Sainsbury’s is exploiting the potential of Britain’s 1.5bn toy market with a trial of Early Learning Centre (ELC) pre-school toys in a handful of its stores.
If successful, it is an experiment which could have one of three outcomes: the range could be rolled out across all 379 Sainsbury’s stores; the retailer could move into the fashionable toy market for older children and stock all major brands; or it could launch an own-label toy range.
But the UK’s second-largest supermarket chain insists it is too early to predict the outcome of the trial, which entails a branded display unit in six stores stocking a compact range of the ELC’s best-sellers (MW June 19).
J Sainsbury’s hypermarket chain Savacentre already sells major brands such as Hasbro, Tomy and Mattel and, according to buyer for toys and sports Gillian Elward, the range sells extremely well. She says the multimillion pound turnover in the toy department is above-average for non-food goods, and attributes this to the large number of families the chain attracts.
Supermarkets traditionally treat toys with indifference, although they are a perfect fit because they attract thousands of families every week, many of which have a child or two in tow and a large spend in mind.
Elward believes a move into toy retailing is what Sainsbury’s needs to attract more of its target market – the young family. “Sainsbury’s brand position and image fits in well with the ELC. A lot of Sainsbury’s marketing is trying to pinpoint the young family and it needs something to attract that section of the market,” she says.
Elward adds that Sainsbury’s “still has some work to do” in attracting such families, something she believes Tesco and Safeway have mastered, and that the ELC deal “can only help”. The ELC confirms Sainsbury’s approached it over the deal.
The ELC also believes it has found the perfect match. Spokeswoman Catherine Shetler-Jones says the average Sainsbury’s customer “has a fit with the ELC brand”. Although the trial has so far been successful, neither Shetler-Jones nor Sainsbury’s spokeswoman Andrea Mountford could confirm whether there would be a national roll-out. However, Mountford says the chain will want to expand on any success and that the possibility of a roll-out certainly exists.
ELC has a second reason to be cheerful as the 200-strong chain has been under serious pressure since Mothercare’s acquisition of Children’s World last year.
Shetler-Jones confirms that the stores chosen for the pilot are in areas where there is no ELC outlet nearby.
But it could equally be argued that toys are a retailer’s nightmare. Not only are they subject to fads, with some slipping in and out of fashion from one week to the next, they are also seasonally led, with pre-Christmas the only real high point of the year.
Jon Salisbury, publisher of UK Toy News and World Toy News, estimates that the run-up to Christmas accounts for about 70 per cent of all toy retailing. This peak in demand obliges stores like Savacentre to dedicate 160 feet of the store to toys in the festive season, compared with the year-round allocation of 50 feet, topped up with another 50 feet for sports equipment.
If the Sainsbury’s initiative is successful, it will launch a direct challenge to Safeway, one of the few supermarket retailers to stock a wide range of pre-school toys.
As well as the big brands, Safeway also has its own-label brand KidsOwn, which includes toys, children’s clothing and accessories.
Adrian Filak, Safeway’s category buying controller for leisure products, plays down the Sainsbury’s threat: “It is difficult to determine the impact of the move without knowing how many stores the range will be entering ,” he says. The impact may, however, be bigger than Safeway thinks. According to Salisbury, if Sainsbury’s “rolls out nationally with complete commitment to toys”, it could well dent other retailers’ profits.
Safeway is stepping up its commitment to toys this year compared with last. Since relaunching its toy range in May 1996, the chain has experienced promising results. During the autumn and winter, Safeway will be extending its range and devoting more store space to toys.
Could Sainsbury’s be thinking of following in Safeway’s footsteps with a brand extension of its own? The ELC trial may be an experiment with the toy market in a more general sense, yet Mountford insists that own-label toys are “not something we are looking at at the moment. If we are looking at anything, it’s the Early Learning brand”, she adds.
Salisbury believes it would be a mistake for Sainsbury’s to launch an own-label toy range. “Supermarkets have no history of strong own-brand toys,” he says. “To get a line off the ground would take massive investment, and I think Sainsbury’s is trying to get people into stores rather than launch a long-term product category.”
He adds that while Tesco – which sells the major toy brands – and Safeway have recognised the magnetism of what is known in the trade as a “hot toy”, Sainsbury’s has been slow to catch on.
“There is nothing in retail as hot as a hot toy. Toys are now making a mockery of the record industry with hot toys moving faster than a Spice Girls album,” says Salisbury. “As a retailing tool, toys are vital. Tesco and Safeway have already got over that hurdle and I believe Sainsbury’s will be next.”
A perfect example of the hot toy phenomenon is Buzz Lightyear, the Toy Story character which proved so popular last Christmas that Canadian manufacturer Thinkway Toys could not keep up with demand, leaving distraught parents desperate to locate the plastic spaceman.
Salisbury says pre-school toys are not typically hot sellers and he thinks the ELC pilot is simply testing the market.
However, he also says Sainsbury’s has a shotgun approach to retailing: “There seems to be no strategic direction. One minute it’s banking, the next it’s toys.”
So far this approach has worked. But if it decides to enter the top end of the toy market, Sainsbury’s shotgun may well backfire.