0)8707 060042 E-Mail: enquiries@toyretailersassociation.co.uk Website: www.toyretailersassociation.co.uk