Tuesday, June 21, 2016

Toy majors rely on licensed merchandise to boost sales

Toy manufacturers are increasing their dependence on licensed brands to shore up revenues in a slow market. Both Simba Toys and Funskool are eyeing more international and domestic licences of established brands in segments like movies and television shows.
“Licences are helping the toys business grow today since consumers recognize toys based on movie characters and TV shows. Having tied up with players like Ferrari, Disney, Warner Brothers and Universal Studios, we expect our licensing revenues to double from the current 15 per cent to 30 per cent of the total business,” said Shree Narayan Sabharwal, Business Head, Simba Toys.
Considering the challenging times for the toy industry, which has seen growth slowing down to 7-8 per cent over the past two years, most retailers are cautious about ‘unrecognisable’ brands.
Simba is now moving beyond school bags into plush toys from movies like Frozen and animation series Lion Guard.
“Our global company in Europe has already got the licence and we will soon be expanding the licence into India and West Asia. Toys as a category has been facing slower growth at single digits in the past two years since even the expansion of modern retail has slowed down,” added Sabharwal.
Simba will now source licensed merchandise from its manufacturing facilities across Europe and South-East Asia.
Funskool, which already holds the licence for big brands like Lego, is now seeking more licences from established international brands and is also willing to try its luck with Indian movie brands.
“Today, the only Indian movie-based merchandise brand to become successful is Chota Bheem. It is a tricky business with no guarantee. However, we are willing to look at Indian movies along with established international brands as we expect half of our turnover to come from the licensed business,” said Funskool CEO John Baby.
In fact, the company already has the advantage of bringing in the licensed brands from its US-based JV partner Hasbro, which holds the merchandise rights for movies like Hulk and Batman. “Since Hasbro already has many licensing rights, we will also consider local manufacturing of the merchandise at our factories in Goa and Chennai,” added Baby.
With toy sales slowing down, both Simba and Funskool are cautious in their outlet expansion plans.
While Simba is taking up its stores from 11 to 40, Funskool is being more prudent, going from 18 outlets to 25 by 2017.

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