MARKET FOR TOYS AND GAMES IN AUSTRALIA


Date:  05/01/2000 
# Pages:  13 
HS Code:  9501 
Country:  Australia
Industry Code(s):  TOY 
 

SUMMARY

The toys and games market (excluding video games) in Australia was valued at US$438 million in 1999.  The estimated annual industry growth rate is four percent.  Australia offers a favorable set of demographics, which in turn influences the demand for toys.  The population of children under 15 totals nearly four million, with an estimated average yearly expenditure on toys per child of US$229.

A standout feature of the Australian economy in recent years has been the continued growth and importance of consumer spending in the market.  Household consumption continues to comprise a large portion of the national account, and retail trade figures regularly establish new spending records.  In light of these realities, U.S. producers of toys should find good sales opportunities in Australia.  The U.S. holds a fifteen percent share of the toy market.

The toy market is often price sensitive and competition from numerous overseas suppliers is strong.  Success often depends on the ability to secure a particular niche in the market.  The Australian toy market is price competitive, with quality, design, innovation and promotion as important aspects to bear in mind when entering the market.  Many products are imported from low-cost Asian manufacturers, notably China, Taiwan and Thailand.  Local manufacturers comprise only a small percentage of the market.

Australian children today are interested in more sophisticated toys.  Fashion and peer pressure are often more important to them than brand loyalty.  Parents demand value for money and high levels of safety in the toys they purchase.  Participants in the toy industry must adhere to the Australian Toy Standard (AS1647).  Also, toy packages must include cautionary labeling, to be used by consumers as a guideline.
 
 

A.  MARKET HIGHLIGHTS & BEST PROSPECTS

Market Profile

Expenditure on toys in 1999 totaled US$438 million, an increase of 25 percent over the 1998 figure.  Despite the significant growth during the last twelve-month period, the annual growth of the toy market is expected to average four percent into the foreseeable future.  The expected decrease in the growth rate is due, in part, to the trend toward electronic games. 

Traditional toys, such as dolls and wheeled vehicles, remain popular.  Consumer demand has become more selective, with an increasing trend toward more elaborate, quality toys.  Offering good quality toys is imperative to success.

The following areas have experienced growth in recent years:

  • Educational toys in timber or plastic;
  • Quality plush toys with character faces;
  • "Theme toys" that are under license to a cartoon or movie character;
  • Ride-on wheeled toys in sturdy plastic; and
  • Dolls with porcelain heads and complex clothing.
Up to forty percent of the total toy sales is comprised of licensed products from film, television and publishing. 

However, this category appears to be the most vulnerable to early oblivion, due primarily to the transient nature of children's likes and dislikes in this area.

Toy sales in Australia are remarkably seasonal, with up to eighty percent of sales during the Christmas season and January summer holidays.

Australian people (particularly children and youths) tend to be receptive to U.S. brands and products, evident in the continuing growth and interest in film, television, and music from the U.S. 

Australian consumers are generally willing to pay for quality, which benefits U.S. manufacturers, that tend to produce high quality products.  U.S. suppliers continue to maintain a constant market share of fifteen percent of the import market.

Statistical Data

TOTAL ESTIMATED MARKET SIZE FOR TOYS AND GAMES
EXCLUDING VIDEO GAMES 

   US Dollars Million
 

 
1998
1999
2000
(est.)
Projected Avg.  Annual Growth Rate for 2001-2002
Import Market
315
422
467
4%
Local Production
22
24
24
0%
Exports
8
8
8
0%
Total Market
330
438
483
4%
Imports from U.S.
47
63
66
4%
Exchange Rates $AUS/$US
1.59
1.51
1.42
 

Best Sales Prospects

Future growth is forecast for high quality educational toys in timber or plastic.  Consumer interest in educational toys remains high, while the market for inexpensive "junk" toys, including novelty items, toy guns and similar items, has noticeably declined in recent years.
 
 

B.  COMPETITIVE ANALYSIS

Based on current exchange rates, U.S. producers of toys need to be cost competitive.  It should be noted that competing on price alone will prove very difficult, and hence finding alternative methods of differentiating a product is highly recommended, e.g., smaller minimum orders, consistent quality, reliable delivery and "new lines" that are slightly ahead of the competition.

The most successful new toys of recent years have been those with an innovative concept, design or feature(s), coupled with high media exposure leading up to and immediately following the toy's introduction to the market.  The most obvious examples of this are "Furbies" and "Tamagotchis".  However, traditional favorites such as board games and plush teddy bears remain the cornerstone of the non-electronic toy industry.

Much of the promotional activity for toys is conducted via television advertising.  Most advertising is generated by individual toy manufacturers, and often along brand-lines.  For example, Mattel and Hasbro advertise Barbie Dolls and Playdoh, respectively, on Australian television.  The three commercial television stations in each capital city carry children's programs weekday mornings until 9 a.m., and afternoons from around 3 p.m.  Saturday morning is also a popular time slot for children's shows.  Television, and consequently television advertising, plays a large role in Australian children's lives and has an enormous impact on shaping their tastes and preferences in a wide range of areas - particularly leisure time activities involving toys and games.

The aim of many companies entering the Australian toy market is to become the 'next big thing'.  Peer pressure is often used as a vehicle to establish a toy's importance in the minds of the child consumer.  However, once this aggressive marketing ceases, interest tends to fade as new toys continuously hit the market.  It has been estimated that around 10,000 new or repackaged toys are released into the marketplace each year, with only a handful of those reaching 'fad' status.  The 'Spice Girls' collection and other licensed merchandise are a good example of this phenomenon.

Domestic Production

With the exception of a few small educational toy manufacturers, local production does not represent strong competition in the Australian toy market.  The majority of Australian toy manufacturers have either ceased operations or are now importing directly.  Domestic production currently accounts for less than six percent of domestic market demand, decreasing by 0.4 percent from 1998.  Domestic production is valued at US$24 million.  Two explanations for the decline in Australian toy manufacturing are the reduction of import tariffs over the past decade and high labor costs.  These factors have combined to make it extremely difficult for Australian manufacturers of many products, including toys, to compete with low-cost overseas competitors, particularly from Asia.

At the end of this report is a list of educational toy manufacturers in Australia.

3rd-Country Imports

With very few Australian manufacturers supplying the domestic toy market, imports comprise a very high percentage of the total.  In particular, Asian-based manufacturers have developed and will continue to maintain the lion's share of sixty percent of the import market, with China, Taiwan, Malaysia, Thailand and Indonesia being the most significant sources from Asia.  In 1999, these five countries supplied US$254 million of Australia's total imports of US$422 million.  Fierce competition from these high-volume, low-cost overseas suppliers is an obstacle to new entrants in the market.  Asian countries (particularly China) have a stronghold in the doll, stuffed toy and metal toy categories.  Imports from Japan and the United Kingdom, which account for eight and five percent of the market respectively, cater to the mid-to-upper end of the market.

Imports from third countries for the next three years are expected to grow by an annual rate of four percent, as reflected in the expected overall market growth. 

U.S. Market Position

The U.S. holds a fifteen percent share of the Australian toy import market.  Toy shipments from the U.S. totaled US$47 million in 1998 and US$62 million in 1999.  For the foreseeable future, imports from the U.S. are estimated to increase by four percent, in line with the overall industry growth.  U.S. manufacturers are currently leading suppliers in the categories of wheeled toys and puzzles/puzzle books.

Competition from Asia is a major factor affecting the potential growth of U.S. toy imports.  The Asian countries of China, Taiwan, Malaysia, Thailand and Indonesia account for a combined market share of sixty percent, with imports totaling US$254 million in 1999.  Imports from other countries and domestic production represent modest competition. 

The major U.S. suppliers to the Australian market are: Fisher-Price, Hasbro, Mattel and Tyco Industries.
 
 

C.  END-USER ANALYSIS

Australian children today are maturing at a younger age, and have greater brand awareness and consumer choice than those of a decade ago.  This is due largely to increased media exposure and higher disposable incomes.  Marketing products directly to children can be successful, but is often fraught with risk.  While there are some constants (such as an interest in sports), fads and fashions in music, television and the like change rapidly, and children are more prone to peer-pressure than brand loyalty. 

However, as toys remain a popular gift item (particularly at Christmas), it is recommended that manufacturers consider targeting parents and grandparents, as well as the children, as purchasers.

For parents, price is a major factor in purchasing decisions for toys.  If a toy is in the high price range, it is often perceived to be of good value and/or high quality.  Australian consumers often purchase brand-name products at discount department stores because of cheaper prices.  This has been emphasized by the recent development and introduction of a 'World for Kids' concept store within K-Mart department stores.  The company hopes that this will create a niche in a price sensitive industry.  Educational and "play value" are also substantial issues, and safety is a paramount consideration for parents when purchasing toys.

The most important feature that children themselves look for when selecting toys is current fashionable trends and preferences of their peer group.  As one industry expert states, "toys are like the fashion business - in one day, gone the next".  Branded items are generally quite important to Australian children.

The market for 'Virtual Pets' and other interactive toys has seen unprecedented strength and growth in Australia, evidenced in the successful releases of Tamagotchis and Furbies in recent years.  There has also been a noticeable shift away from traditional toys toward more modern, electronic products.

Parental interest lies in elaborate, quality toys, especially high-quality educational toys, rather than inexpensive toys.  Demand is also value-driven, with consumers demanding quality products at lower prices.  The most popular toys in Australia in the twelve months ended April 1999 were:

Zapf Creations - Baby Born - White
Playskool - Teletubbies Talking
Playskool - Teletubbies Assorted Figures
Fisher Price - FP Dream Doll House
Mattel - Bounce Around Tigger
Parker Bros- Monopoly
Tyco (Mattel) - SS Tickle Me Elmo
Mattel - H/W D/C vehicle
Ventura Games - Battle of the Sexes
Hills Industry - 4 Unit Lawn Gym
 
 

D.  MARKET ACCESS

Import Climate

The import duty rate on toys is currently five percent.  To obtain further information, the contact details of the Australian Customs Service are:

Australian Customs Service
414 Latrobe Street
Melbourne, Victoria 3000
AustraliaTel: 61-3-9244-8000
Fax: 61-3-9244-8680

Toys are also currently subject to 22 percent sales tax, based on the wholesale value of the goods.  From July 1, 2000, wholesale sales taxes will be abolished with the implementation of an across-the-board Goods and Services Tax (GST) of ten percent.  Additional information can be obtained from:

Sales Tax Department
Australian Taxation Office
P.O. Box 470D
Melbourne, Victoria  3001
Australia
Tel: 61-3-9275-2397
Fax: 61-3-9285-1284

Despite being a minor player in the global toy manufacturing industry, Australia is playing a crucial role in developing International Standards.  The toy industry in Australia is closely monitored and highly regulated by the Federal and all State Governments. Standards Australia, Australian Federal Government commission, has established the Australian Toy Standard (AS1647).  Though essentially a voluntary standard, all participants in the toy industry are required to adhere to it, or face prosecution if found to be misrepresenting their compliance.  In addition, both State and Federal governments have enacted regulations to produce mandatory standards in relation to certain sections of AS1647, in particular those relating to toys for children under three years of age.

Labeling of toys is a particularly important and detailed area of the Australian Toy Standard.  Virtually all toy packages must include suggested ages for use, and guidelines have been included in AS1647. Age labeling is intended to give the consumer a general guideline upon which to base toy selections for individual children.  Chronological age, physical size, skill level and maturity, as well as child safety and the type of toy, should all be taken into consideration when age labeling toys.

To obtain further information, the contact details of Standards Australia are: P.O. Box 1055, Strathfield, New South Wales 2135, Australia; tel: 61-2-9764-4600; fax: 61-2-9746-3333; website:  http://www.standards.com.au

Distribution/Business Practices

Both manufacturers and wholesalers undertake distribution in Australia.  Retailers generally contact manufacturers for name-brand items and less well-known lines are purchased from wholesalers.

There has been a marked shift in the retailing of toys in Australia in recent years.  Over half of all toys (52 percent) are now purchased from general merchandise stores (including hypermarkets and discounters).  Independent toy stores and toy chains (a group which once occupied a large portion of the market), now represent approximately 17 percent of toy sales each.  Department store sales are slowing growing, with a current market share of eight percent.  Retailing through mail order/catalogs is minimal, and sales of toys via the Internet are beginning to gain popularity.  With the continued spread of Internet usage, this medium is becoming an important source of pre-purchase information gathering.

The major toy retailers in Australia, by category, are:

  • General merchandise stores: Big W, Target, Kmart
  • Toy chains: Toys 'R Us, Toy Kingdom, Toyworld
  • Department stores: Myer/Grace Bros, David Jones
Companies wishing to enter the market are advised to seek the support of an established wholesaler.  Following is a list of major wholesalers in Australia.

Information on the financial strength of a prospective wholesaler can be obtained from the following credit reporting companies in Australia:

Dun and Bradstreet (Aust.) Pty. Ltd.
19 Havillah Street
Chatswood, New South Wales 2067
AustraliaTel: 61-2-9935-2600
Fax: 61-2-9935-2666
Contact: Mr. Frank Morand, Senior Sales Consultant

AMBA Credit Services Pty. Ltd.
1 Box Road
Caringbah, New South Wales 2229
AustraliaTel: 61-3-9525-3011
Fax: 61-3-9525-8005
Contact: Mr. John Petermen, Managing Director

Financing

Financing practices are comparable to U.S. practices.  The terms of payment are negotiable, with methods of payment that include an Irrevocable Letter of Credit, a standard Letter of Credit, and cash in advance.

KEY CONTACTS

ASSOCIATIONS

Australian Toy Association
22 Blackwood Street
North Melbourne, Victoria 3051
Australia
Tel: 61-3-9320-2677
Fax: 61-3-9320-2622
Email: [email protected]
Web: http://www.austoy.com.au

MANUFACTURERS

Educational Aids (Aust.) Pty. Ltd.
7 Davis Street
Wingfield, South Australia 5013
Australia
Tel: 61-8-8347-2066
Fax: 61-8-8347-2389

Educational Colours Pty. Ltd.
43 Burgess Road
Bayswater, Victoria 3153
Australia
Tel: 61-3-9729-0788
Fax: 61-3-9720-5261

Finger Toys Pty. Ltd.
15 Turnbull Street
Winmalee, New South Wales 2777
Australia
Tel: 61-2-4754-4538
Fax: 61-2-4754-4335

Kangaroo Worldwide
21/4 Lismore Avenue 
Dee Why, New South Wales 2099
Australia
Tel: 61-2-9971-9069
Fax: 61-2-9971-3141

Life Education Products
Cnr. Hewitt & Roper Streets
Carlton, New South Wales 2218
Australia
Tel: 61-2-9833-0255
Fax: 61-2-9833-7936

Modern Teaching Aids Pty. Ltd.
26-28 Chard Road
Brookvale, New South Wales 2100
Australia
Tel: 61-2-9939-2355
Fax: 61-2-9938-4082

WHOLESALERS

Clipper International Pty. Ltd.
33-39 Bowden Street
Alexandria, New South Wales 2015
Australia
Tel: 61-2-9698-8944
Fax: 61-2-9698-7063

FBA Imports & Wholesale
13-23 Wendel Street
Brunswick, Victoria 3056
Australia
Tel: 61-3-9380-6884
Fax: 61-3-9388-0719

Gift Fashion Trading Pty. Ltd.
17 Levanswell Road
Moorabbin, Victoria 3189
Australia
Tel: 61-3-9553-3133
Fax: 61-3-9553-3155

Lucky Company Pty. Ltd.
Unit 5/57 Rhodes Street
Hillsdale, New South Wales 2036
Australia
Tel: 61-2-9694-1433
Fax: 61-2-9663-5101

Mauriane Trading Pty. Ltd.
27 Christensen Street
Cheltenham, Victoria 3192
Australia
Tel: 61-3-9699-6099
Fax: 61-3-9555-3933

Nalegold Pty. Ltd.
27/566 Gardeners Road
Alexandria, New South Wales 2015
Australia
Tel: 61-2-9669-6688
Fax: 61-2-9667-3888
 

RETAILERS

Big W
3 City View Road
Pennant Hills, New South Wales 2120
Australia
Tel: 61-2-9847-1000    Fax: 61-3-9847-1500

David Jones Ltd.
86-108 Castlereagh Street
Sydney, New South Wales 2000
Australia
Tel: 61-2-9266-5544    Fax: 61-2-9261-5717
Contact: Jill Stewart, Manager - Toys

Kmart
800 Toorak Road
Tooronga, Victoria 3146
Australia
Tel: 61-3-9829-4820    Fax: 61-3-9829-6173
Contact: Terry McEvey, Senior Toy Buyer

Myer Stores Limited
295 Lonsdale Street
Melbourne, Victoria 3000
Australia
Tel: 61-3-9661-4117     Fax: 61-3-9661-4018
Contact: Nicholas Rimmer, Toy Buyer 

Target Australia Pty. Ltd.
12-14 Thompson Road
Geelong North, Victoria 3215
Australia
Tel: 61-3-5246-2000     Fax: 61-3-5246-2700
Contact: Geoff Vale, Buyer

Toy Kingdom Aust. Pty. Ltd.
(Administration)
3 Chestnut Court
Dingley, Victoria 3172
Australia
Tel: 61-3-9558-0311     Fax: 61-3-9558-0743

Toys 'R Us
Block G, Commercial Drive, Regents Park Estate
391 Park Road
Regents Park, New South Wales 2143
Australia
Tel: 61-2-9794-8999
Fax: 61-2-9794-8992 (Merchandise Admin)
Contact: Shane Whitlelaw, Buyer

Toyworld 
(Associated Retailers Ltd)
169-173 Burnley Street
Richmond, Victoria 3121
Australia
Tel: 61-3-9429-8266
Fax: 61-3-9428-4933
Email: [email protected]
 

TRADE PROMOTION OPPORTUNITIES

Australian Toy, Hobby & Nursery Fair
March 23 - March 27, 2001
Melbourne, Victoria
Melbourne Convention and Exhibition Centre
Australian Toy Association
P.O. Box 74
North Melbourne, Victoria 3051
Australia
Tel: 61-3-9320-2677
Fax: 61-3-9320-2622