In conversation with Mr. Habeeb Rahman, Buying Manager at OPM Group, KSA and 24+ years of experience in Hypermarkets, we have tried to understand the KSA Toys Market. We talked about the challenges faced in logistics during COVID, major trends and factors affecting the market's growth and future.
“In KSA Toys Market around 99% of the toys are imported from various international suppliers, with China being the primary source of these imports.”
Q1. How have the pre, during, and post-COVID periods affected the KSA Toy Industry?
Prior to COVID, the industry was functioning normally, with Jeddah, Riyadh, Makkah, Madinah, and Dammam witnessing significant developments in the retail sector. However, during COVID, sales increased, but logistics were greatly affected, causing disruptions for approximately three years.
Q2. What impact has the COVID-19 pandemic had on the logistics and supply chain of the Saudi Toy Industry?
The COVID-19 pandemic caused significant disruptions to the logistics and supply chain of the Toy industry in KSA. The cost of containers experienced a substantial increase, impacting the transportation of goods. However, over time, the container cost returned to normal levels, allowing the industry to stabilize. The cost of containers surged from $2,900-$3,500 to $10,000 for 8 to 12 months before stabilizing at around $3,000 for a 40 ft container. But at the same time demand for toys increased significantly during COVID.
Q3. How would you describe the current state of the Toy Industry in KSA in terms of manufacturing?
The Toy Industry in KSA is currently in a fragmented stage. The market is highly reliant on imports, with approximately 99% of toys being sourced from international suppliers, predominantly from China.
Q4. Which countries are major import sources for the Toy industry in Saudi Arabia?
The Toy Industry in Saudi Arabia heavily relies on imports from various countries to meet the market demand. Key import sources include the United States, United Kingdom, Germany, China, Malaysia, and Taiwan. The imports from these countries contribute to the availability and variety of toys in the Saudi Arabian market, ensuring that customers have access to a diverse selection of high-quality toys.
Q5. What are the major toys categories in KSA Toys Market?
KSA Toys market have all the toy categories possible, with major categories being dolls, soft toys, pre-school toys, construction toys, and remote-control toys, and balloons being a significant part of indoor toys. Outdoor toys, particularly trampolines from Taiwan, also hold a prominent position. Major buyers of toys are hypermarkets.
Q6. Could you elaborate on the major players in the Toy industry in KSA?
In the brick-and-mortar segment of the toy industry in Saudi Arabia, major players include ToysRus, Jarir Bookstore, SACO, and Virgin. These well-known retailers have established themselves as key players, offering a wide range of toy options to customers across the country.
When it comes to major hypermarkets, Lulu, Tamimi, and Danube hold significant prominence.
Q7. Can you provide insights into the margin for retailers in the KSA Toy industry?
Hypermarkets and departmental stores typically receive discounts of around 35%-45% from retail prices when sourcing from distributors like Toy Triangle. This enables them to maintain competitive pricing for consumers. Additionally, distributors and retailers conduct costing analyses that consider various factors such as labor costs and other expenses associated with specific toy categories.
Q8. What are the certification requirements for toy imports in Saudi Arabia?
To import toys into Saudi Arabia, a GCC certificate is required. Previously, the Saudi Arabian Standards Organization (SASO) played a role in certification. However, now, G-Mark is also needed for import. The GCC certification from SGS helps to verify the safety and quality of toys before they can be imported and sold in Saudi Arabia. Without a GCC certificate, imports of toys are not permitted into Saudi Arabia.
Q9. What is the market share of Online Toys Market the KSA Toy industry, particularly in e-commerce?
Overall, share of e-commerce is ~20%, but for toys market it accounts for approximately 10% to 15% of the total Toy Industry in KSA.
Q10 How will changing demographics and consumer preferences will impact the future trend of the toy market in Saudi Arabia?
The increasing number of working women is leading to families with two incomes in Saudi Arabia which will impact the growth of the toy market in future. Additionally, parental concerns regarding toy safety are shaping consumer preferences. As a result, the future trend of the toy market is expected to see continued growth with a focus on safe and age-appropriate toys.