International toy manufacturer, the Simba Dickie group of Germany, together with its indian master franchisee, Exelixi Management, has opened a 3,500 sq.ft. store in Bangalore’s Phoenix Market City. The company intends to open more Simba outlets in Indiranagar (Bangalore), Noida and Shipra mall (Ghaziabad). It intends to take its total store count to 30 in six months. Ben Nabert, Simba Toys’ CEO for India, Middle East and North Africa, talks to “Images Retail” about his assessment of the Indian toy retail market, the company’s plans and how Simba intends to distinguish itself from others.
Can you walk us through the history of Simba Toys and why you decided to enter India?
Simta started way back in 1982 in Germany as a small company. It has now evolved into a multinational player, having subsidiaries in more than 20 countries around the world. We have more than 3,500 employees. The store at Phoenix Market City in Bangalore that we have opened in August this year is our very first store in the country.
In India, we have been in the wholesale and distribution business of toys, but now we have decided to embark on this new journey as a retailer. We believe that the retail business in India, especially in the toy segment, is highly under-developed. So we see a big chance here. That is why we are starting here with this new concept of Simba Toys stores. We currently have a growth rate of over 20 percent per annum in India.
What is your assessment of the toy retailing market in india?
There is a lot of room for improvement in the country’s modern retail trade and we also see it in the numbers. There is still a lot of unorganised business in India in toy retailing, but there are a lot of brands coming into the market too. Funskool has been here for a very long time. Now it is time that even more multinational companies like Simba Toys enter the Indian market with new standards and something that an Indian consumer always looks for: quality for certain value.
Tell us about some of the trends you have been witnessing in the toys segment in india.
There is a clear trend towards educational toys, so when mothers or even fathers are looking for toys, they not only require a play value but also an educational value. This aspect is more in focus in the Indian market compared to the European market or even the Middle East market where people just buy toys to keep the kids satisfied. The Indian consumer looks for an additional value and I do believe that Simba is the right partner for those families.
As you said, The Indian toy market is dominated by unorganised players. so What kind of future do you see for toy chains like simba in the country?
I see a very bright future for toys in India. The subject of toys has just been explored in the past couple of years. Earlier, it was not normal for parents to provide toys for children. There are basic toys popular here like fashion dolls and board games but the world of toys is definitely much bigger than that. We at Simba Toys have a huge collection of 6,000 SKUs in our toys portfolio and we have 3,500 of these to offer to the Indian consumers. Actually, even at Simba, we are just looking at the tip of the iceberg of the toys market.
What are the challenges that you see for Simba Toys in india?
Under-development of the modern retail sector in the country is a big challenge. We still need to work with a lot of distributors here in the region as modern retail has just started. But we have managed to get very good partners. Some of these were the first ones to open a pure toy store in the country.
This situation is definitely different in comparison to other countries where you have an already established toy retail segment. This is just evolving at the moment in India and that is a challenge. Also, not to forget, infrastructure is another problem that sometimes makes it difficult for us to reach on time to different places in India. We have to struggle sometimes but we are definitely progressing.
What is Simba Toys’ marketing positioning in India? What is your typical customer profile?
In general, what we have in our focus in India are two of our brands. We do have more than 30 brands but we cannot promote all of them at the same time. So our focus is on Steffi Love, our fashion doll brand of very good quality sold at a decent price. The dolls have a lot of fashion and play elements in them. The other brand we are promoting is for the boys segment, called Majorette. This focusses on die-cast models as well as remote-controlled cars. For licenses, we are also working closely with Disney, so we will support this with TV advertisements and in-store promotions.
It is not easy to fix the typical customer profile for Simba unlike some of our competitors that have only one segment of products with which they target the middle and upper class of customers. We actually have toys for everybody, appealing to all segments of the society.
What is the price range of products at your stores? Which price band is the most popular with customers? Also, what kind of toys sell the most at your stores?
We have products that start from Rs 50 or less and those that reach up to Rs 5,000 and even more. So that is the big benefit of Simba – we have such a wide product range that we can really serve every type of customer across all price points with very good quality. That is something very important in the toys industry.
At the moment, our brand Steffi Love is the most popular in India. It has been very well received by a lot of children across the country. We had great feedback and success from a game called “Squap” which was promoted by us last year here. We had TV advertisements and certain Bollywood stars supporting us during the promotion.
Are all Simba products imported? are some made in India too?
The Simba products sold in the country are not made in India as yet, but we have a clear commitment towards India and do not want to bring the international sourcing model into the domestic market.
We do have production plans for the country and will start with productsin the “back to school” segment. We sell a lot of stationery, backpacks and other school equipment. We are also looking at board games as well as plush items such as teddy bears to manufacture in India.
What is the location strategy for your stores – malls or high street? Which locations do you prefer?
Our franchise format focuses on malls as well as high-potential locations in tier II and III cities away from the metros. We want to approach cities with our concept where modern retail has not been fully established yet. This is the strategy we will be following in India. We want a healthy mix of stores ranging from 1,000 or 1,500 sq.ft. going up to 5,000 sq.ft. in certain malls.
How much investment goes into setting up each Simba store? What is the ROI expected? How much time does it take for a simba store to break even?
It will be difficult for me to mention concrete figures as our partners Exelixi Management are taking care of this, but I can tell you that their commitment is great. They are investing a lot more money into our franchising concept than other partners in the toy retail stores. We want to make something different and have a clear commitment towards quality. It is not about opening an outlet like any other in the market. We want to make sure that the customers who walk into our store feel special. We want our staff to explain to mothers and fathers walking into our stores what each toy on the shelves is all about, what play value it has, and the age group it caters to. This is the kind of additional service people have come to expect from Simba.
We are in general expecting a 10 percent ROI over the first two years of our operations in India, and we are pretty sure that we can achieve this. Actually, our business plan for the country shows that we will break even in the first year itself. The 10 percent ROI has to be continued over the first and second fiscal year and then we expect a growth of about 20 percent in the coming years.
What is your marketing strategy for India? what are you doing to promote your products?
We are going to carry TV advertisements in India, and are also planning to focus on in-store promotions. In addition, we have loyalty programs as well as indirect programs that were initiated by us in 2011 when we supported the ICC Cricket World Cup.
We feel our customers understand that Simba as a brand is not just looking for short-term revenues from the country – that is never our strategy. We are also investing into certain opportunities in India. For example, cricket is a very popular game in the entire Indian subcontinent.
We simply want to be different from other toy retailers, so we haveappointed some cricket mascots. We are trying to show to our customers that Simba is ready to be the right partner for the Indian market and consumers.
What is your expansion strategy to open more stores in India? What kind of franchisees are you looking for and where?
We have a huge plan for expanding our presence throughout the country. We are expecting to open more than 30 Simba stores in the next 12 months all across India which shows how serious we are about the market. It is quite an ambitious plan, unlike other toy retailers in the country. Apart from increasing our store count, we are also expanding in terms of additional offices. We intend to open offices in Bangalore and Chennai over the next 12 months.
We have a robust franchising model the world over. The franchise partners that we are looking for in India are people who have already had a certain degree of experience in the retail industry. We are really screening them before going into a long-term partnership.
Our future franchise partners have to show us that even in the past they have worked with some global brands and followed international retailing standards. The retail franchising company Exelixi Management is our master franchisees in India. They have done a good job by helping us identify the type of partners we are looking for, and we are happy with the candidates that have been selected for opening more stores. Exelixi is, in turn, happy with us.
In fact, they are already committing themselves to opening another five Simba stores in the next couple of months after opening the store at the Phoenix Market City in Bangalore. This shows the kind of trust our partners have in Simba.
Are there any interesting concepts or innovations you have introduced at your stores in the country?
As I mentioned before, we do plan to manufacture certain products in India, which shows our longterm commitment here. This also differentiates us from other global toy manufacturers who are importing toys from abroad for retailing in the country.
There is a lot more to come such as licensing opportunities. We have just had a successful launch of theSpiderman game license last month in the country.
Again you see that Simba toys is trying to turn a new leaf by having the best licenses available here in the Indian market. With this, you can rest assured that we will keep showing something absolutely new to our customers in India and not sell out-offashion or outdated products.
*This interview was originally published in September 2012 issue of Images Retail.
