Providing established brands at an affordable price has helped Toy Market Trading sell an estimated $14 million worth of toys in 2003. This represents 35% of the $40 million local toy market and it has China to thank. Cheaper operating costs have allowed the major international toy manufacturers to be more competitive and Toy Market Trading today imports 90% of its toys from the growing industrial superpower. “You get what you pay for in China,” said Wael Sinno, toy division manager at Toy Market Trading and son of Kamal Sinno, who founded the company in 1973. “All the main US toy brands like Chicco and Mattel have factories there.” The China factor, coupled with a slashing of import tariffs from 25% to 5%, has seen Toy Market Trading experience an 8% year-on-year growth for 2003, despite a wintry economic climate. Toy Market Trading – which distributes its products to 750 retailers, including BHV, Spinneys and Fahd Supermarket – employs a staff of 52 as well eight salesmen covering the Lebanese market and three drivers employed to distribute the goods.
Understandably, 40% to 45% of annual revenues come from Christmas and other holiday sales, but the summer season, from April to August, are also crucial selling months because of the sales of outdoor sports items, including bikes, skateboards and pool accessories, among others.
According to Sinno, an average parent or child will spend approximately $300 to $350 on toys per year, with an average of $10 to $15 doled out per toy. During Christmas, however, the average spent per toy increases to about $25 to $35. Toy Market Trading, however, aims to offer clients a wide variety of affordable toys of good quality by providing two to three brands of similar products in different price ranges. “We cater to all types of budgets, even if that means we compete against our own products,” explained Sinno.
Affordable playthings, like balls and water pistols, and high-end toys, like remote control cars and lifelike dolls, comprise a ratio of 60:40 of cheaper to more expensive toys. Some of Toy Market’s main brands, for example, like Blue Box and Playgo offer products that are as much as 30% cheaper than Fisher-Price toys, even though all three produce similar products for pre-schoolers. Some of the hot selling items this season are “everything funky and trendy,” said Sinno, like the Brats (not distributed by Toy Market Trading), which are the anti-Barbie doll. Toy trends usually last up to a maximum of one to two years, except for classic mainstays like Barbie and Disney toys, which have been successful for years. But coming up with a top seller in toys is becoming increasingly difficult in the computer and internet age, especially with eight- to 10-year olds. As a result, Toy Market Trading has shifted focus on pre-school items, targeting six-month- to five-year-olds. “We now have to be very selective,” said Sinno.
Some of their past successes included the pottery wheel, which sold 12,000 units at about $25 each. Other toy hits imported by the company included an ice-cream maker, and a talking pen made by educational toy brand Clementoni. In addition to their successes, Toy Market Trading has also suffered some misses.
“The pregnant doll was not very well received,” admitted Sinno, who explained that the doll, imported in 1993, came with another plastic baby inside the belly of the main ‘mother’ doll. “It was mainly opposed by religious people.”
Surprisingly, film merchandizing has also not done very well in Lebanon. “HARRY POTTER was a failure and HULK was a disaster,” said Sinno. Only very few films have succeeded in merchandizing in the country. “THE LION KING was a great success – we were selling lions for about three years [when the film was released]. ALADDIN was also a hit.”
Other than dealing with toys that flop, Toy Market Trading and the other importers also have to contend with illegal importers. Sinno admitted that his company loses up to $600,000 a year from smugglers who purchase cheap toys from Dubai – where there are no tariffs – and import them into the country through Syria. In fact, illegal traders are what Sinno consider the greatest competition to his company, and not the three other main importers (Middle East Market, Tamer Freres and Boch).
“Retailers are not going to buy from me at prices 10% higher than smuggled toys. They want the best price they can get and this is understandable,” said Sinno. Sinno explained that the lax laws concerning the toy industry extend further than implementing controls over smuggling. “Lebanon is an open chaotic market that is still underdeveloped with no safety regulations,” he said. As a result of Lebanon’s complete lack of regulations, said Sinno, the Syndicate of Toy Importers and Dealers – which was founded by his father – takes the initiative to not import toys that are unsafe. Most recently, the Syndicate decided to stop importing pellet guns and worked with the ministry of the interior to have them banned. “These guns are made China, but even the Chinese government has banned them,” said Sinno, adding that despite the Lebanese ban, illegal importers have made these dangerous toys available in the country.
Although the smuggling business is indeed lucrative, Sinno has no intention to stray from the straight and narrow. “We go by the book 100%,” he said. It is a policy that has kept them on top of their game, together with a new strategy they have adopted over the past five years to shift the focus on brand loyalty as opposed to just importing Chinese items. “We are now focusing on the brands,” said Sinno, who explained that such an approach, is one way to escape competition and to build loyalty among customers. The strategy seems to be working for the company, which currently enjoys its status as the leading toy importer in the country. As to the secret of their success, Sinno put it simply: “A class products for the most competitive prices.”
