Europe plays a significant role in the global toy market. The patterns and trends in data for the European toy market show signs of maturity. Europe has a moderate growth rate in the toy industry as compared to the Asia-Pacific, Middle East and Africa, and Latin American regions. However, most of the toy production by toy companies is outsourced to other regions where labor costs are cheaper, such as Asian countries, primarily China. However, production of toys in Europe is cost-competitive when transportation costs from China are high. Also, the management of toy companies can have better control over the production process if the production process is kept close to the main markets. Several reports by the ECSIP Consortium indicate that production in Europe increases flexibility in serving changing markets and may lower quality assurance costs.
In the research titled "Europe Toy Market Research Report, 2027," Actual Market Research attempts to elaborately explain the current and emerging scenarios in the European toy market with sufficient data backing. The European market was calculated to have USD 27 Billion in 2021, which is further anticipated to grow at more than 4.5% CAGR for 2022-2027. The major category of toy items produced in Europe includes low-priced small plastic items, where order volumes are often below the amount needed to outweigh transport costs from Asia effectively. Toys produced in Europe in highly automated factories can also be price competitive, especially if the relevant inputs can be sourced locally. Most firms design and develop toys close to their home markets and link up with large Asian production facilities and liaison offices in Hong Kong to increase capacity for fast response to changing product specifications and to further control the product quality and monitor the production processes. The price sensitivity for toys in the European toy market is also high among consumers. The off shoring of production processes also reflects the fact that the company faces cost and price competition to a significant extent.
The toy categories are naturally characterized as having a shorter life cycle, and the companies need to innovate and reinvent their product lines to adapt to the changing market situations and maintain and grow their market position. Therefore, investment in research and development in the market is very important, especially for a region like Europe where the market is relatively mature and the companies need to open up new product lines to carve out a market.
The third crucial block in the European toy market is the regulatory and framework conditions. In Europe, toy safety is governed by the Toy Safety Directive. The TSD imposes conditions and mandates the required protocols to ensure that their products meet the requirements in the field of toy safety, including mechanical, physical, and chemical safety. Each toy that fills the rack on the market is submitted to a conformity assessment process. Counterfeit is another significant challenging that toy manufacturer’s face, and IPR protection has become increasingly important. Because of the high proportion of small and middle-sized enterprises in the region’s toy market, counterfeit and duplicate products easily have a chance to flood the market as they come at a lower price range as compared to the original products and are attractive to price-sensitive consumers.
However, Europe’s toy market is well structured, but the destruction in the supply chain caused by the COVID-19 pandemic and unfavorable demographic trend will test the crisis management and long-term planning of the toy companies.