How does Funskool keep itself relevant in the age of digital gaming

The toy major adopts a differentiated retail strategy for metros and small towns, pitches itself as a lifestyle choice and an antidote to digital addiction

How does a three-decades-plus old toy company keep itself relevant in the age of digital gaming and entertainment? This is a question that Funskool, the MRF-owned company, has been staring at for several years. And now, the company is building a new marketing pitch for its brands while expanding its retail footprint into the small towns.
 
The challenge today is manifold. For one the global role models in the toy business are crumbling (Toys R Us, for instance, has filed for bankruptcy) and secondly,  core consumers (children) are turning towards digitised gaming and entertainment. The domestic online gaming industry has more than doubled over four years, between 2014 and 2018 and is expected to grow at a frenetic pace over the next five years.

 
To stave off the emergent challenges, Funskool is reframing the brand narrative, offering its toys as therapeutic and educational fare that keep children away from their screens, instead of playthings to fill up a summer afternoon. It is also adopting different retail formats for regional and urban markets and creating a more robust arts and crafts portfolio with its in-house label Handycraft.
 

John Baby, CEO of Funskool India  believes that the right toys at the right age will go a long way in developing healthy minds, besides improving cognitive skills and creative thinking for both children and adults. “Children of this generation don’t know what failure or refusal is,” said Baby, pointing to cases of students ending their lives when they fail examinations. He believes that promoting the right kind of play could help keep such tragedies at bay.

 
The right play
 
According to Baby, Indian parents have been slow to see toys and games as tools that shape the character of children. It was either meant for education or for entertainment. That is changing, he said as parents look at toys as therapeutic tools and enablers of mental well-being. 
 
Funskool has also sharpened the pitch around arts and crafts products, positioning these as aids for creative development. It is bolstering the Handycraft (arts and crafts supplies) portfolio, by adding new products and refreshing existing products. These products are meant for children between 5-12 years and upwards and have been designed by a team of design specialists under the guidance of trained industry professionals from the IITs and others, said Baby.

 
The aim, he added, was to launch a new range of products where price-value is of utmost importance and to leverage Funskool’s extensive distribution ties to push these products. The advertising for the range would be largely via digital channels. Baby said Funskool’s own toys contribute to about 30 per cent of the turnover and the balance is from licenced products and the plan is to increase the former to 50 per cent.
 
Retail trail
 
The challenge for Funskool is to expand its footprint beyond the big towns and hence the expansion being undertaken currently. The company said it has opened 16 stores in various cities and now plans to expand at least in 50 tier-II cities. Baby said that the company expects sales and expansion in the metros to be through multi-brand retail stores and in tier-II markets, through Funskool stores.

 
Harish Bijoor, branding expert and founder-CEO Bijoor Consults said, “Funskool is a very hard working brand, because its price is very alluring. At the same time, it has quality global brands in its fold. It is a potent combination for expansion into the tier II towns.” Funskool is the largest toy manufacturer in India and will close this year with a turnover of about Rs 225 crore and targets around Rs 400 crore in two years.
 
Market research firm IMARC said that the Indian toy market was worth $1.5 billion in 2018, and has grown 15.9 percent compounded annually, between 2011 and 2018. IMARC expects the market size to cross $3.3 billion by 2024, driven by a huge base of young population, and strong economic growth.

 
Bijoor said that Funskool is well placed to up its game today. “It has the ability to define value for money very nicely in the space of board games, toys and everything that they make. On their own brands, the idea initially looks like they wanted to take on franchises of other brands and create a brand equity and then launch their own brands. So own brands will always piggyback on the global ones that Funskool markets,” he said.