Toy Market: Serious Potential of a Playful Market Dominated by Generations Z and Alpha

Analysis of big data by the Statista portal calculated that Europeans spend more than 1300 kuna per child each year just on their toys. Croatian parents spend that much on average for two occasions, Christmas and a child’s birthday, not to mention unplanned incidental expenses when a child tugs at your sleeve at a kiosk or in a large shopping center. Toys today emerge from all sides: they are available at kiosks, gas stations, offices, bookstores, shopping malls, specialized stores, stalls, discount stores like Pepco, Orbico, or Offertissima, and at much lower prices than in the past when children received a switch and some sweets for St. Nicholas, and chocolate eggs and bunnies for Easter, rather than tablets and expensive toys.

The Bait from Advertisements

Children like everything they see in TV commercials, and so for the past two years, there has been a craze for Spin Fighter, a plastic gun that shoots metal marbles for arena battles. You could hardly meet a boy or girl in the park without one in hand, while the same-named cartoon was being aired on television. The guns, of course, are upgraded, the marbles are sold separately, and there is also the arena, thin plastic worth less than ten kuna, but costing around 150. Therefore, for a real Spin Fighter experience, you will spend about 500 kuna.

Toy retailers today focus their offerings on children up to five years old, after which they are taken over by the world of tablets, mobile phones, and computers. At Hrvatski Telekom, they say that younger children, usually up to eight years old, most often use tablets, and after enrolling in elementary school, they start using mobile devices. When it comes to brand selection, these are generally those that are currently the most attractive on the market.

– We would highlight the MyKi children’s watch from our offering, an innovation that HT introduced to the market first in 2017, which allows children and parents to communicate and track the child’s location using the MyKi Watch app. Regarding entertainment, HT included consoles and other equipment for PlayStation in its offering back in 2016, and it still has regular promotions through which users gain various benefits – they emphasize at HT.

On Multiple Screens

They also add that children are generally very intuitive users and do not require special adaptation when it comes to using mobile devices, but rather the engagement of parents who will determine which applications they are allowed to use and which are appropriate for their age.

– Children, the so-called alpha generation, and teenagers, or the younger group of the so-called generation Z, are generations growing up in the digital age and for whom it is natural to be technologically hyper-connected. Just as it is said about generation Z that they are ‘always connected’, always connected, the alpha generation is ‘permanently connected’, permanently connected. They are mobile, global, embrace diversity in every sense, and their members are great individuals and very independent in decision-making, expecting their needs and preferences to be respected. This is the generation of streaming the song ‘Baby Shark’, fidget spinners, and video games, which they cite as the top five digital leisure activities. This is the generation of iPhones, iPods, and tablets, wearable technology, smart speakers, and voice assistants. Online connectivity is taken for granted, and social networks become the standard of their communication, with Instagram, Snapchat, and WhatsApp leading the way. Watching linear television is not as much of a habit for them as following streaming content on YouTube, TikTok, Netflix, etc. They follow local and global influencers and are also inclined to create their own video content. The habit of using several devices or screens simultaneously, or applications, social networks, and other digital solutions, has reduced their attention and concentration, which is already recognized and acknowledged by about two-thirds of Croatian teenagers, according to a survey conducted among the Croatian generation Z by Hrvatski Telekom in June 2021 – they emphasize at HT.

Slight Growth

Products for children and teenagers account for 60 to 70 percent of total sales in the multimedia bookstore Menart. Books make up 55 percent of sales, gift programs 20 percent, music and film 11 percent, toys nine percent, and technology five percent. Emil Kolanović, the director of sales and marketing at Menart, says that the market for children’s products and services in Croatia is dynamic, with most current global brands for children represented and a smaller percentage of local brands.

– The current results of our business in the toy segment compared to the pre-pandemic period are stable, with slight growth of four to five percent. The best-selling products during the pandemic year from the toy segment are Menart Toys‘ Spin Fighters line, board games from the Alias line with the new Alias Hrvatska, and the YuGiOh line. We see further growth potential in a quality selection of brands for children and the development of our own local brands of children’s toys. Online sales significantly increased during last year’s lockdown, and this trend continues. Current online toy sales in our country account for up to ten percent of total sales – says Kolanović.

Although there is no shortage of toys in Croatia, only two specialized stores, Škrinjica and Denis, have survived, but they are struggling for survival after being overtaken by large foreign chains. One2Play, Turbo limač, and Magma have failed, and the remaining stores are achieving annual revenues that they once realized in a single month. As a salesperson in one store told us, there are between 400 and 500 specialized toy stores in the Czech Republic. Additionally, wholesalers have been pushed aside, and Slovenians have taken over distribution; for example, they are the main representatives for Playmobil, which they then sell in Croatia.

Few Manufacturers

At the moment when cheap capital with low interest rates came from Europe, large chains like Müller and Spar destroyed small toy retailers with large volumes, shelf degradation, and low prices in procurement contracts. As we learn, Croatian wholesalers can no longer approach Müller even if they have the lowest prices on the market; everything is imported directly from Germany. At the same time, for Croatian customers, Müller is a concept even though it is the most expensive on the market and very rarely enriches its assortment with innovative products. Therefore, we have more and more specialized online toy stores, where mostly younger parents shop; the older generation still prefers visual perception when shopping, especially if they go shopping with a child.

There are very few toy manufacturers in Croatia; they actually have no one to produce for unless they export directly. Even when they make a toy, they have to ‘pump’ much more money into marketing than into production, for which they often lack funds. After all, Croatians do not value their own; they want foreign products, preferably those that are featured in advertisements.

Interestingly, a salesperson in a toy store told us that the best-selling toys during the pandemic were puzzles, but not those for children, rather for adults, who saw them as a means to kill depression. 

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