Are bargain stores toy retail's biggest challenge?

Sales and brands are under threat from the growing discount retail sector, say specialist toy stores.
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The fact that discount and bargain retailers are selling more toys is a problem for some specialist toy shops.

And it’s not just toy retailers that are under threat, but established toy brands, too.

“I think the biggest challenge toy retailing has is the discount sector – retailers who are basically feeding off clearance and end of line product,” The Entertainer’s buying director Stuart Grant explained to ToyNews.

“Because of their business model and structure, the margins they need to work on are very thin, so the value they can offer the consumer is huge when compared to something we can sell.”

Discount retailers like Home Bargains and B&M Bargains have enjoyed strong growth in recent years, often setting up shop in areas vacated by Woolworths.

A recent part-sale of B&M valued the Liverpool- based company, which now has 315 nationwide stores, at £965 million.

While these shops typically target cash- strapped consumers, it’s still not ideal for toy retail.

However, Toymaster’s operations and marketing director Ian Edmunds said that while B&M Bargains and Home Bargains are two discount retailers which have caused the most ‘complaints’ to Toymaster over recent years, they are good retailers that fulfill a role on the High Street.

“It’s easy to understand why suppliers turn to them when overstocked or in need of cash,” he said. “However, from our point of view, it is easy to walk around the problem.

“It is only certain suppliers who trade with them on an ongoing basis, so as long as [toy retailers] bear this in mind at selection time, then the potential issues can be reduced.”

Paul Wohl, owner of Argosy Toys in Southend, has seen bargain retailers in his area stocking more toys. 

“I’ve noticed that there’s a lot more toys in the bargain stores,” he told ToyNews. “They’re not this season’s, but it’s still tricky when there’s a line there that looks the same – even though it might be one from last year.

“You think ‘that makes me look bad’ even though you’re selling the newer version. To the customer they see an item on our shelf for £5 and then go into Home Bargains and see it for £2.50. They think we’re ripping them off, but that’s not the case.

Wohl added: “We just fight them as best we can. I visit them, I check their prices and make sure we’ve got something comparable.”

Grant digressed that, although discount retailers allow toy companies the chance to make money on old or underperforming lines, it is ultimately a false economy as consumers are beginning to learn to search for cheap toys at bargain shops first, while toy brands also become de-valued.

“They’re making money, but the toy industry isn’t,” he commented.

“There’s zero chance of any toy manufacturer ever making any money out of a product going through their tills. It’s educating consumers. It’s telling them: ‘go there first, and if they don’t have something you want, then go to the toy shop’.”

Home Bargains declined to comment while B&M Bargains didn’t respond to ToyNews’ requests.

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