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Toy Retailing - UK - October 2006

ISSUES IN THE MARKET
The market for toys is very challenging
Life for the specialist toy retailers is tough
Traditional toys are no longer the automatic gift for children
Definitions
 ABBREVIATIONS
INSIGHTS AND OPPORTUNITIES
MARKET IN BRIEF
Toy market suffering
Parents will always spend on kids
Core audience shrinking
Supermarkets gaining share
So who is losing share?
Woolworths is on the defensive
Argos rides high
Toys ‘R’ Us
Independents in decline
Escaping the price war
Taking a lifestyle approach
Improving the shopping experience
The Mintel toyshop improvement matrix
Market prospects
How the retailers will fare
FAST FORWARD TRENDS
Trend 1: “Hire Hire!”
Definition
Context
Market touchpoints/implications
Trend 2: “Rise of the Procurator”
Definition
Context
Market touchpoints/implications
Trend 3: “Failure To Launch”
Definition
Context
Market touchpoints/implications
INDUSTRY INSIGHTS
Market conditions
Impact of toy crazes
General retailers vs specialists
Different shopping trips
Differentiate to survive
Seasonality
Toys falling in the pecking order
Price deflation
The role of brands
Deals and special offers
Buying groups
Ambience and environment
Service a key differentiator
Online shopping – opportunity or threat?
Outlook remains challenging
INTERNAL MARKET ENVIRONMENT
Price discounting
High dependency on current fads
Children losing interest in toys at younger age
Consumers likely to indulge children
Demand for educational toys strong
Toys in supermarkets create more scope for impulse buying
Selective extravagance
BROADER MARKET ENVIRONMENT
Rising costs
Economic growth
Figure 1: PDI and consumer expenditure, at current and constant 2001 prices, 2001-11
Employment levels on the rise
Figure 2: Levels of employment, by gender, 2001-11
Population trends
Figure 3: UK population, by age band, 2001-11
Population shifting upmarket
Figure 4: UK population, by socio-economic group, 2001-11
Divorce rates increasing
Figure 5: Marriage and divorce, UK, 2000-10
THE MARKET IN CONTEXT
Clothing vs toys
Figure 6: UK consumer expenditure on toys and childrenswear, at current prices, 2001-05
How children spend their money
Figure 7: How pocket money is spent – 7-10s, 2005
Figure 8: UK audio-visual markets, 2000-05
Figure 9: Market for mobile phone handsets, 2000-05
Mobile phones popular with kids
Figure 10: Ownership of mobile phones by children, by age group, 2005
STRENGTHS AND WEAKNESSES IN THE MARKET
WHO’S INNOVATING?
Own-label
E-commerce
Store design
Personalised mailings
Other services
MARKET SIZE AND FORECAST
Spending on toys
Figure 11: UK spending on toys, games and hobbies, 2001-05
Market segmentation
Figure 12: Spending on toys and games, by type, 2004 and 2005
Specialist toy retailers
Figure 13: UK retail sales, all non-food retail sales and all other non-specialist non-food retailers sales, 2001-05
Outlet data
Few specialist chains
General retailers significant and growing
Some retailers add edited toy ranges
Figure 14: UK toy retailers, store numbers, 2001-05
Forecast
Clouds on the economic horizon
Figure 15: Spending on toys, 2001-11
THE CONSUMER – WHERE THEY BUY TOYS
Consumers use wide variety of outlets
Supermarkets expanding
Figure 16: Where toys/games bought from for child under 16 in the last 12 months*, June 2006
Males less likely to purchase toys
AB groups favour educational stores
Argos appeals strongly to Ds
Supermarkets mount strong attack on toy retailing
Figure 17: Where toys/games bought from for child under 16 in the last 12 months*, by gender, age and socio-economic group, July 2006
Specialist online retailers favoured by ABC1s
Disney Store attracts young buyers
Boots attracts an older profile
Core audience
Figure 18: Where else toys/games bought from for child under 16 in the last 12 months*, by gender, age and socio-economic group, July 2006
 NUMBER OF STORES USED
Figure 19: Number of shops toys bought from, July 2006
Destination stores
ELC shoppers use a wider range of stores
Many stores only used as part of a much wider repertoire
Supermarket shoppers often use at least two other shops
Figure 20: Number of shops toys bought from, by retailer, July 2006
WHERE THEY BUY TOYS – DETAILED CONSUMER DEMOGRAPHICS
Figure 21: Where toys/games bought from for child under 16 in the last 12 months*, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing habits, store used regularly for grocery shopping, household size and car ownership, July 2006
Figure 22: Where toys/games bought from for child under 16 in the last 12 months*, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing habits, store used regularly for grocery shopping, household size and car ownership, July 2006
THE CONSUMER – WHAT ARE THEY BUYING?
Games and puzzles strong
Soft toys very popular
Active lifestyles
High-tech goods
Figure 23: Toys bought for own or someone else’s child in the last 12 months, July 2006
ABC1 groups favour educational toys
25-44s are core target group
Older and female consumers buying board games
Cuddly toys for 25-34s
ABs favour games and creative pastimes
Ds attracted to fashion dolls
35-44s favour sports sets
Figure 24: Top seven toys bought for own or someone else’s child in the last 12 months, by gender, age and socio-economic group, July 2006
Generally the 25-44s buy more often
ABs encourage imagination
Handheld consoles appeal to C2s
Figure 25: Other toys bought for own or someone else’s child in the last 12 months, by gender, age and socio-economic group, July 2006
Influence of age
Figure 26: Toys bought for own or someone else’s child in the last 12 months, by age of child, July 2006
Impress the buyers
ABC1s creative and imaginative
Families have wide sphere to buy for
Bung it in the boot
Encourage the part-timers
M&S and Tesco have potential in educational toys
What bought by where shop
 NUMBER OF TOYS PURCHASED
Fairly large group of very active shoppers
Figure 27: Number of toys bought in the last 12 months, July 2006
Toys that come lower in the pecking order
Most toys in a range of four or more
Typical gifts often in smaller repertoire
Figure 28: Number of toys bought in the last 12 months, by type of toy, July 2006
WHAT ARE THEY BUYING – DETAILED CONSUMER DEMOGRAPHICS
Figure 29: Top seven toys bought for own or someone else’s child in the last 12 months, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping, household size and car usage, July 2006
Figure 30: Other toys bought for own or someone else’s child in the last 12 months, by marital status, lifestage, age of children, Mintel's Special Groups, working status, tenure, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping, household size and car usage, July 2006
Figure 31: Other toys bought for own or someone else’s child in the last 12 months, by gender, age, socio-economic group, marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping, household size and car usage, July 2006
Figure 32: What toys bought, by where conusmers are shopping for toys, July 2006
Figure 33: What toys bought, by where conusmers are shopping for toys, July 2006
THE CONSUMER – MOTIVATIONS AND WISH LIST
Special celebrations drive demand
Happy birthday
Impulse and other
Figure 34: Reasons/occasions that prompted toy purchasing, July 2006
Figure 35: CHAID analysis of triggers for toy purchasing, July 2006
Reasons for purchasing
Gifts for children’s friends
Rewards
Figure 36: Top five prompts/occasions for buying toys, by gender, age and socio-economic group, July 2006
25-44s purchase toys for smaller occasions
Women more inclined to give toys for Easter
Toys for holidays
Figure 37: Other prompts/occasions for buying toys, by gender, age and socio-economic group, July 2006
 WISH LIST
Trying out the toys
Guidance is helpful
World-wide Web
One-stop shopping
Figure 38: Things that would make shopping easier and encourage more shopping for toys, July 2006
Lower socio-economic groups look to test toys
AB customers shop at home
Figure 39: Top seven improvements that would make shopping easier and encourage more shopping for toys, by gender, age and socio-economic group, July 2006
Figure 40: Other improvements that would make shopping easier and encourage more shopping for toys, by gender, age and socio-economic group, July 2006
How many improvements are needed?
Figure 41: Number of improvements consumers would like to see, July 2006
Figure 42: Number of improvements consumers would like to see, by improvement, July 2006
Improvements wanted by store
MOTIVATIONS AND WISH LIST – DETAILED CONSUMER DEMOGRAPHICS
Figure 43: Top five prompts/occasions for buying toys, by, marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping, household size and car usage, July 2006
Figure 44: Other prompts/occasions for buying toys, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping, household size and car usage, July 2006
Figure 45: Top seven improvments that would make shopping easier and more shopping for toys, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping and car usage, July 2006
Figure 46: Other improvments that would make shopping easier and encourage more shopping for toys, by marital status, lifestage, age of children, Mintel's Special Groups, working status, region, ACORN categories, media usage, commercial TV viewing, store used regularly for grocery shopping and car usage, July 2006
Figure 47: Improvements wanted, by where shopped for toys, July 2006
CHANNELS OF DISTRIBUTION
Industry associations/buying groups
British Toy & Hobby Association
Toy Retailers Association
Buying groups
Toy Fairs
Market segmentation
Figure 48: UK toy market: channels of distribution, 2005
RETAILER COMPETITOR ANALYSIS
The retailing scene
Share of the market
Figure 49: Estimated market shares of leading retailers in toys, 2003 and 2005
Figure 50: Summary of main toy retailers, 2006
Recommendations for retailers to maximise their potential
RETAILERS
 SPECIALISTS
 THE DISNEY STORE LTD
Figure 51: The Disney Store Ltd: Sales as share of spend on toys, games and hobbies, UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 52: The Disney Store Ltd: Group financial performance, 2000-05
Store portfolio
Figure 53: The Disney Store Ltd: Outlet data, 2000-05
Retail offering
Market positioning
Brands
Product offer
Operational issues
Advertising and marketing
E-commerce and home shopping
 EARLY LEARNING CENTRE LTD
Figure 54: Early Learning Centre Ltd: Sales as share of spend on toys, games and hobbies in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 55: Early Learning Centre Ltd: Group financial performance, 2000-05
Store portfolio
Figure 56: Early Learning Centre Ltd: Outlet data, 2000-05
Retail offering
Market positioning
Brands
Product offer
Operational issues
Advertising and marketing
E-commerce and home shopping
 THE ENTERTAINER (AMERSHAM) LTD
Figure 57: The Entertainer (Amersham) Ltd: Sales as share of spend on toys, games & hobbies in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 58: The Entertainer (Amersham) Ltd: Group financial performance, 2001-05
Store portfolio
Figure 59: The Entertainer (Amersham) Ltd: Outlet data, 2001-05
Retail offering
Market positioning
Product offer/brands
Advertising and marketing
E-commerce and home shopping
Operating issues
 GAMES WORKSHOP GROUP
Figure 60: Games Workshop Group: Sales as share of spend on Toys, Games & Hobbies in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 61: Games Workshop Group: Group financial performance, 2000-05
Store portfolio
Figure 62: Games Workshop Group: Outlet data, 2000-05
Retail offering
Product offer
Advertising and marketing
E-commerce and home shopping
 GAMLEYS LTD
Figure 63: Gamleys Ltd: Sales as share of spend on toys, games & hobbies in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 64: Gamleys Ltd: Group financial performance, 2001-05
Store portfolio
Figure 65: Gamleys Ltd: Outlet data, 2001-05
Retail offering
Market positioning
Brands/products
Advertising and marketing
E-commerce and home shopping
 HAMLEYS OF LONDON LTD
Figure 66: Hamleys of London Ltd: Sales as share of spend on Toys, Games & Hobbies in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 67: Hamleys of London Ltd: Group financial performance, 2001-05
Store portfolio
Figure 68: Hamleys of London Ltd: Outlet data, 2001-05
Retail offering
Market positioning
Brands
Product offer
Advertising and marketing
E-commerce and home shopping
 TOYS `R’ US
Figure 69: Toys `R’ Us: Sales as a share of toys, hobbies and games UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 70: Toys `R’ Us: financial performance, 2002-06
Store portfolio
Figure 71: Toys `R’ Us: Outlet data, 2002-06
Retail offering
Market positioning
Brands
Product offer
Advertising and marketing
E-commerce and home shopping
 TOYWORLD GROUP PLC
Strategic evaluation
Background
Financial performance
Store portfolio
Retail offering
Market positioning
Product offer
E-commerce and home shopping
 GENERAL RETAILERS WITH TOYS
Argos
Figure 72: Argos: Sales as share of all non-food retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 73: Argos: Group financial performance, 2001-05
Store portfolio
Figure 74: Argos: Outlet data, 2001-05
Retail offering
Market positioning
Brands
Product offer
Operational issues
Advertising and marketing
E-commerce and home shopping
Space allocation
Woolworths Group plc
Figure 75: Woolworths plc: Sales as share of all non-food retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 76: Woolworths plc: Group financial performance, 2000-06
Store portfolio
Figure 77: Woolworths plc: Outlet data, 2000-06
Retail offering
Market positioning
Brands
Product offer
Operational issues
Advertising and marketing
E-commerce and home shopping
WH Smith UK
Figure 78: WH Smith UK: Sales as share of all non-food retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 79: WH Smith UK: Group financial performance, 2001-05
Store portfolio
Figure 80: WH Smith UK: Outlet data, 2001-05
Retail offering
Mothercare Plc
Figure 81: Mothercare Plc: Sales as share of all non-food retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 82: Mothercare Plc: Group financial performance, 2000-05
Store portfolio
Figure 83: Mothercare Plc: Outlet data, 2000-05
Retail offering
Market positioning
Brands
Product offer
Operational issues
Advertising and marketing
E-commerce and home shopping
 DEPARTMENT STORES
John Lewis
Debenhams
House of Fraser
Harrods
 GROCERY RETAILERS
Tesco
Asda
 OTHER RETAILERS WITH TOYS
Boots
M&S
Hobbycraft
Mamas and papas
 INTERNET SPECIALIST TOY RETAILERS
Brightminds.co.uk
Otherlandtoys.co.uk
Letterbox.co.uk
Myfirstyears.co.uk
Knottoys.com
Jigsawpuzzlesdirect.co.uk
Thekidswindow.co.uk
Coolgiftsforkids.co.uk
 OTHER INTERNET SITES RETAILING TOYS
Amazon.com
Ebay.co.uk
Big-book mail order companies
ADVERTISING AND PROMOTION
Adverts to reach the kids
But restrictions may increase
Children's TV channels increased opportunities
What the parents think
Figure 84: Leading toy retailers, advertising, 2001-05

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