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With large format retail stores in metros battling high rentals, toymaker Funskool Ltd is expanding its presence to tier 2 cities with own retail stores.
The company, a joint venture between MRF Tyres and US toymaker Hasbro, is also increasing its private label brands and e-commerce presence through tie-ups with marketplaces.
“Our growth in malls has been sluggish. Large format retailers have been struggling on account of high rents. Our strategy will be to push our brands and retail formats,” R Jeswant, Senior Vice-President of Sales and Marketing, Funskool, told BusinessLine .
The company has been selling its wares through multi-brand stores and large format departmental chains.
About 30 per cent of the company’s revenue is generated from large format retailers while the balance comes from mom-and-pop stores, Jeswant added.
The company is looking to take its own retail formats to tier 2 cities. “Besides cheaper rents, there are more buyers willing to spend on toys in such cities,” he said, adding the average ticket size in tier 2 cities stood anywhere between ₹500 and ₹1,000.
Funskool has five own retail formats sized anywhere from 1,000 to 1,500 sq feet. It plans to add 10 more through the franchisee model.
Funskool has tie-ups with various brands, including Lego, Leapfrog, Hasbro, Tomy Takara and Ravensburger. Jeswant said board games, Lego and magnetic toys are major trends in the Indian market. The company is also scaling up its own labels like Giggles, Handycraft and Play ‘n’ Learn
Funskool has two manufacturing facilities in Ranipet near Chennai and Goa, where it makes products, both for the joint venture products as well as its own line of offerings.
The global toy market is estimated at $85 billion (₹4.5 lakh crore), while the Indian market is pegged at ₹2,500 crore.
“The per capita consumption of toys in India is significantly low unlike in the Western world. We expect it to grow in the coming year,” Jeswant added.
He said the company expects to close the current fiscal with a turnover of ₹150 crore.
Asked if Funskool plans to add its own ecommerce vertical, Jeswant said the company is not looking at own channel, but will be scaling up its presence in various marketplaces.
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