When 34-year-old Gurgaon homemaker Ruma Sehgal set out to buy the first set of toys for her child, she knew exactly what she was looking for. “My goal was to buy a toy that worked as a developmental learning tool and was age appropriate for a child. When I shopped for my 15-month-old boy who is a bundle of energy, raring to explore everything around him, I had to keep all this in mind,” she says. Fisher Price’s Little People Animal Sounds Farm, a Ball Popper and a set of stack bucket did the trick for her. “I do not want my child to be a gadget-baby, he should learn and develop creative skills with these toys,” she says.
Sehgal is among the few young urban parents who are reaping the benefits of an open market for Indian toys; a market which is giving young children an opportunity to learn and be productive with innovative toys without having to make do with Chinese knock-offs. Interestingly, even these young parents are more interested in outcome-based toys rather than meaningless assembly-line productions, resulting in a boom in the Indian toy industry.
Market Scenario
The Indian toy market has exploded over the last couple of years giving fair amount of competition to their Chinese counterpart and engaging young urban parents in the process of ‘holistic child development’.
According to a new report by Assocham, the Indian toy industry, which was estimated to be worth around `8,000 crore as of March 2013, is expected to grow at a rate of 30 per cent by 2015 because of the rising demands of toys by the middle class population which is spending big on children. The industry that was once reeling under competition from cheap Chinese products is pulling out all stops to bounce back. In addition to the Assocham report, the Toy Association of India also released a report stating that the demand for homegrown toys is growing by 15 to 20 per cent every year.
Sunil Nanda, owner, Tripple Ess Toys Pvt Ltd and President of Toy Association of India says, “Although we have primarily become a trader’s economy rather than a manufacturing one, there has been significant growth. However, more can be expected only if basics such as low-cost factories, 24x7 electricity and supply of raw material are made available to Indian toy manufacturers. With an increase in export, we can outdo the Chinese influx.” Nanda, however, adds that even though there is huge competition for Indian toy manufacturers from their Chinese counterparts, it provides for a healthy competition.
India’s toy industry may touch `13,000 crore by 2015, on account of increasing consumerism and a growing population. The industry is growing at a compounded annual growth rate (CAGR) of about 20 per cent, the study says. According to Secretary General of Assocham D S Rawat, the Indian toy industry caters to about four crore kids in the age-group of 12 years across the country. “But domestically manufactured toys account for only 15 per cent of the market and the rest of the market is flooded with imported toys from countries like China, Korea, Malaysia, the UK and the US,” he says.
The Indian market at the moment offers a wide range of products, including electronic toys, board games, construction toys, educational games and collectibles. The domestic toy industry is highly fragmented, unorganised and is dominated by micro, small and medium-scale manufacturers.
Furthermore, the Assocham study also added that cities like Ahmedabad, Bangalore, Hyderabad and Pune were fast-emerging as toy manufacturing hubs.
At present, the industry employs about 25 lakh people both in the organised and unorganised sector. It said that about 70 per cent of the toy market in India is unorganised. And while small local toy shops catered to the masses, brands such as FisherPrice, Funskool, Hamleys, Lego and Mattel catered to the middle and upper-class, with young parents going in for toys that offer both entertainment and education.
The upwardly mobile parents
Child psychologists suggest that this change in attitude towards ‘edutainment’ toys has been driven primarily by the young, upwardly mobile, urban class. The rush to get their hands on the best brands and engage themselves with special educators has in a way become the need of the hour. Supreet Oberoi, Gurgaon-based life coach and special educator says, “Parents are no longer satisfied with their children engaging in colouring and such. They understand the importance of skill and personality development which starts as early as a couple of months. And because they are proactive and more aware, they are opting for structured development through toys and even Education Technological Learning (ETL) which was earlier called Early Time Learning.”
Oberoi says that the numbers of parents going in for ETL has increased substantially over the past four years. “It will be wrong to say this is a new technology. ETL has been in India for well over 25 years. But its use is limited given its cost.” An ETL programme can cost a parent anything between `50,000 and `2.5 lakh depending on the sub-programmes they choose.
Sehgal who is also trying the ETL programme for her boy says, “I bought three sub-programmes for `1.20 lakh which included DVDs and books on knowledge, values and English time. There is a visible change in my child’s behaviour, pick up and level of understanding,” she says. Even though Oberoi says ETL plays an important role in engaging young children and identifying their skills, conventional methods of engaging children in toys are also quite useful.
Bangalore-based interior designers and decorators Aashita Chadha and Abhishek Chadha are among a large percentage of affluent urban parents who are following the conventional yet smart method of educating their children and are willing to engage their children in more than just entertainment.
“Role-play toys are a hit with toddlers and pre-schoolers. Soft toys and regular battery-operated toys usually entice very young kids aged between one and two years. However, they do not provide enough stimulation to keep the older ones entertained and something more interactive is needed to keep their interests alive,” says Aashita. Abhishek adds that for them “edutainment” toys are the ones to eye and buy. “I would categorise the kinds of toys based on the skills they focus on Cognitive, that teaches academics, thinking and problem solving, imagination and creativity; Physical, that enhances fine and gross motor skills, sensory, balance and co-ordination; and Social, that teaches teamwork, sharing, listening and communicating.” He is for buying toys which are entertaining for the child and also cover at least one of the above skills. “While playing with these ‘edutainment’ toys, the child doesn’t even realise that he/she is also learning through play. What more can parents ask for?” says Abhishek.
Experts say that it would be correct to say that parenting has evolved as the parents do find toys aiding in the self development of their children. Jeswant, Vice President, Marketing and Sales, Funskool which also has the Lego franchise in India says, “We are now witnessing a stage where the current generation of young parents have played with educational toys and therefore are well aware of the advantages of paying with such toys.”
Toy manufacturers suggest that toys are considered a lifestyle product only at the top of the pyramid—the very rich segment that has a just about average knowledge of toy brands. The rest of the market is still very nascent and is still going through a learning curve and is quite ignorant of toy brands and categories. Dr Shyam Makhija, Director Business Development, ToyKraft Pvt Ltd says, “The industry growth in our opinion hovers between 10 and 15 per cent with the modern trade and organised players growing at 15 to 20 per cent. Metros like Bangalore, Hyderabad and Pune which have a pool of new and growing population have seen the highest growth in toy sales. This new emergent pool of customers looks beyond the common toys (those connected with just light, sound and motion).”
The Indian toy industry is filled with both small scale and large scale manufacturers and retailers. Some large MNC toy manufacturing units like Mattel and Funskool have a substantial share in the market. While Funskool Toys is the largest toy producer in India with 30 per cent market share, Mattel has about 20 per cent, Lego almost four per cent, Hasbro has nine per cent, Bandai has four per cent, Leap Frog has three per cent and other miscellaneous brands have a market share of almost 30 per cent.
Toys Are Us: the cult generation
The important question that is yet to be answered by a study is about the kinds of cult toys and its rising demand in the market. Experts say the educated and discerning buyers are checking out toys in modern retail and also on e-commerce for them. They are looking at toys, which will bring home to their child learning and play values.
Ekta Alreja Kapoor, a media professional says, “I did not conduct any market surveys, but I read up a lot on the Internet. I even registered myself with a number of parenting forums and referred to quite a few parenting books. Additionally, I registered with a toy library, giving me enough access to choose from a range of products in the market.” Kapoor and her husband prefer nesting and stacking toys, simple shape sorters, pop-up toys, soft block, bath toys, balls, push-pull toys, ride-on toys (feet-propelled), musical instruments, cardboard picture books, and pop-up books for their year-old daughter Suvira.
Today, children are more spoilt for choice in the range of toys available, than what the parents have seen in their childhood. “In fact, for the parents themselves many of these are new experiences as well. The new educated parent wants to give the child the very best in every way and that includes toys. Their first time exposure to the new and quality toys now available, gives them a new learning on parenting as well,” says Makhija.
Imported toys such as VTech Switch and Go Dino, Hamley’s products, Barbie Photo Fashion and Sbyke S-16 tec scooters have also become a hit with children for this very reason. Kapoor adds that their look and use for a child is another reason parents get attracted to them. “Toy shops these days are full of ‘made in China’ toys. These are mostly fun as most of them are battery-operated toys, but I always watch out for the lead content and look for a safe toy for my child. This is where such toys score,” she says.
Jhumari Nigam, Vadodara-based Programming Head of Radio Mirchi, experimented with all kinds of toys for her three-year-old girl. “My daughter Tara has an eclectic collection ranging from wooden toys to battery-operated ones to soft-toys to very basic wind-up toys. More than learning or keeping her occupied the idea behind picking a toy is often very simple—one that would get her super-excited. Interactive toys, learning toys, alphabet and number readers, wooden blocks, animal blocks, dolls and even cars,” she says. So while Tara enjoys her fair share of Dinos and Barbie doll, she also has the time to arrange her soft-toys and chalk-boards in her cheery colourful room.
Products such as paper quilling DIY kits, finger painting kits, alphabet pizza, Lego building sets, board games such as Monopoly and Othello, the Giggles range, Bey Blades, NERF and Transformers are all currently very popular in India.
While Funskool launched Giggles, its own brand of products for infants and pre-schoolers in 2012, the brand has been accepted well by the market. Handycrafts, a range of arts and crafts products, and Play & Learn educational puzzles have been launched in July this year. Toy-Kraft recently launched an entire new category of toy products under the Acorn brand which comprised 42 innovative jigsaw puzzles and educational aids. This category is replete with standard puzzles which have not seen extended utility and value-based learning with the target group.
“The new range incorporates some very novel and multi-level play options. The entire range is a one-of-kind foray in this segment of edutainment toys and has been accepted very well as seen from the initial sales—both at retail and on e-commerce. At one of the B2C portals, the sales of the new range correspond to 60 per cent of the toy sales. And this is the scenario with just 42 products. Looking at a crowded market where other players in the same segment have nearly 10 times more toy products, the future for new puzzle releases scheduled for the current year looks very encouraging,” says Makhija.
Interestingly, as the market for branded toys picks up in the metro cities, Tier-II and III are not far behind.
Small town, big market
Makhija explains, “The demand for toys in Tier ll and lll towns is mainly fulfilled by the unorganised players through a string of wholesale distribution network. Most of the smaller manufacturers feed this market. Customer knowledge of toys is limited and cheaper options score over quality toys.” He adds that customers in these underdeveloped markets are looking for very basic toys such as bats, balls, tops, simple games like Ludo and Snakes and Ladders, chess, rattles and toys which have light, sound and motion.
According to the Assocham report, in small towns and cities, the Chinese goods offer a wide variety at a cheaper price and attract children of all ages.
At present, the toy industry in India employs around 30 lakh people both in the organised and unorganised sector. With the industry growing, employment opportunities are also expected to accelerate. The Assocham study anticipates the employment to be around 50 lakh by 2015 with the industry growing at 30 per cent or more by 2015.
Future of the Toy Industry
Experts suggest that the future of the Indian toy industry looks extremely promising, not only because it will generate employment, but also open doors for innovative toys to enter the market.
Jeswant says, “As first generation parents who have played with branded toys during their childhood and are empowered with increased purchasing power, exponential growth is expected.” He adds that the market can be estimated to grow at 12 to 15 per cent per annum. “With more exposure and education, young parents realise the importance of toys in the development of the child and this has resulted in the market growing faster over the last few years. Organised retail with a much higher quality of merchandising has also provided more exposure for branded toys, which has helped in growing the market faster.”
John Baby, CEO, Funskool India Ltd agrees. “The future looks extremely promising as we are now seeing the first generation of parents who have played with branded toys during their childhood and coupled with increasing purchasing power, exponential growth is expected,” he says.
While the future of this industry looks bright, it cannot be ruled out that the demand for toys has undergone a dramatic change. Toys are no longer just fulfilling the requirements of a child, but are also catering to the growing needs of skill-development for parents.