Europe plays a significant relevance in the global toy market. The patterns and trends in data for the European toy market show signs of maturity. In 2014, the European toy market generated sales worth USD 22.19 Billion. During 2014 and 2019, the market grew and in 2019 the Europe Toy Market was valued at USD 26.87. Looking at the economic scenario of Europe and the relevant demographic trend, Bonafide research forecasts the toy market valuation in 2025 to be more than USD 30 Billion.
Europe has a moderate growth rate in the toys industry as compared to the Asia Pacific, the Middle East, and Africa, and Latin American regions. However, most of the toy production by toy companies is outsourced to other regions where labor costs are cheaper such as Asian countries and primarily China. However, the production of toys in Europe is cost-competitive when transportation costs from China are high. Also, the management of toy companies can have better control over the production process if the production process is kept close to the main markets. Several reports by ECSIP Consortium indicate that production in Europe increases flexibility in serving changing markets and may lower quality assurance costs. The major category of toy items produced in Europe includes low-priced small plastic items, where order volumes are often below the amount needed to outweigh transport costs from Asia effectively. Toys produced in Europe in highly automated factories can also be price competitive, especially if the relevant inputs can be sourced locally. Most firms design and develop toys close to their home markets and link up with large Asian production facilities and liaison offices in Hong Kong to increase capacity for fast response to changing product specifications, and to further control the product quality and monitor the production processes. The price sensitivity for toys in the European toy market is also high among consumers. The offshoring of production processes also reflects the fact that the company faces cost and price competition to a significant extent.
The toy categories are naturally characterized as shorter life cycles and the companies need to innovate and reinvent their product lines to adapt to the changing market situations and maintain and grow their market position. Therefore, investment in Research and Development in the market is very important especially for a region like Europe where the market is relatively matured and the companies need to open up new product lines to carve out a market.
The third crucial block in the European toy market is the regulatory and framework conditions. In Europe, toy safety is governed by the Toy Safety Directive. The TSD imposes conditions and mandates the required protocols to ensure that their products meet the requirements in the field of toy safety including mechanical, physical, and chemical safety. Each toy that fills the rack in the market is submitted to a conformity assessment process. Counterfeit is another crucial challenge that the toy manufacturers face and protection of IPR becomes significantly important. Because of a high proportion of small and middle-size enterprises in the region’s toy market, counterfeit and duplicate products easily have a chance to flood the market as they come at a cheaper price range than the original products and are attractive to price-sensitive consumers.
However, Europe’s toy market is well structured but the destruction in the supply chain caused due to the Covid-19 pandemic and unfavorable demographic trend will test the crisis management and long-term planning of the toy companies.