3 June 2019 Accessing the ASEAN Consumer Market: Toys and Games (Distribution Channels) Across many ASEAN nations in recent years, the toys and game industry has continued to be affected by the increasing popularity of online shopping. This migration affects some toy categories more than others. E-commerce already dominates the baby and pre-school toys market as parents are the key decision makers in the purchase of these sorts of toys and are inclined to search for these products online to find the best deals. Despite the rise of e-commerce, bricks-and-mortar stores are still the preferred channel for some categories of toys, especially dolls, superhero action figures, board games, and science, technology, engineering and math (STEM) toys. Purchases of these sorts of toys and games are highly driven by children’s choice, and parents like to try them out with their kids before buying them. This kind of shopping activity can enhance the bond between parent and child. Going shopping together for toys is a favourite activity for many families, especially during holiday seasons. Hong Kong toymakers and suppliers eyeing the ASEAN market need to keep aware of developments in both online and offline channels in order not to miss opportunities. Toys and Games Specialist Stores Toys and games specialist stores are a one-stop shop for toys, games, parties and gifts. They remain a preferred option for many ASEAN families shopping for traditional toys for children over three years old – toys such as dolls, action figures, board games and STEM toys. However, older children and teens in ASEAN are becoming increasingly reliant on their smartphones and social media at an early age. As a result, e-commerce is expected to continue to gain market share as a distribution channel for toys and games. It is becoming increasingly difficult for offline channels to match the convenience, numerous good deals and vast product ranges offered by online shopping. In response to the growing demand for online shopping, many toys and games specialist stores have created their own online shops to offer convenience and a seamless transition across online and offline channels. Notable Examples of Toys and Games Specialist Stores Indonesia Toys Kingdom – One of the biggest toy chains in Indonesia, with more than 30 stores across the country. Its flagship store in Grand Indonesia offers a complete product range, and comes with impressive in-store decorations and professional sales staff which help to enhance the experience of shopping there. 1 Accessing the ASEAN Consumer Market: Toys and Games (Distribution Channels) Kidz Station – Another well-known toy speciality chain with more than 70 stores in the country, housing popular toy brands, such as Hasbro, Disney, Mattel and LEGO. It also sells collections of licensed products including clothing, footwear and stationery. Toys Kingdom and Kidz Station in Indonesia (1). Toys Kingdom and Kidz Station in Indonesia (2). Multi Toys & Games – Established for nearly 10 years, it focuses on figurines and movie memorabilia. It is an authorised distributor of well-known brands like Bandai, Goodsmile and Kotobukiya. It has retail outlets in several key cities, but also sells through its online store and several online marketplaces. Toys City – A one-stop shop for kids that sells toys, costumes and stationery through its network of more than 10 stores. Malaysia Toys”R”Us – While Toys"R"Us is closing or selling its US and UK stores, its operation in Asia is business as usual, spanning a network of over 400 brick-and-mortar stores across key Asian countries, including Mainland China, Hong Kong, Japan, Malaysia, the Philippines and Thailand. The chain has about 40 stores in Malaysia, mainly concentrated in Selangor and Kuala Lumpur. Sheldonet Toy Store – Specialises in pop culture toys, figurines, and collectibles from global brands such as FUNKO and Bleacher Creatures. Toy Garden and Toywiz – Focuses on limited editions of toys and collectibles, especially Toy Biz and Marvel figures. Established in 2004, the store has three outlets throughout Klang Valley. It offers a wide variety of brands, including Hot Toys, Enterbay, Star Wars, Marvel, Transformers, LEGO and Hot Wheels. Thailand Early Learning Centre (ELC) – Became part of the Mothercare company in 2007. ELC provides educational toys for children up to the age of eight. Its products are sold through franchise and wholesale operations across many Asian markets, including Thailand, Malaysia, Indonesia and Singapore. Toys”R”Us – One of the leading toys chains in Thailand with 10 stores across the country, most of them in Bangkok. 2 Accessing the ASEAN Consumer Market: Toys and Games (Distribution Channels) Unique positioning of Toys and Games Specialist Stores In key cities in Thailand, Indonesia and Malaysia, online shopping is gaining an ever- increasing share of the toys market. As a result, providing a fantastic in-store experience is critical for toys and games speciality shops. They encourage customers to explore more in the stores by providing demonstrations, hands-on access to the games and toys, and recommendations and assistance from the in-store staff. They look to develop a unique positioning and advertise the aspects that set them apart from other distribution channels. While most toy shops in ASEAN offer a full range of toys and games, some focus on just one type or category, such as educational toys or figurines. These shops aim to become the primary destination for specific groups of customers shopping for that particular category of toy. If Hong Kong toymakers can identify toy shops or chains which specialise in selling their products and which match their market positioning, they will have a very good chance of winning orders from those retailers. Nursery and Baby Shops Along with baby essentials and baby clothing, many nursery and infant shops also offer toys – especially pre-school toys, such as bathtub toys, push cars, dolls and soft toys and tricycles. Notable Examples of Nursery and Baby Shops Indonesia Birds & Bees – As well as trendy baby gear, Birds & Bees also carries items such as toy teethers, dolls and soft toys, books and media, and baby gym and playmat equipment. SUZANNA – Its products portfolio includes toys and gifts for newborn and kids. Agabang Gallery – In addition to maternity and baby clothes, the South Korean retailer also sells baby toys such as dolls, soft toys and mobiles. Malaysia Babyland – Established in 1982, Babyland is one of the oldest baby stores in Malaysia. Its products include wooden toys, and infant and toddler toys, which are sold through both its bricks-and-mortar store and its online shop. 3 Accessing the ASEAN Consumer Market: Toys and Games (Distribution Channels) Mamours – As well as its wide selection of strollers and maternity products, it also sells baby toys. It has seven outlets across Malaysia. Happikiddo – Carries over 100 international brands, including baby and educational toys. In addition to its online store, the company has several outlets in Kuala Lumpur. Bebehaus – Has a wide range of baby toys, including bath toys, soft toys and educational toys. Mamours in Kuala Lumpur. Applecrumby & Fish – Its online shop offers various types of safety tested toys for babies and toddlers. Thailand Mother Goose – Founded in 2006, Mother Goose offers its own designed furniture, bedding and nursery room furnishings, along with other brands covering products from accessories to toys and clothes. Kiddie Season – Offers a wide variety of toys, including baby puzzles, wooden toys and children’s games. The company is the sole distributor of the Italian toy brand LISCIANI. Naturally! BeBe – Sells a wide range of soft toys, wooden toys and ride-on toys. Baby‘n Me – Carries a variety of imported brands, with a focus on organic and eco- friendly products, including non-toxic art supplies, organic teethers and baby toys. Opportunities Presented by Nursery and Baby Shops Nursery and baby product retailers are open to working with foreign toy manufacturers and brands to improve both the breadth of their product range and the depth of their value-added services. They are constantly seeking new and exclusive products to add to their portfolio. If a toymaker or supplier can offer a product that is differentiated from those in the local market vide, it will find that the roadblocks to entry into the ASEAN retail market are not as high as they might otherwise be. When searching for a potential distributor or retailer in ASEAN, Hong Kong toymakers and suppliers need to understand the market positioning of the retailer, and work out whether their products match the needs of the retailer’s target customers or add value to the retailer’s existing product range. Nursery and infant product retailers welcome collaborations with both established and emerging brands that can offer unique product concepts. However, manufacturers and suppliers that want to sell through this channel should bear in mind that such retailers do not purchase wholesale except from world-renowned and popular brands. They prefer to use a consignment agreement to minimise their risks. New opportunities have emerged with toys retailers in ASEAN building their own e-commerce sites. Online stores do not face the same physical restrictions on space as bricks-and-mortar shops, which makes it easier for suppliers to persuade retailers to offer their products for sale. 4 Accessing the ASEAN Consumer Market: Toys and Games (Distribution Channels) Department Stores While department stores have suffered in recent years in the West, they are still thriving in key ASEAN cities like Bangkok and Jakarta. In Thailand, Central Department Store, The EmQuartier and Siam Paragon are packed with shoppers during weekends and holiday seasons. Department stores are an ideal channel for selling toys and games in ASEAN, as shopping at the weekends is a favourite pastime for many families.