M&M start toy store-y with Beanstalk

03 Oct,2011

By Sagar Malviya & Sarah Jacob

 

Utility vehicle maker Mahindra & Mahindra has launched a toy store and driven into a new market that pits it directly against the Mukesh Ambani-led Reliance Retail. The store, Beanstalk, which opened at Brookefields in Bangalore’s IT suburb Whitefield, will target children up to their late teens. “We have been piloting a toy store for the last two weeks in Bangalore,” said Mr K Venkataraman, MD of Mahindra Retail, without sharing further details.

 

With its first toy store, Mahindra Retail has forayed into the highly unorganised and fragmented 1,500 crore domestic toy market which is growing at 15%-20% according to industry estimates.

 

This is the company’s second venture in the retail sector, after it launched the mother and baby care brand Mom & Me more than two years ago. Mahindra & Mahindra has, however, been distributing toy brands such as Lego, Disney and Mattel, among other products, through group subsidiary Mahindra Intertrade unit.

 

For Mahindra Retail, toy retail is likely to be an extension of catering to children, expecting and new mothers across categories such as baby food, strollers, toys and apparel. Its 49 Mom & Me stores are spread across metros and smaller cities such as Amritsar, Aurangabad and Coimbatore. It has also launched Mom’s Lounge, a wellness studio for new and expecting mothers, at two stores.

 

Mahindra’s toy store has opened less than a year and a half after Reliance Retail entered the domestic toy market. Reliance Retail, which stitched a franchise agreement with British toy maker Hamleys, opened its first flagship outlet in April 2010. It plans to invest around 125 crore in five years and open 20 Hamleys outlets, two of which are the large-format stores that have opened in Mumbai and Chennai.

 

Besides Mera Toy Shop, which has 19 stores across the country, most toy retailers are either regional players such as Sapphire in Karnataka or owner-managed standalone stores.

 

A relatively late entrant into the $20-billion organised retail segment in India, Mahindra & Mahindra has focused on specialty formats to benefit from non-crowded retail segments.

 

But selling toys is no child’s play.

 

“Children are much clued into not just games but also the brands today. And pester power works,” said Mr Sudhir Pai, senior VP & head of Hamleys. With both parents working in many nuclear families, toy retailers stand to benefit. “Parents are unable to spend enough quality time with their children and the guilt factor is prompting buying,” he said, adding that infant and play school categories are growing faster.

 

Mr R Jeswant, VP sales & marketing at toy maker Funskool India, said higher purchasing power of young parents, better merchandising of products and awareness of the role of toys in aiding child’s development are boosting growth in the industry. Funskool India, a joint venture between American firm Hasbro and MRF, expects to report a 35% growth in revenue at 100 crore this fiscal.

 

“The average selling prices of toys have been moving up as higher-priced toys are being sold in much large numbers. Customers are willing to spend upwards of 20,000 on toys,” Mr Jeswant said. Besides traditional toys, video games are expected to be a high-growth segment.

 

The industry is, however, plagued by duplicates.

 

“There are probably three dozen versions of Scrabble and two dozen versions of board game Monopoly in the market. But only one each of that is authentic,” said Mr Amit Bagaria, chairman of retail consultancy Asipac Projects.

 

The consultancy estimates that toy retail within leisure megastores typically generate sales per sq ft of around 450, a little more than half of what children’s apparel stores do because consumers prefer lower-cost options.

 

“The challenge will be for companies to convince consumers to switch from purchasing non-branded counterparts to the branded types,” said Ms Parita Chitakasem, research manager-India at market research firm Euromonitor International.

 

Source:The Economic Times

Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

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One response to “M&M start toy store-y with Beanstalk”

  1. GD says:

    The consultancy estimates that toy retail within leisure megastores typically generate sales per sq ft of around 450…
    Is this $450 per sft per year???

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