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From: The Economic Times website about the India Market.
Oct. 11, 2010.
Traditional toy market is alive: LEGO
It’s time for LEGO to ‘play well’ in the Indian market. One of the world’s
largest toy makers that started its journey in 1932, the Denmark-based LEGO
Group is gearing up to tap the Indian market. It recently joined hands with
Funskool to expand its footprint in the country. Based on the world-famous LEGO
brick, the company provides toys, experiences and teaching materials for
children in more than 130 countries. The Group, which has over 8,000 employees,
is the world’s fifth-largest manufacturer of play materials. During his first
visit to India, LEGO Group CEO and president, Jorgen Vig Knudstorp, spoke to ET
about the toy industry and the company’s plans.
Excerpts:
With global majors vying for a slice of the Indian toy market, the segment is
set to witness intense action?
The toy market in India has witnessed lot of changes over the last few years,
and we see tremendous potential here. I visited a few malls and found that there
are customers who want to buy toys of high quality. Moreover, Indians always
have a strong thought that children learn through playing with toys. Playing
helps them in thinking systematically and logically. It’s like using
mathematical sciences. They can put pieces together and make new creations. Work
collaboratively and see how they connect things. At present, the toy market in
India is highly fragmented. We estimate that the industry is worth around Rs
1,500 crore, and is growing at the rate of 12-15% per annum. And we feel we are
here at the right time.
Nowadays kids are getting more into virtual world. Will it impact the
industry?
The virtual world is indeed becoming very important. But let me tell you another
interesting story. The global toy market has improved over the last two years.
Global economic crisis, even though it did not have a big dent in India, made
people shift from high-price to low-price products, and this has benefited the
traditional toy market. Also, the virtual world always reaches a saturation
point. Children will always need a toy. Though boys play football online, they
also like to play on the field. The traditional toy market is not dead... it’s
still alive and markets like India and China are emerging. In fact, we are also
developing digital business.
What are your plans in the digital space?
We have come out with a platform called LEGO Universe, which is a massive
multiplayer online game. We have just launched this in English and in all
German-speaking countries through the Lego.com website. Children can meet online
and play games they want. We see this as a very important business for us in the
coming years.
Did you face any entry barrier in India?
No, we did not have any such issues. I feel the Indian economy is more open and
freely competitive. However, there are challenges such as infrastructure that
needs to be addressed. But these challenges prevail in other countries as well,
and we will overcome them in India. In this country, there is a functional value
to the brand.
What about your expansion plan in India?
Our investment is not on a monetary basis; it’s more of collaborations and
tie-ups. We would be investing in marketing as we want to be present in the
right stores across metros, mini-metros and smaller cities. We are present in
140 stores across India and will be present in another 60 stores by year-end.
And we will double this number over the next two years. But again it’s not a
number game for us. We are more focused on the experience that the consumers get
with our products. We want to find a scalable business model where LEGO, its
partners and retailers would benefit on a long-term basis. We also want to
activate consumers by creating awareness about engaging kids with toys – this is
what we need to focus and work on. The future business for us is in the Indian
and the Asian markets. We have no plans to set up manufacturing facility in
India. We want to get closer to the consumers through sales channels, clubs and
collaboration programmes, and not by setting up facilities.
Economictimes.indiatimes.com
-end of report-
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