A Toy Story from the Gulf

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 gcc, toy, market, children

 

The exact figures for the GCC toy market are varying but it is evident that the Gulf countries are the third largest market in Asia, right after China and India. Mr. Husni Al-Zubaidi, General Manager of Saudi based Toy Triangle (region’s largest toy distributor) said for bq that no-one is really sure about the exact value of the market “but 5 billion Saudi Riyals (USD 1.3 billion) retail value will not be far from the real figure.”   Moreover, baby-care product industry generated USD 15 billion in the MENA region in 2013, with GCC countries in the lead and analysts predict the market to grow further in the coming years due to constant population growth and tremendous increase of the retail sector.

According to Economist Intelligence Unit forecasts, the GCC population will reach 53 million by 2020. The percentage of juvenile population in these countries is above world average as some 26.14% of the population will be aged under 14 in 2020. With a combined GDP of USD 1.37trn, the region is one of the few emerging markets where the retail sector is forecast to grow significantly and consistently over the next 3 years. Such increase of the Gulf’s retail sector creates countless opportunities for the toy industry.  Gulf’s retail market is expected to reach USD 221 billion by 2015, according to the Kuwait’s Financial Centre “Markaz” report “GCC Retail Report” from 2013, while Alpen Capital is even more optimistic and forecasts GCC retail industry to cross the USD 270 billion mark by 2016. In the last few years, a number of grand malls and shopping complexes have opened across the GCC and many more are underway, spreading the net of toy stores and enriching the toy offer, bringing mayor global toy producers in the Gulf. It is not surprising that Babyshop alone, for example, plans around 200 outlets in the region.  Similar trend is noticed among other mayor toy manufacturers and retailers in the Gulf.  Not surprising, as for example, in UAE average annual spending per child reached 1300 DH (USD 353) last year.

GCC market is particularly interesting for manufacturers and retailers for another reason. There is almost no local competition, so a large niche exists in the market. However, Al Zubaidi said that “some locally created brands like Bambolina for nurturing dolls will continue to grow but they will be sourced from the Far East.” Due to an absence of local production, the GCC toy market relies on imports and most products are designed in Europe and USA by the large toy manufacturers, and made in China, with less than 10% imported from Europe and USA.

 

gcc, toy, market, children
Average annual spending for toys per child in the GCC reached USD 327 in 2011, which is second only to USA and Canada.

 

KSA and UAE the biggest spenders

Saudi Arabia accounted for more than one third of the market share of the entire MENA market in 2012, with around USD 550 million. KSA is definitely the most interesting market as 30% of its almost 30 million people are younger than 15 years and thus consumer base holds significant potential according to the NBK Capital report. On the other hand, UAE is becoming increasingly relevant with Dubai becoming the absolute regional trade leader.

Dubai has evolved into international trade center and major distribution hub of the region known for its relatively simple import and re-export procedure at the Dubai Ports. Toys and other products for children are no exemption. Toy distributors and manufacturers service 12 destinations in the GCC, CIS and African countries from Dubai, as some of the markets in this area are difficult to reach. Overall, Middle East market is still immature in some parts and not fully organized and personal contacts are irreplaceable. Most of the international brands use Dubai for their springboard for other markets in the region.  Dubai also hosts the only toy and other children products exhibition in the Middle East, Playworld Middle East organized by Epoc Messe Frankfurt GmbH since 2011.

 

Slides, swings and bicycles

According to Al Zubaidi, “Within each market you have some small local historic variations usually along ethnic lines in their toy preferences and influences, but have no major impact and globalization is prevalent in toys as it is in other categories.”

Association of Play Industries has noticed increased trend in sales of outdoor playground equipment in the region in last several years. High level of urbanization and parental awareness of healthy lifestyle importance and welfare of their children has increased the promotion of exercise equipment, exceeding the global trends due to a better weather conditions in the Gulf. This in particular means the better sales of slides and swings and especially bicycles.  As infrastructure in the Gulf is becoming ever friendlier to the children and outdoor activities; especially in the case of Dubai, where bicycle lanes alike to European cities are being introduced.

Besides this, Al Zubaidi notices that there is an evident drift away from traditional toys to electronic games and Apps. This trend has been going for some time, as “although parents prefer kids to have traditional toys, kids themselves prefer gaming and electronic games in a lot of cases.”  Furthermore, heavy influence of TV, internet and cinema have significant impact on toy purchases as well as increased brand awareness and better quality shopping environments for toys, added Al Zubaidi.

But despite the globalization of the toy market in the Gulf, in the last several years there is also an increased interest for more regionally ‘flavoured’ toys, according to the Playworld management’s observation.  As an example they named Lebanese company Edu Fun and their game that teaches Islamic rules, as well as Simba Toys’ dolls Jamil and Jamila wearing traditional clothes. Al Zubaidi also expects this trend to grow stronger in the future, adding that “some of the top toys this year are more traditional than in previous years.” In this regard, “the region tends to follow global trends so looms, Frozen, Lego are all big hits last year” he added. 

There is definitely a huge impact of modern technologies and web related products that are competing with the traditional toys as more and more children are using tablets, online gaming, downloadable applications s and computer games, which creates a completely new sector in the world of toys and children’s entertainment. However, action figures are also popular due to cartoons,  and therefore, manufacturers nowadays try to link two trends by linking action figures to web functions, achieving ever better results.

 

gcc, toy, market, children

 

Harmonization of safety standards 

In the last years, much has been done to harmonize the standards for toys sold in the GCC countries, as all toys have to meet the requirements set by the GCC Standardization Organization. Toys need the Gulf Conformity Mark, which proves the compliance with GCC wide safety and health regulation for toys. To ensure maximum levels of safety and health, a new GCC Technical Regulation initiative on children’s toys has been enforced to monitor children’s toys in the local markets of the member states since January last year.

Under this regulation, every consignment of toys from importers must be independently certified and get the mandatory G-mark before entering the GCC market.  The main purpose of introducing the GCC regulation is to ensure a higher level of protection for children and as well to ensure the safety of local or imported products placed on internal market of the GCC member states.  Such measures also successfully limited the counterfeiting products and thus increased the overall safety. Al Zubaidi, stated that some 10 years ago, this was a problem in some markets, but nowadays  tighter controls and testing procedures  as well as severe penalties against infringers  have made such activities less attractive than in the past.  “Illegal toys always pose a threat to your child and should be avoided at all costs,” concluded Al Zubaidi. 

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