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Retail Management

Report on
Comparison of toy retail stores in India

Submitted to

Prof. Srikant Gokhale

By
Group No 3

Kalpit Rajak| Rahul Pateliya | Shivanand Pawar| Sonam Jaiswal| Tushar Gogia
On
10th November 2015

Contents

Toy retail industry in India................................................................................................. 3


Who are their Customer.......................................................................................... 3
The Market.............................................................................................................. 3
Factors affecting Purchase Decision........................................................................4
Major Challenges in Indian toy retail industry.....................................................................5
Key observations at individual stores.................................................................................... 5
1.

Simba................................................................................................................ 5

2.

Funskool............................................................................................................ 5

3.

Me n Moms........................................................................................................ 5

4.

Babyoye............................................................................................................ 5

5.

Shishu ranjan.................................................................................................... 5

Comparison of the toy stores............................................................................................... 6


Customer perspective............................................................................................. 6
Retailers perspective.............................................................................................. 8
Marketing Strategy........................................................................................................... 8
Key Learnings and Conclusion............................................................................................ 8
Appendix....................................................................................................................... 8
Store Layouts.......................................................................................................... 9

Toy retail industry in India


The toy market in India is currently valued at 400million USD making up 0.5% of the global
toys market. The industry is witnessing a growth at CAGR of 15 %, and the growth trajectory is
all set to increase especially in the context of the growing middle class and increasing demand
for quality and luxury goods. The horizon looks promising with the advent of international toy
retailers and also due to the Indian retailers allocating a large share of store space to the toys
category. The industry growth is further fueled by video, console and computer games purchased
by growing adult consumer base which pursues it as a popular leisure pursuit.
Initially, the Indian toy industry consisted of only local toy manufacturers making low-quality
products. But presently, the market has seen a rise in some branded toy stores indicating a good
development in the industry.
There are two major categories of toys in the market educational and recreational.

Educational toys consists mainly of plastics and cardboard materials


Recreational toys - mainly include electronic toys (remote control, video
games), battery operated toys (cars etc), plastic toys (Dolls etc), soft toys

Who are their Customer


The toy market is a market that caters to consumers who want to buy everything that the stores
have, not caring about the cost and are less than five feet tall. Children have taught this industry
that selling toys isnt exactly a childs play. Innovation and creativity are the key to survival in
this industry, a lot more than super-hero characters is needed for survival. However, in recent
years the market has witnessed changing consumer tastes, with children opting for more
advanced video games and electronic toys. Children are also becoming habituated to changing
toys more frequently. Thus, toy and game manufacturers are obliged to introduce new products
on a regular basis, with a focus on innovation and technological advancements.
Last five years have seen a tremendous change with customers being more inclined towards toys.
The factors for this are rapid rise of nuclear families increased disposable income, and
inclination of parents to purchase more toys for children both educational and recreational.
Toys are high involvement products since it comes down to kids health and hygiene hence

parents are increasingly demanding high-quality toys. Also, parents buying decisions are highly
influenced by kids choices hence decisions makers are kids most of the time.

The Market
The toy market consists of two major categories of players- the local manufacturers and brands.
The branded toy market is not more than 20-25 percent like Simba, Hamleys, Funskool,
Landmark, etc. These companies are importing toys, branding them and selling in India. They
market their brands through distributors, who distribute the product to retail stores.
The local manufacturers have got a network of wholesalers and distributors. Their reach is high
due to their comparatively inexpensive products. While the branded stores have few distributors
owing to their high price points.
Our group has studied, amidst of stiff competition from online retailing how brick and mortar toy
stores are profitable in Udaipur. The study covers four branded stores Simba, Funskool, Me n
Moms, Babyoye and, an established local toy store Shishu ranjan.

Factors affecting Purchase Decision

Convenience of location in terms of traffic, parking and surrounding stores


Price
Quality and non-toxicity of products
Visual / aural appeal of the products
Need & choice of the end-user
Brand
Knowledge & attitude of stores staff
Variety in the store
Offers/Discounts

Major Challenges in Indian toy retail industry

A large number of Indians (specially middle class and lower class) are wary of spending
on toys that clearly dont have any educational value. Hence, it is important for retailers

to communicate the bebefits of toys to parents to penetrate the middle class households.
Due to high penetration of smartphones in India, kids are spending more time in playing
games on phones given the low cost of games. Thus toy companies should aslo start

developing their apps and linking toys to them in some way.


Indian toy market is seeing an influx of cheap Chinese toy imports and thus is facing a
tough competition from them in terms of market share.

Key observations at individual stores


1. Simba

A German company
Dream world like ambience, appealing to children; played music as we
entered
All branded products, mostly recreational
Sections were divided primarily on gender basis
Product knowledge of staff (1) was good but low on communications
First sight view of Foosball table: expensive item

2. Funskool

Brand owned by MRF group


Ambience was simple & soothing. Aisles were spacious
All branded products, majority of them being educational
Sections were divided primarily on product type & brand basis
Product knowledge of staff (2+1) was excellent and owner was involved in
communications
First sight view of a blocks-made statue, remote cars & crayons placed in
front section

3. Me n Moms

Ambience was crowded with lesser walking space & too much of staff (5)
Products of in-house brand, recreational & educational toys along with babies
utilities
Sections were divided on the type of products (cars separate, cradles &
utilities separate)
Product knowledge and communication skills / friendliness of staff was very
poor
Discount was available on selective expensive products but wasnt displayed
First sight view of baby utilities

4. Babyoye

Brand owned by Mahindra group


Focused on smaller age group
Products for new mothers

5. Shishu ranjan

Local store
Poorly planned
No space to walk
Boxes lying everywhere
No space to attend customers

Comparison of the toy stores


Customer perspective
S.No
.

Attributes

Rating (1 to 5) or Y/N
Simba

General
Store opening hours
Layout of store
Footfall

Location
Street/mall/hyper
market
Proximity to target
audience
Visibility
Parking space
Position of shop
Nearby shops competition/eateries
Exterior appearance
Signage
Cleanliness
Aesthetics/exterior
display
Security guard
Attractiveness to stepin
Fliers/promotional
posters pasted outside
Interior appearance

Funskool

Me n Moms

Shishu
ranjan

Babyoye

Mall

Mall

Mall

Street

Street

4.5

3.5
5
3

3
5
3

2.5
5
3

3
4
3.5

4
3.5
4

4.5
4

4
4

3
4

4.5
4.5

3
1

3.5

3.5

1.5

4
Store size
4
Lighting
3
Flooring
3.5
Ceiling
3.5
Display
Temp., music,
3
fragrance, wall colors
3.5
Segregation
walking space - easy to
3.5
navigate, clear aisles
Amenities - water
2
cooler, sitting area
Common
Washroom
5

Product
Price Range
Display
Options/variety
Brand availability
Quality
Well labelled price/brand
Customer interaction
Staff behavior greeting / reaction to
direct/indirect
customer
No. of staff
Reception
Staff
uniform/grooming
Staff behavior in their
idle time
Friendliness -behavior
if purchase was not
made
Approach time to
customer
Product knowledge
Brand and price
knowledge
Owner's presence

3
3.5
4
3.5
4

3
2
3
3
3

1000 sq ft
5
5
4
4.5

2
1
1.5
1

4.5

2.5

3.5

2.5

4.5

4.5

1.5

Common

Common

No

No

2.5
4
3
3
4

3
3.5
3
4
4 .5

4
3.5
4
3
3

3
4
3
4
4

4
1
4
3
2.5

4.5

3
3

3.5
2.5

4
3

2
1

2
1

3.5

3.5

3.5

3.5

3.5

2.5

2.5

No

Yes

No

No

Yes

Billing - time,
manual/computerized
Exit - impulse
purchase
Bargaining
Repeat purchase
appeal?
Will u recommend the
store to others?
Did u find what u were
looking for?
Age-wise toy
availability
Did u increase your
knowledge of toys
Were u comfortable
buying from the store?

Computerized Computerized

Computerized

Computerized

Manual

Yes

No

No

No

No

No

Yes

3.5

Yes

No

Yes

No

3.5

No

No

3.5

2.5

Yes

Yes

3.5

Yes

No

Yes

No

Retailers perspective
Simba

S.No.

Funskool

Me n Moms

Babyoye

Attributes

General
Franchise / Self
1 owned
2 Opening Hours
Opening Month
3 or date
Space on
rent/lease or
4 owned
What is the
5 weekly footfall?
How many of
these are
repeat
6 customers?
7 Total floor area?
8 Do you face
competition
from nearby

Franchise

Franchise

Franchise

Franchise

10:30 AM
to 9.30 PM

10:30 AM
to 9.30 PM

10:30 AM
to 9.30 PM

10:30 AM to
9 PM
September
2015

Feb14

Aug14

Dec14

Rent

Rent

Rent

Owned

100-120

100-125

180-200

60 70

50%
800 sq. ft.
Yes

35%-40%
1000sq.ft
Yes

25%
800 sq. ft.
Yes

20%
1000 sq. ft.
Not much

Shishu
ranjan

stores?
Age groups
9 served

0 to14 years

0 to 18
years

20 - 25 Lacs

30 Lacs

20 Lacs

20 25 Lacs

Both

Both

Company

Both

20 to 25

6 to 7

30

0 to 4 years

0 to 12 years
and females

Inventory
1

2
3
4

6
7

How much is
the investment
on inventory?
Who decides
the inventory
(Company or
franchise
holder)?
How many
brands you
keep?
What is the
range of
products?
Computerized
Inventory
Management
system?
Materials come
through
company or
direct from
supplier?
Any bargaining
or Loyalty
programs?

INR 100 to
INR 30,000

15 to 20
Apparels,
toys, baby
products

INR 49 to
INR 33,000

INR 29 to
18,000

Yes

Yes

Yes

Yes

Supplier

Warehouse
in Jaipur

Supplier

Both

Yes

Free gifts

Yes

Yes

Interior &
Maintenan
ce
Who decides
the interiors
(Company or
franchise
1 holder)?
Are the
interiors
standard in all
other stores of
same
2 company?
Marketing

Company

Yes

Company

Yes

Company

Yes

Company

Yes

Monthly
marketing
1 budget?
Share of
company &
franchise
2 holder?
Who decides on
the marketing
3 activities?

How marketing
4 is done?

No Idea

50% each
Company
and
Franchise
Owner

No Idea

Varies from
month to
month

Company

No Idea

50% each

Company

Company

No Idea

Events in
mall and TV
ads

Paper ads,
Radio,
Hoardings
and Events
in mall

Hoardings

3.75 Lacs

2.5 Lacs

5 to 6 Lacs

Mutual
decision
Pamphlets
at local level
and
newspaper
ads at
regional
levels

Revenues
& Profits
Total average
1 monthly sales
Any Targets? If
any then how
2 much?
What are the
average
3 margins?
Do you think
the business is
4 profitable?

5.50 Lacs

5 Lacs

4.25 Lacs

7 to 8 Lacs

7 Lacs

30% to 25%

30% to
25%

30% to 25%

30% to 25%

Yes

Yes

Yes

Yes

Employee
s
How many
1 employees?
Training to
employees
(Company or
franchise
2 holder)

Once in six
months

1 Manager
and 2 Staff
Once in
three
months

Monthly

Once in
three months

Marketing Strategy
Key Learnings

Owner/Managers direct involvement is both a sales and purchase motivator,


especially in the initial period of stores opening
Product knowledge in terms of content, usage & quality is essential for any
store employee. Giving brand information also forms trust with the customer
Sample display of packaged goods is necessary. It can be done in a creative
way with toys
Discounts if available should be clearly displayed outside the store
With a store dealing in kids products, you need sales people to be humorous
and involved in the purchase. Dull faces repel the customer
To attract walk-ins, the display should be arranged in a way that a potential
customer get the idea of the range of products available from outside itself
Enough walking, toy-testing & viewing space should be available in the store
layout
Crowding / lack of space turns unattractive to instil a walk-in stimulus
Segregation of display in terms of age groups and gender helps
Customer retention critically depends on salesmen attitude and variety in
the store
Low price colorful products like crayons, tiny cars, magic gums, rubiks cube,
etc. are ideal impulse purchase items to be placed close to billing counters
Store display should give a feel of its specialty (differentiated) if located with
a lot of competitors in the same area
Location should be decided in such a way that it has a decent footfall of the
target customers, caters to parking convenience, have other utility or leisure
stores in vicinity
With the general context of discounts not being offered, additional
inexpensive gifts with purchase are a nice gesture to retain customers

Appendix
Store Layouts