As it was highlighted in our new global briefing, "Corporate Strategies in Emerging Toy Markets," Latin America may be the talking point for Mattel, and LEGO is doing well in Eastern Europe; nevertheless, emerging markets, in particular Asia Pacific, have yet to reveal their true potential for multinational toy manufacturers.
Global toys growth is shifting towards emerging markets, and this trend is expected to continue
Emerging markets have become more important across all industries, and the shift is especially pronounced in traditional toys. Between 2006 and 2011, growth in developed countries averaged 1%, while emerging countries registered 13% average annual growth, driving the global toys sales.
Rising incomes are the main driver of growth in toy sales in emerging markets
Demographics may play a role for toy sales in developed countries, but rising income levels are clearly the reason behind growth in toy sales in emerging markets. Despite rises in income, however, emerging markets are very price sensitive, explaining the high share of unbranded toys.
The traditional toy store retail channel is becoming more consolidated, making expansion easier for toymakers
Traditional toy stores, such as Detsky Mir in Russia, Smyk in Poland and Ri Happy in Brazil, experienced a boom in emerging markets over 2006-2011, growing into regional or national toy store chains. This has reduced the differences between retailing in the emerging and developed markets, making it easier to expand using established business models.
Pre-school and plush toys are the most popular categories in emerging markets
Pre-school is the most important category in the emerging markets, without much competition. As such, toymakers usually bring pre-school lines first when expanding. Plush is the second most popular category in the emerging markets.
Having localised toys in the portfolio gives an advantage
Whilst making a localised toy, or getting a locally popular licence does not immediately open doors to the market, it can greatly help a brand to grow from niche to mainstream. Barbie in India is a good example, bringing the Bollywood and Barbie fashion icon status together.