UK toy market – Product mix
The product mix in the UK toy market is more reliant on licenses than most other markets. This is partly due to the plethora of kids’ entertainment available with English being the language of choice for the UK, USA, Canada, Australia, New Zealand and more, but it is also a reflection of a society which is very consumerist and label driven. The UK also (sadly) ranks quite low in terms of responsible parenting. ‘Plasma parenting’ is common, i. e. leaving children to watch screens so they are quiet and less trouble for the parents.
UK toy market – RETAIL CHANNELS
In terms of retail, the biggest players in the UK are Smyths Toys, Amazon and Argos (owned by Grocery chain Sainsburys). Amazon is of course known to all. Argos is a major UK generalist retailer, originally the foundation of Argos’ business was the Argos catalogue, a massive print catalogue, with a print run of more than 20 million copies These days however, and not just because of the pandemic and lockdown, Argos is becoming more and more an Online business, offering both Click & Collect and also delivery services. Smyths Toys is a toy specialist chain which offers a broad range of toys and has grown from roots in Ireland to become a major toy retailer across the UK and into Europe, too. From a personal perspective, in my 20+ years working in the toy business, it has been joyous to watch the development of Smyths from a major player in Ireland but largely unknown away from the emerald isle into the driving force it has become today. The final point to make on retail is that the UK has a much smaller independent toy store ecosystem versus other markets such as Germany or the USA, whereas Germany has thousands of independent toy stores, the UK has a few hundred only.
The ‘B’ word – Brexit: Implications & impact on the toy market
Having covered the basics of the UK toy market, the dominant topic regarding the UK for the past few years has been Brexit. Having enjoyed the benefits of the European project for decades, the UK voted to leave the EU five years ago in a highly contentious, deeply divisive and long running saga, which saw the UK finally exit the EU with a transition period from January 31st, 2020 to December 31st, 2020.
The question now, more than a year on from the official leaving date is what impact has Brexit had for the toy business, and how has it affected British companies seeking to sell into Europe and EU based companies looking to sell into the UK? The answer to that question can be split into two: short-term and long-term. It is far too early to appreciate the long-term impact of Brexit, although they are likely to be broad. But there have been some obvious immediate impacts:
- Bureaucracy & delays – border delays, paperwork complexities, courier packages taking longer to get from Britain to Belgium than to China. There is no doubt that logistics have been complicated and caused both extra work for toy companies and delays in sending and receiving shipments. This should smooth over time, but as an immediate impact it has been a very definite negative consequence of Brexit for toy companies on both sides of the water.
- Warehousing – for those British toy companies who have a domestic business and also export into and across the EU, many have seen the sense in setting up a warehouse on the mainland. Belgium & Holland in particular due to their port access and proximity to the UK have been the beneficiaries. This has mostly led to smooth supply for EU based customers of UK companies. Although, this has inevitably added significantly to operational costs for those UK companies, as they are now running two warehouses and having to split shipments coming in from Asia at a time when shipping costs have soared.
- QA/Certification – anyone who has ever tried to digest the EU’s Toy Safety Directive/EN71 regulations will know that compliance is a complicated area. It is helpful for anyone seeking to ship into the UK to speak to QA/compliance specialists for the latest guidance. But needless to say the addition of another regulatory body/UK specific regulations is not going to make anyone's life easier!
The reality overall though is that Brexit has complicated things for the toy industry. However, coming at a time when there was a much bigger disruption from the COVID-19 pandemic, it has been perhaps easier to put Brexit into context. It is still relatively easy to sell toys from the UK into the EU and vice versa, but it may take more admin resources. The toy business is above all a people business, and the people haven’t changed, regardless of some additional bureaucratic hurdles to jump over. Moreover, while Brexit looks likely to lead to significant social, legal, commercial and cultural consequences over time, the reality is that the show must go on. At least now we can work with the certainty of Britain being separated from the European Union going forward.