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Future-minded Russian Parents Drive Growth of Early-learning Sector

Demand soars for educational toys as disillusionment grows with computer games and over-priced licensed characters.

Photo: Early Learning Centre: Set for mass-market positioning across Russia.
Early Learning Centre: Set for mass-market positioning across Russia.
Photo: Early Learning Centre: Set for mass-market positioning across Russia.
Early Learning Centre: Set for mass-market positioning across Russia.

Demand for educational and early-learning toys has soared across Russia this year, while the number of outlets offering such items has also enjoyed a dramatic increase. With many parents keen to jumpstart their children's career prospects, puzzles, construction sets, chemistry kits and DIY electronics projects have all proven to be hugely popular, resulting in a bumper year for Smart Kids (Umnyie Deti) and Daughters & Sons, two of the country's leading toy chains, while also triggering the Russian relaunch of the Early Learning Centre (ELC), a UK-based specialist toy retailer.

ELC first moved into Russia just after the turn of the millennium, a time when the country's economy was riding high on growing revenues from the oil and natural-resources sectors. Following the lead of many other overseas retail operations, the company quickly established flagship outlets in Moscow and St Petersburg, only to see its operations falter – but not fold – in the wake of the escalating international sanctions imposed from 2014.

ELC's Russian operations were managed in association with Detsky Mir, the country's largest and longest-established toys and games chain-store operator. Even though ELC's Russian outlets only delivered about 1% of Detsky Mir's overall annual revenue, the tie-up was seen as boosting the Russian retailer's image, while giving it far greater gravitas in the educational-toys sector than Imaginarium, the Spanish toys and games retail chain seen as its main competitor.

The revival of interest in development-focused toys has seen ELC's Moscow outlets migrate from the centrally located Atrium and Gagarinsky shopping malls to a number of the city's larger malls, notably Las Vegas and Rio, which are seen as having higher footfall. At the same time, plans have been announced to open 45 additional ELC-branded stores across Russia by the end of the year, a move that takes it close to equalling the 50 outlets currently operated by Imaginarium. It is also believed that Detsky Mir is hoping to reposition its ELC operation, shifting it from its upmarket focus and boosting its mass-market appeal.

Over the longer term, it seems likely that demand for early-learning and educational toys is set to continue to rise across Russia, a development that will inevitably require many retailers to extend their range of such items. This increased demand has, in part, been fuelled by growing disillusionment with seemingly over-priced licensed toy characters and widespread concerns over the impact of addictive computer games on young Russian consumers.

In light of this, there are clear opportunities emerging for Hong Kong-based OEM and ODM suppliers with experience in the development-focused toy sector. For any companies considering this, however, it is well worth researching the market and consulting with Russian retailers with regard to domestic preferences prior to developing any product lines. If possible, it is also well worth securing the endorsement of the Russian Ministry of Education. While this is inevitably a lengthy and resource-intensive process, it does almost guarantee the success of any product that actually gains such official approbation.

It is also worth attending Mit Detstva (Childhood World), an annual expo held every September in Moscow's Expocentre. The event typically attracts 2,000 exhibitors from around the world, while its accompanying seminar programme offers considerable insight into the domestic toy market.

Photo: Mit Detstva: The most important expo in the Russian toys and games sector.
Mit Detstva: The most important expo in the Russian toys and games sector.
Photo: Mit Detstva: The most important expo in the Russian toys and games sector.
Mit Detstva: The most important expo in the Russian toys and games sector.

The opportunities offered by the e-commerce sector also merit serious consideration, with online purchases of children's products becoming ever more commonplace in many of Russia's comparatively poorly served regional and rural markets. With both AliExpress and JD.com now running Russian-language sites, the two now offer a low-cost means of accessing this potentially huge market.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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