kids retail Feb, 15 2014

Toy biz is not a child's play

As per the industry body Assocham, size of the Indian toy industry is touted to touch Rs. 13,000 crore by 2015, compared to Rs.7,500 Crore in 2012. The industry is on the growth trajectory and opportunities for entering the market are available across var

By Parina Sood, TFW Bureau
Senior Sub-Editor
Toy biz is not a child's play

Every child wants a toy. Every child deserves a toy. Every parent, cutting across economic strata, tries his/her best to provide their kids with the toys they desire. The trend of ‘playing with a toy’ will never go out of fashion and so, toying with the idea of entering this business is not unworthy at all.

With the market showing signs of growth, there is a lot of untapped potential waiting to be explored. Companies are offering opportunities to associate with them in various formats. Franchise offers come in retail format, as online toy libraries and also in toy-rent-out models.

The growing toy-rent-out model

The toy-rent-out model has taken wings off late. This is a model where the renter rents a play tool for a particular time / for an event. This model is quite appealing to the customers as the kids can enjoy playing with all sorts of toys without the parents having to buy them at all. Many brands offer profitable, home-based opportunities in this segment; Toys-on-rent, Air Buddies, Rentoys to name a few.

However, in such models, maintaining hygiene levels and keeping the toys sanitised is of utmost importance.“Hygiene and cleaning of toys is integral part of our work-flow and each center manager is given detailed training to ensure toys are cleaned, disinfected and packaged before each exchange. For damaged toys, customers have to foot cost of damage if it is beyond normal wear and tear of the toy,” says Prajakta Kapure, Owner, Toys-on-rent.

The brand ‘Toys-on-rent’ started out in 2009 with a vision to provide young kids a wide array of educational and fun toys without any purchase burden on parents. It started franchising in 2012 and has 10 franchisees as of now. The brand offers home-based business opportunity with potential to generate Rs. 25,000 to Rs. 40,000 per month as profit. It offers comprehensive online training to all new franchisees to ensure smooth operations and seamless interface for customers. With plans to expand pan-India and take in 20-30 new franchisees in FY 2014-15, the brand feels young mothers who are compelled to stay at home to attend to their young kids would form their ideal franchisees.

The thriving retail format

This segment is majorly unorganised (75% is in the unorganised sector as per a report and the remainder is highly fragmented) and dominated by foreign players (Hanung, Funskool and Mattel being major players).

Giving these brands competition is another brand, The Simba Store, world’s 3rd largest toy maker with a footprint in over 25 countries. The brand has a host of international movie licenses in its kitty, more than 6500 SKUs to choose from and a wide price range to fit all budgets.In business for more than three decades now, the brand boasts of a wide array of traditional toys, electronic games, plush toys and educational ones. It targets all age groups, from toddlers to teenagers.

Simba has been brought to India by Exelixi Management Company Pvt Ltd. (master franchisee for Simba in India that entered the market with a viewpoint of helping international and regional iconic brands access the attractive Indian retail market.) Exelixi has flagship stores in Mumbai and Bangalore along with regular stores in Delhi NCR, Mumbai, Bangalore, Indore, Udaipur,Bhopal, Dehradun, Chennai, Bhubaneshwar and Surat. It has pan-India expansion plans.

Online toy libraries: a stunted growth story

Toy libraries are very similar to book libraries. Toys are issued to regular members keeping in view the child’s age and requirement. Once the child returns the toy within a laid down time, he/she gets another issued. Toy libraries in India is a relatively new concept, however it has been the fancy of many European and American markets for the past decades. Many people still don’t know that such libraries exist while others still remain in a condition of doubt and uncertainty about them.

Davinder Malhotra, who runs a successful venture ‘Rent Me Toy’ and has many franchisees associated with her, explains the problem plaguing this genre.“Most of the parents shy away from toy libraries saying, they can afford to buy the toy, not realising its advantages. With regular visits to toy libraries, the child gradually becomes more responsible towards library toys and picks up the sense of caring and sharing. But many parents today have no time and patience, which is needed to play with the child and tell him/her how to use the toy coming from the library. This is one of the reasons why the concept of play-area in the malls (which entered India at the same time as toy libraries) has become more popular than toy libraries as there’s no responsibility added to the parents when they leave the child in play area.”

Addressing the challenges

With increasing affluence, toy industry is bound to benefit in India. However, the industry on a whole needs to address certain issues:

On the Retail front

“There is a lack of organised retail on account of stranglehold on margins being applied by the larger MNC players. Also, a structured liquidation/returns policy is lacking from manufacturers; as a result retail shelves often carry stock which is months, sometimes years old,” opines Anumita Tripathi, Official Spokesperson, Exelixi Management Company.

Promoting Toy Libraries:

“Government must reduce the import duty on toys as well as promote domestic toy industry. Secondly, the toy manufacturers need to advertise toys as a source of infotainment and not merely entertainment. Also, young parents need to learn to balance their time between home and work. Even schools should tie up with toy libraries or open their own and start concept of weekend toy libraries where a child takes back a toy every weekend, plays with it and then discusses it on the next working day,” asserts Davinder Malhotra.

FRANCHISE FACTS:

Brand

Invest-

ment

Area

RoI

Break-even

Expansion plans (FY 2014-15)

Toys-on-rent

Rs 2.5 lakh

100sq. ft

35%

1.5 years

20-30 new franchisees across India

Exelixi Manage-ment Company Pvt Ltd

Rs 25-30 lakh

600-800 sq. ft

18-20%

8 months

The brand plans to open 5-8 flagship stores in top cities along with regular stores in Tier-I and Tier-II towns.

Related: 'Identify the right business opportunity'

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