Children’s toys market segment is an attractive and profitable business year round.
With a population of over 1.3 billion, India is the second most populated country in the world. The high birth rate in India is an additional positive impact on sales in the children’s toys segment which currently generates around US$ 1,045 million. Despite a wide-reaching income gap, India is developing a solid middle-class, thanks to the rise in disposable income. This has made the country a relevant sales market for many consumer goods. Because of the size of the population, collective buying power of the country is quite impressive.
The most important sales channel for toys in India is the brick-and-mortar retail trade. Roughly 98.3% of the sales are made here. The country’s growing economic and infrastructural development paves the way for a future change of the retail structures towards an organised retail trade.
Driving Factors of Growth
Toy trends in India are influenced by the growing level of education. More and more parents are beginning to give preference to educational toys in order to promote learning by playing for their children. Due to a rise in consumer spending, there is an increasing demand for toys, such as action figures, plush toys, puzzles, sports’ equipment and pre-school products. The sales of toys and games based on cartoon characters, TV shows, and movies are escalating, which is further promoting the growth of the market.
Intensive advertising for the launch of new products has led to greater brand awareness over the past few years. In line with this, the demand for branded toys amongst Indians has been growing especially international brands like Hamley’s are in demand. Next to international brands, franchise stores are an important factor in the Indian toy sector.
What does it take to start a Toy Business?
A typical outlet of children’s toys would range between 1,000-2,000 sq ft. the rent of which will vary from city-to-city pan-India. The total investment required of a franchise would be 30-50 lakhs, including the stock/inventory of a vast range of toys, will amount to 12-15 lakhs. The operational expenses of the said store which will range from 50- 75 thousand. Including the salaries of 4-5 people ranging up to 75,000 in a metro or tier-2 city, electricity can cost up to Rs. 10,000-15,000 depending on store size as well as Rs.10,000 miscellaneous expenses. Against these expenses, a kid’s wear franchise outlet can generate revenue of up to Rs. 6-10 lakhs a month.