29 May 2013
From cradle to school: opportunities for babies’ and children’s toys
Global sales of toys for babies, infants and pre-schoolers are expected to see an annual growth of 6% in the next four years, reaching US$17.5 billion in 2016. The EU and the US are the biggest toy markets for children under the age of four, accounting for more than 70% of the total. On the other hand, parents in the BRIC countries – Brazil, Russia, India and China – increasingly recognise the benefits of toys to children’s development. The toy markets in the BRIC countries are expected to grow by 8% to 30% per annum in the next four years.
Playing to learn as the key trend
Toys are essential for babies and children, by keeping them happy and helping them to develop. Babies’ and children’s toys can be classified as, according to the intended age group, toys for babies (from birth to 18 months), infants (from 19 to 36 months) and pre-schoolers (from three to four years old). In 2012, the global toys market targeting children under the age of four years amounted to US$14 billion, while toys for pre-schoolers accounted for more than half of the total.
Simple toys can appeal to the baby's sense of touch
Babies have limited mobility. They explore the world through seeing, touching, smelling, hearing and tasting. They are interested in toys which are bright in colour, noise-making and of different textures. Toys targeting babies need no fancy designs as they mainly serve as objects for babies to look at, feel, chew on, hold and drop. They should be washable, non-breakable, safe and large enough to avoid suffocation and choking. Basically, it is unsafe if the toy or its parts can get through a toilet roll tube. Examples of toys for babies include stuffed and plush animals, balls, strap-on rattles, and musical and chime toys. The demand for babies’ toys is relatively small because babies spend most of their time sleeping and eating.
As infants begin to walk or crawl, their demand for playthings increases. Parents or caregivers would give infants toys that are simple but require some coordination to build up their small muscles and to promote their cognitive development. Examples include push-and-pull toys, nesting and stacking toys, activity cubes and shape sorters. Toys targeting infants aged between 19 and 36 months are expected to see a stronger growth of 6.3% per annum in the next four years as parents are increasingly becoming concerned about early childhood development.
Activity cubes are inspiring to infants
Pre-schoolers have a much wider choice of toys as they have mastered skills such as early literacy, number and spatial concepts, fine and gross motor control, the ability to identify colours, and making use of art materials such as paint, play dough, crayons and chalk. Toy safety is still the top priority but parents of pre-schoolers are also concerned about the educational value of the toys. However, parents in different countries may see educational values differently. In the Western world, parents focus more on children’s creativity, innovation and social skills. To most parents in Asia, educational values may refer to knowledge and literacy. In any case, technology and electronics elements play little role in toys for this age group. Popular toys for pre-schoolers include simple construction toys, creative materials and books.
BRIC countries have strong growth potential
According to Euromonitor International, the EU is the biggest toy market for babies and children, accounting for half of the world total, while the US market accounts for another one-quarter. The sales figures of the BRIC countries lag far behind those of the US and the EU, totalling only US$2.3 billion, or 16% of the world total. Toys are believed to be essential for children’s development in the Western world while this may not be the perception of parents in emerging economies. However, parents in the BRIC countries are increasingly recognising the benefits of toys to a child’s development. They are becoming more willing to lavish their children with toys as their living standards improve. Indeed, the toy markets in the BRIC countries are expected to grow at a rapid rate, ranging from 8% for Brazil to 30% for India per annum in the next four years.
In most developed economies, licensed toys are the big drivers of the sales of babies and children’s toys. In fact, the US, the UK and Japan are the origins of many popular cartoons and cartoon characters, which are then “exported” to the world including the BRIC countries through TV series and movies. Barney and Friends, Fireman Sam and Hello Kitty are no strangers to children in the BRIC countries. That is why licensed toys are gaining popularity in the BRIC countries too. Licensed toys are appealing to parents as they are happy to see their little children recognise certain characters.
As a matter of fact, some manufacturers and traders had the foresight to purchase the licence before the character became known or popular in a market. But one has to be mindful of the risks. In some markets, foreign characters may be perceived as affecting their own culture and values of their children. Also, in some countries such as China and Russia, the local media industry is developing some homegrown cartoons and characters which are proving no less popular than foreign ones.
A famous Russian cartoon character named “Cheburashka”.
In addition to licensed toys, educational toys are gaining popularity in the BRIC countries and this is most apparent in China. According to the recent HKTDC survey entitled, “China’s Baby Boom Dividends”, educational toys are what the respondents buy most frequently (67%). On the other hand, in an interview with The Wall Street Journal on 19 November 2012, Jerry Storch, the Chief Executive of Toys“R”Us, said that about 35% of sales in of Toys“R”Us stores in China are tied to education, compared with 21% in the US.
The safety issue
Toy safety is a top concern in almost every country. There are stringent regulations on the sale and import of toys in all major markets which exporters should observe. In the US, it is the Consumer Product Safety Improvement Act which stipulates the safety requirements of imported consumer goods including toys and the US Consumer Product Safety Commission that ensures the safety of consumer products including toys. In the EU, Directive 2009/48/EC specifies the general safety requirement of toys as well as rules applying to chemical hazards. In Japan, The Japan Toy Association established a voluntary safety control system on toys.
In Brazil, toy test reports from accredited laboratories outside Brazil will be accepted but they have to be translated into Portuguese by an approved signatory and contact information of the issuer. In Russia, the GOST R certificate of conformity signifies that imported products including toys comply with Russian standards, quality and safety requirements. The Gost-R certificate is necessary for customs clearance in Russia and for sales and/or marketing within the country. In India, the Bureau of Indian Standards prescribes the safety requirements for toys. In China, six types of toys, namely children’s vehicles, battery-operated toys, plastic toys, metal toys, toys with shot projectiles and dolls, are subject to the China Compulsory Certification scheme.
In addition to the official regulations, it is also important for toy manufacturers to carefully examine the appropriate age of babies and children for their products because parents do rely on the “recommended age” shown on the package during the process of choosing which toys to buy. Besides, as a general principle, toys intended for babies and children should avoid small parts, sharp points, ropes and magnets. They should be well-made and free of toxic chemicals.
Specialist retailers mostly preferred
As far as distribution channels are concerned, specialist retailers seem to dominate in most major markets. In Japan, 80% of sales of traditional toys and games come from specialist retailers and the share is also high in Brazil (63%) and Germany (46%). It is, however, interesting that in the US and China, one-third of sales is generated from grocery retailers instead. India has a very different pattern to other markets, where 72% of sales of traditional toys and games come from other non-grocery retailers which may include mom and pop shops and flea markets.
Still, there is one distinct difference between mature and emerging markets. The share of non-store retailing is higher in mature markets, ranging from 10% to 21% of the total sales of traditional toys and games. Apparently, consumers in mature markets are more accustomed to shopping for toys online while the share appears to be lower in emerging economies. The only exception is Russia (10%), which is likely because the country is sparsely populated, making it more cost-effective to distribute online rather than through physical stores.