Worsening economic conditions undermine market performance
Following a modest recovery in 2011, the French toys and games market recorded a negative performance in 2012. This was due to worsening economic conditions, with marginal GDP growth and ongoing uncertainty over the eurozone debt crisis dampening consumer confidence and restricting discretionary spending. The increasing popularity of purchasing toys and games online, where prices are typically lower than in store-based retail channels, also contributed to the decline in total market current value sales. Traditional toys and games was worst affected by unfavourable economic conditions, recording a sharp decline in current value terms. Video games current value sales grew marginally, though this was still an improvement on the category’s performance the previous year. Favourable demographic trends helped to prevent a worse performance by the entire market; birth rates in France remained among the highest in Europe, and continued to rise. This ensured the continued expansion of the core consumer base for toys and games, ie children aged 0-14 years.
Demand for licenced traditional toys and games falls in 2012
After rising steadily over 2008-2011, the value share held by licenced products in traditional toys and games declined in 2012. This was mainly due to the unfavourable economic situation in France, though the drop also reflected slower demand for licenced products launched towards the end of the review period. These included Hasbro France’s Beyblade and the Cars 2 range from Simba-Dickie Group GmbH & Co KG. The fact that there were comparatively few successful licencing novelties in 2012, again partly due to the economic slowdown, also contributed to the sharp decline in current value sales of licenced traditional toys and games.
Nintendo and Hasbro lose ground as competition intensifies
Toys and games in France remained highly fragmented and competitive in 2012, with several players vying for shares in most categories. Nintendo France SA and Sony Entertainment France were the top two players in video games, while Hasbro and Mattel France SA led traditional toys and games. Nintendo’s value share in video games declined steadily throughout the review period. This was due to the poor performances of its core categories, video games hardware and software, which faced increasing competition from digital gaming. The main beneficiary of this latter trend was Electronic Arts France, which continued to strengthen its lead in the digital gaming category in 2012 thanks to the success of brands like Fifa, Battlefield and Mass Effect. Similarly, Hasbro’s overall lead in traditional toys and games was weakened over 2011-2012 due to declining current value sales in key strongholds like action figures and accessories and outdoor and sports toys. Hasbro’s value share decline was also due to strong gains made by smaller players like Lego France SA, which benefited from the success of recently launched brand extensions like Lego Friends for Girls.
Internet retailers make strong gains at the expense of store-based channels
Traditional toys and games stores remained the leading distribution channel for toys and games in France in value terms in 2012, followed by hypermarkets and media products stores. However, during the review period the market value shares held by these and most other store-based channels declined steadily as internet retailing made strong gains. The rapid advance of internet retailing was partly due to unfavourable economic conditions, as consumers can often buy toys and games online at more competitive prices than they can in store-based channels. Moreover, with consumer lifestyles in France becoming increasingly busy, the convenience factor drove gains for internet retailing; shopping online makes it easier for consumers to compare prices, while also allowing them to have toys and games delivered directly to their door. The establishment and expansion of online sales portals by leading store-based chains, particularly specialist chains, also fuelled the positive development of the internet retailing channel.
Favourable outlook for toys and games over the forecast period
After having declined slightly over 2007-2012, total toys and games constant value sales are expected to grow steadily over the forecast period. Constant value growth will be underpinned by modest economic improvements in France. More favourable economic conditions will encourage consumers to increase spending on toys and games, while also prompting manufacturers to step up investment in innovation and marketing activities. Further growth in the French population, particularly in the 0-14 years age group, will also fuel the positive development of the entire market.
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The Toys and Games in France market research report includes:
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