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Tale of the rising Indian toy industry

By Alnoor Peermohamed & Karan Choudhury | Vjmedia Works | May 06, 2013

Crafting an exciting in-store ambience and creating product awareness among consumers, seems to be the key strategy of toy brands and retailers to stand out in this burgeoning market.

A walk into any toy store in the country, and you are sure to be baffled by the endless rows of toys, with an enormous product range and numerous brands under the same roof. While this could be overwhelming to the parents, it is happily lapped up by little shoppers who are always ready to get their hands on the latest toy in the market.
Catering to this boundless demand from the target group, the burgeoning toy market in India is gathering great momentum and foresees huge growth for the sector in the near future. According to RNCOS - Indian Baby Care Market Study which was released at the CBME Expo, the Indian baby and children toy industry currently has a market size of appx Rs 45.9 billion. Along with the steady demand for baby care products and apparel, the baby and children toy market is witnessing a CAGR of 18% y-o-y since 2011, the report says.

Rise in the number of dual income parents, increased spending on safe and branded toys, international toy makers entering Indian market and easy access to affordable imported toys are some of the factors contributing to the growth of this sector. According to the report, about 70% of the toy industry is still unorganised and dominated by small and medium-scale manufacturers. However, there is a steady increase in the number of organised retailers and even international brands entering the Indian toy market. So what are retailers and brands doing to standout from unorganised players and cheaper China-made toys and connect with the target group, where concepts such as brand loyalty don't exist.

Point-of-Purchase spoke to retailers, domestic and International toy brand to understand that product awareness and in-store activities are the key marketing elements used to capture and also retain customers.

Quality matters

With horrifying reports on the use of low quality and toxic materials in certain toy brands in the past few years, parents today stress on the quality of the toys and its impact on their children. And addressing this sensitive issue has become prime factor in the toy industry.
"The advent of modern retail has created a rise in demand for quality driven products. With higher incomes and a more informed customer, toy brands are focusing on better quality products which have a better value proposition,” says Philip Royappan, Marketing Manager, Funskool India Ltd.
Instead of marketing a product, toy brands are increasingly focussing on providing product awareness to connect with the customer.
Prowl Germany which recently announced its foray into the Indian market with an investment of Rs 600 crore over the next 4-5 years believes creating awareness is the key to build up a sustaining impact over the end user. "Sales will happen when our consumers understand the value we bring in. Cheap and hazardous products available in the unorganized sector are a challenge to the future of Indian children. We do not intend to compete with these brands,” comments Rajesh Padmanabhan, Managing Director, Prowl Germany.
Starmark, a wholly owned company of Emami Group, believes in being quality conscious than price conscious and thus in their retail chain only stock the good quality toy products as their clientele are trained buyers when it comes to toys.

Creating the in-store buzz

Toys bring joy and it is vital to create the fun element in a shopping environment to reach out to the little shopper. Customer engagement is crucial in this category to achieve brand recall and trigger purchase. On this front, toy brands and retailers are continuously introducing various in-store activities and customer engagement programs which suit them best.
Creating a fun in-store environment, brands like Funskool frequently organize contests and promotions on popular brands such as a'Beyblade'competition and LEGO "Building a Fire Truck" event.
"A store is a very compelling and critical medium, where research shows that over 70 per cent of the purchase decisions are made'in store'. Therefore, marketers have a tremendous opportunity to reach consumers, generate sales and build brand equity. For example, children would like a touch and feel experience of toys before the actual purchase decision is made,” says Philip Royappan of Funskool. He adds that the main challenge is to retain the interest of the children; capturing the attention of the children with appealing in store displays that prompts kids to buy the toy is half the battle won.

As for retailers, Crossword Bookstore has dedicated a children hour every Sunday across cities and stores, where they conduct innovative story reading sessions, art and crafts activities, gaming etc.
"The overall children's category contributes 35% of total business. Hence we have dedicated separate children's area with age-wise segregation and play area at stores,” says Kinjal Shah, COO, Crossword Bookstore.  

As for Starmark,'kids category' is of utmost importance and they target kids across various departments starting from books, toys and stationeries. In the toy section, Starmark conducts various events in partnership with toy companies like Scrabble competition, Rubik's Cube contest, Clay Dough contest and many such interesting activities which attract the kid to the store.
"With these events there is always a steady increase in the footfall. Our marketing strategy is to expose the products available which would eventually drive the sale for kids category in toy section,” says Gautam Jatia, CEO, Starmark.

According to retailers, the toy market is increasingly getting crowded, where toys are stacked rows on rows in a typical store. "Point of purchase is the preferred medium of companies to be noticed and get their products picked by the consumer. The danglers, posters or even the beautiful displays intrigue a person to ask about that products and initiate discussion on the same. Once this happens the product has broken the clutter and has been noticed,” says Moiz Gabajiwala, Founder & Owner, Zephyr Toymakers Pvt Ltd.

Big boom ahead

The toy industry is poised for great growth in the years to come, as India is one of the few countries in the world with a large percentage of its population still under 18. Added to this, rising incomes and burgeoning middle class with improved buying capacity will augment the growth of the toy market.

While the market is currently dominated by the unorganised players, there is a steady increase in the number of Indian and international branded toys & stores entering the market.
Retailers are also in the process of increasing space for toys category within their stores, while new international entrants are opening toy stores in India
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