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Traditional and Electronic Games to the Fore in Poland's Toy Sector

Poland's toys and games sector reports unexpected 10% surge for 2014, with demand for electronic games still rising, though a distinct parental preference for traditional and environmentally-friendly Polish toy items is also emerging.

Photo: Lego Polska: Flying the flag for the Polish toy market.
Lego Polska: Flying the flag for the Polish toy market.
Photo: Lego Polska: Flying the flag for the Polish toy market.
Lego Polska: Flying the flag for the Polish toy market.

With its overall economic slowdown and its declining birthrate, many have understandably written off Poland as a potentially lucrative toy market. In such straitened times, it has been assumed, family spending will be purely focussed on necessities. A closer look at the consumer priorities of many Poles, however, reveals a slightly less pessimistic picture.

Polish parents are notoriously keen on spending money on their children, with Christmas, Children's Day, name days and birthdays all providing the perfect excuse to treat their offspring. With the country currently home to more than seven million children, the Polish toy market is now valued at around 2 billion PLN (US$527 million).

Overall, the figures for 2014 confounded expectations, with the country's toy market reporting a 10% year-on-year growth. This is the first year for a considerable time when growth has been in double figures. Typically, growth has averaged around 3-4% since 2008. Given the windfall nature of the last 12 months, however, the question for the industry is just how to sustain this level of growth.

This decided upswing has clearly been good news for mainland China, which – unsurprisingly – holds the dominant position in the Polish toy market. While other Southeast Asian territories – including Hong Kong and Taiwan – also occupy significant niches in the market, the combined value of their total imports is only around a hundredth of that of mainland manufacturers. According to Marek Jankowski, the editor of Branza Dziecieca, Poland's leading toys and baby products trade title, one of the key reasons behind China's preeminence has been its willingness to comply with the recent changes in EU regulations with regard to toy manufacturing, legislation that has had a huge impact on such imports all across Europe.

Overall, the leading brands in Polish toys are all global players, including Hasbro, Lego, Simba and Zapf Creation. Among the distributors and importers heading up the sector are Inter Kobo, Cobi, Impuls, Lukas, Axiom, Lechris, Kathay-Haster, and Marko.

Aside from these traditional distribution channels, internet retailing is also beginning to make a belated impact in the sector. This is being driven by an ever wider range of toys and games being available via online stores, highly competitive pricing and a growing consumer confidence in e-commerce transactions.

Photo: Allegro: Poland’s e-Bay.
Allegro: Poland's e-Bay.
Photo: Allegro: Poland’s e-Bay.
Allegro: Poland's e-Bay.
Photo: The Mio Tab: Educational choice.
The Mio Tab: Educational choice.
Photo: The Mio Tab: Educational choice.
The Mio Tab: Educational choice.

The owners of two of Poland's leading baby products and toys retailers, Ryszard Ginalski of Rampers and Grzegorz Szymczak of Colletto, are both thought to be looking at developing their stores' online presence. Their move is thought have been inspired by the demand for toys, strollers and high chairs currently being manifested on allegro.com, Poland's own take on e-Bay.

In terms of market opportunities, Jankowski sees a growing preference for "toys that parents can give to their kids to play with in the car", helping ensure a peaceful journey. Such items obviously include downloadable game apps.

As well as their ability to distract during car journeys, such items are also valued for their educational potential. An existing success story here is Dante's Mio Tab, a tablet said to be suitable for children in the 3-6 years age range. Lech Podsiadly, the owner of Lechris, one of Poland's leading game distributors, has identified such toys as a priority He is currently said to be seeking a number of new ranges, including therapeutic toys for children with special needs, to introduce to the Polish market.

Aside from such educational items, licensed products continue to play a commanding in Poland's toy and games sector. As in other markets, action figures and accessory sales have been dominated by such products. The heavyweight promotional campaigns for Frozen and How to Train Your Dragon 2, for instance, inevitably proved a major boost for merchandise related to the two movies.

In the traditional toys and games sector, one manufacturer to stand out is Lego Polska, largely on the back of its licensing agreements with a number of movie franchises and video games companies. The company's wide and constantly expanding portfolio of construction toys and licensing deals, as well as the success of The Lego Movie (2014), are all seen as having been instrumental in its continuing success.

Away from the big brands and electronic toys, there has also been a surge in demand at the other end of the spectrum, with more and more consumers opting for wooden or handmade toys, particularly those in a traditional Polish style. The continued growth of this particular sector, however, is said to be compromised somewhat by a lack of suitable production materials, while the necessary licensing for the sector is also seen as prohibitively expensive.

Despite this, the premium nature of such products are said to be highly appreciated by Polish consumers. Many parents relish the opportunity to purchase traditional, environmentally-friendly products for their children, as opposed to the mass-produced plastic items that make up the mainstream. As a result, a number of e-commerce platforms are nowoffering such discrete and niche traditional products.

Photo: Is Poland’s traditional toy sector due a revival?
Is Poland's traditional toy sector due a revival?
Photo: Is Poland’s traditional toy sector due a revival?
Is Poland's traditional toy sector due a revival?

Overall, hopes remain high for the future of the Polish toy and games market. New maternity leave legislation, for instance, has now been put in place in a bid to arrest declining birth rates. In light of this – and the traditional prioritisation of spend on children among Polish families – there are seen as clear opportunities for Southeast Asian suppliers and investors in both the country's mainstream and niche markets, particularly with regard to the increased traffic on online retail platforms and app stores. Ultimately, there also remains a growing and under-exploited market for electronic games and accessories in Poland in particular.

Gabriela Chan, Warsaw Consultant

Content provided by Picture: HKTDC Research
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