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GCC Toy Market 11.8% Annual Growth

On 13 May 2007, the largest toy exhibition in the Middle East, Middle East Toy Fair, will open in Dubai. Exhibitors and industry experts from across the globe will descend on the emirate with what probably amounts to several Santa’s sack-loads of toys and a veritable plethora of new ideas for the playroom.

The show, which has doubled in size since it’s launch five years ago, will comprise of more than 200 exhibitors – among them, iconic toy industry names such as Ravensburger, Simba-Dickie Toys and Christy’s Group. Categories will span the market spectrum too - from baby products to back-to-school, to just about everything you could possibly think of in-between.

It’s probably the very best place on the planet as visitors will be entering the magical world of toys where they will observe the latest innovations and endless creativity in the toys’ industry which makes it the most competitive and lucrative trades in the world.

And the market in the Middle East is no exception. Worth an estimated $1.5 billion a year and with growth rate of 11.8 percent, toys are a serious business for GCC retailers, who are rapidly cashing in on the region’s booming population growth of six percent a year.

Season’s Greetings
But although the market has enjoyed a steady and healthy growth over the past three decades, as would be expected from a region where an estimated 50 percent of the population is under 16, unlike other retail markets, selling toys is not all fun and games.

Primarily, it’s a seasonal industry, with approximately 65 percent of a year’s sales taking place during Eid Al Fitr, Eid Al Adha, Christmas and Diwali. This sets it apart from other retail arenas such as fashion, where the year is broken into spring/summer and autumn/winter collections which sell fairly consistently throughout the year.

Children are tricky customers too. Retailers must hazard a guess at the new ‘it toys’ for the season which may – or may not turn out to be successful. Parents are also a factor in the customer equation, and conflict will often arise in terms of which toys they want their children to have – and which toys their offspring actually desire – making the ‘it toy’ forecast even more complicated.

And all that isn’t even factoring in the logistical issues of the extra space required by retailers to display their products and the strict safety standards required across the board – particularly for babies and children under five.

Baby Boomers
Yet despite the challenges of the industry, the eastern hemisphere in general is experiencing what amounts to a blossoming business climate – and population growth as well as healthy disposable incomes are the reasons, say Magrudy’s – the company that opened Dubai’s first toy outlet more than 30 years ago.

“Demand for toys is increasing by around 10 to 15 percent a year,” says their spokesman, who acts as the chain’s main toy buyer consultant.

He explains; “The reasons are basically down to the increase in population, which manifests itself in the increase of shopping mall space, increase of kindergartens and increase in the flow of tourists. Magrudy’s has been in the business of toys for more than 30 years and the market has changed a lot, but the main season for business is still the last quarter of the year – where on average, parents spend more than Dhs 300 per purchase.”

As evidence of the younger customer’s purchasing power – and their steady increase in number, (the region’s birth rates have risen by 10 percent over the past few decades) the Middle East is soon to become the home of six Hamley’s stores.

The historical outlet which has suffered financially in recent years, hopes the great trek east will boost its market value, following the decline in sales in the west, where the population is ageing, consumer spending is down, and rents and overheads are increasing. Indeed, already 30 percent of Hamleys customer’s in its legendary London store are tourists – not residents.

The first Middle East Hamleys store will appropriately open in Emaar’s new Dubai Mall– which will also be the world’s largest shopping mall. And the amount of retail space opportunities that will be available to other outlets in Dubai by 2009, is currently estimated to be worth a staggering $26 billion.

In terms of home-grown businesses, Babyshop is the local success story. The company, which was established in 1973 with just a single outlet, now has 60 stores across the region – 26 of which are in Saudi Arabia were the birth rate has enjoyed a particularly healthy boost in recent years.

Traditional versus Modern
But perhaps most surprisingly, despite the massive technological advances within the toy industry that have seen the birth of the Furby, a robotic plethora of pets and electronic nursery playmates, traditional, educational toys are gaining in popularity in the Middle East.

“The demand for creative, educational toys has increased,” confirms Magrudy’s spokesman, who goes on to add that the retail chain has geared their stock to meet market demands by increasing the number of traditional toy in their stores.

Perhaps the shift towards learning through play is evidence of the increased awareness parents now have regarding the development of their children. Or perhaps, it is also in part because the number of nurseries and kindergartens in Dubai has increased by almost 40 percent over the past five years.

Either way, a young population plus a healthy economy is a pleasing equation for the region’s toy market, which for now, and for the foreseeable future, looks set to enjoy a profitable growth trajectory.

Consumers, trade visitors and experts can visit the Middle East Toy Fair from 13-15 May. And for the first time a Conference will take place along side the Exhibition to shed more light on the latest trends and discuss other interesting topics concerning the toy industry. Some of key speakers are V Andrew Dobbie, Gameplan Europe UK, former European Marketing Director of Mattel Toys. Neil Griffiths, UK Creator of the internationally acclaimed Storysack concept and author of books on creative play as well as children’s picture books. Wasken Abadjian, Intermarket Consulting Germany, Former Export Manager of Haba Habermaaß GmbH.
via Mena Report



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