All to play for

It’s no secret that toy retailers have struggled in recent years. Familiar challenges, including consumers buying online and the cost pressures associated with operating physical stores, have plagued the industry.

Looking for convenience and value, customers have turned to digital suppliers, most notably Amazon, as well as picking up toys as part of their weekly shop. Sainsburys’ integration of Argos concessions into their superstores is an effective response to this kind of consumer behaviour: combining convenience and choice for busy shoppers.

Yet against a challenging backdrop, a handful of toy retailers are defying the gloom that hangs over the wider industry. With a carefully crafted proposition for their consumers, they've shown a lucrative market still exists for toys on UK high streets and that opportunities exist for other independent toy retailers to benefit, too.

The Entertainer, a fast growing, family-owned chain, is a case in point. It's co-founder, Gary Grant, attributes recent success to the "fun atmosphere in stores", suggesting an important point of differentiation is the experience retailers on the high street can create. The company's click and collect service also demonstrates that online players need not have a monopoly on convenience.

The Entertainer’s recipe for success (it posted a 31% year-on-year surge in profits last January) lies in its product mix and placement in store. As well as stocking familiar brands at a higher price point, such as Star Wars and Lego, smaller filler lines including puppets and inflatables are also available. Grouped into sections within the store, such as: `Arts and Crafts', `Imagine and Play' and `Action and Adventure', children are encouraged to experiment and explore.

There are three trends likely to influence the UK toy market going forward:

Gifting
The popularity of gifting provides a significant opportunity for toy retailers. Consumers seeking a special gift for a loved one or family friend, reflecting the child's personality and traits, may seek smaller, independent brands over the more generic offer available through supermarkets. This is especially true if the business' values align with their own, such as promoting environmental sustainability and transparency in the provenance of product materials. Conscious Craft is one such self-styled `eco-brand', selling sustainable and safe toys to a more discerning shopper.

Showrooming
As some high street stores become more akin to showrooms, toy retailers can offer consumers the opportunity to interact with products before purchasing them. Hamley's flagship on Regent Street, for instance, is designed to captivate children through demonstrations of target product lines, allowing them to `try before they buy'. During the festive period, when as much as 80% of sales are generated, the store front features the latest product craze, such as character figurines and stuffed toys from a recently released Disney film, to lure passing shoppers.

Differentiation
Equally, creating a unique shopping environment can help drive sales and establish customer loyalty. Games Workshop, which specialises in selling miniature wargames, encourages gaming enthusiasts to browse at leisure and share knowledge about products with other customers in store. A niche offer and narrow consumer base needn't be a barrier to success.

The toy industry is still to a large extent an industry in flux; in a process of consolidation after the collapse of high-profile brands (e.g. Toys R Us). It is easy to see how the supermarket chains and online players appear as the natural beneficiaries. However, the arrival of a millennial generation of parents and soon-to-be parents, offers opportunities for nimble toy retailers to cater to evolving customer needs and behaviours.

The market for toys is still all to play for.

Jamie Parker