The Changing European Toy Scene

Andrew's pictureAfter graduating from Oxford with a degree in Biochemistry, Andrew turned his back on test tubes and Petri dishes forever, and embarked on an international career in marketing, working in South Africa, UK, Germany, Austria and the US before ending up as European Marketing Director of Mattel. On the way he picked up fluency in German, French and Spanish which stood him in good stead when in 1988 he founded the business consultancy Gameplan Europe Ltd. Focusing exclusively on the international toy and related industries, the consultancy helps manufacturers to expand internationally by providing strategic advice, finding business partners such as distributors, and recruiting managers around the world. Gameplan Europe also publishes the annual International Directory of Retail Toy Buyers and four other directories of business information

During 2013 several European toy manufacturers have increased their efforts to expand internationally to compensate for stagnating or declining home markets
. This is particularly noteworthy in the Spanish market the value of which has declined over 20% in two years. So Famosa, Educa Borras , Bizak and probably other local companies are trying hard to sell more across Europe by expanding their network of subsidiary sales offices or distributors. 

Poland and Russia are fast growing toy markets in which several multinational toy companies are setting up local sales offices, sometimes starting with just one key account manager to replace a distributor. Over the next few years the toy markets in countries such as Ukraine, Belarus and other large former Comecon countries can be expected grow to a value which will encourage multinationals to set up subsidiaries. At any one time of course there are losers as well as winners, and Spin Master has gone through a bad patch in the last two years, precipitating a cutback in the management structure in the European network.

Lego has enjoyed several years of double digit growth, a remarkable renaissance after the nadir in 2003 when many observers forecast its demise .However, increases in market share cannot continue indefinitely. In 2012 the Lego share of the German market was 17.6%, and the target is to achieve 20%. Given the huge success of Lego Friends, probably over $300 million worldwide annual sales, I would not bet against Lego growth just yet.

Mega Brands has a promising portfolio of licenses for 2014, but unfortunately Halo and Call of Duty are rejected by many German buyers on account of their military or violent themes. The Germans continued guilt about their 20th century militarism continues to echo in choices of toys made by buyers and parents. They even have a word for it ‘Vergangenheitsbewältigung’, which means ‘coming to terms with the past’. One ray of light on the horizon however is the great growth in Nerf sales in the last couple of years in Germany, indicating that attitudes to toy weapons are changing.

Tomy has a strengthened European position since acquiring RC2 two years ago. It is a reasonable guess that when BeyBlades is re-launched the next time, Tomy will sell their own property rather than continue to let Hasbro handle it.

Two huge threats to the European toy business are Amazon and electronic tablets/smart phones. If Amazon continues to sell ongoing products sometimes at well below cost, it will provide the nails for the coffins of many specialist toy retailers. Vtech and Leapfrog , and some European companies such as Lexibook, have had very good business with electronic pads, but the availability of parents’ iPads to kids and even to toddlers has now provided a rich source of play value with which toys are struggling to compete. I would now be extremely worried if my business were heavily dependent on traditional board games.

Andrew Dobbie

Gameplan Europe Ltd

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