Letter from Norway

(Editor’s note: This is the second in a series of market reports from members of ITMA, the International Toy Magazine Association. A representative from Norway contributed this month’s report. Playthings is the U.S. member of the organization.)

In his famous 1942 speech, President Franklin D. Roosevelt proclaimed, “Look to Norway,” recognizing the country as a source of inspiration for the United States. But these days, it seems even the Scandinavian nation is not immune to the difficulties facing both its toy retailers and suppliers.

Today, the Norwegian toy and hobby market is an example of what happens when competition takes over, and a tremendous amount of counterfeit Asian imported product has been stockpiled in wholesalers’ warehouses and retailers’ stockrooms.

Over the last year, importers, wholesalers and distributors have been having a tough time. But the some 900 retailers in Norway have been enduring hardships of their own even longer. This is due to a combination of factors, from the advent of age compression to the increased volume of consumer electronics, much of which is being sold at big-box electronics retail chains.

In fact, the spreading craze for video games for the PC, Sony game consoles and Microsoft’s Xbox has been “a nail in the coffin” for the Norwegian hobby and toy market. It seems only Nintendo favors loyal retailers among the traditional and professional shops.

The intensive price competition between the Norwegian toy and hobby chains has resulted in several dissolved family-run retailers, as they have earned too small a margin to exist. And this has, in turn, given the Danes incentive to conquer new space in Norway and Sweden.

The Danish Toys “R” Us franchise, which is under the Top-Toy A/S holding company that also contains BR Top-Toy, Toys “R” Us (Scandinavia) and Top-Toy (Hong Kong) Ltd., has promised its owners to occupy both Sweden and Norway within five to seven years. Already, the Danes have implemented several large Toys “R” Us markets in both neighboring countries, while building up the affiliate system of BR Toys shops. These stores have been known to wipe out traditional, surrounding toy shops and then raise over-the-counter prices on products once the competition has been eliminated.

For those buyers still holding on to their businesses, new product can be obtained from major suppliers around the country. Ranking geographically from north to south, Norwegian retailers and their buyers can easily visit Ringo and VN Leker in Drammen; Brio and Fritz Hansen in Tønsberg; Simba Dickie Nordic in Stokke; Norstar, Torger S. Iversen (TSI) and Tactic Norge in Sandefjord; and Carlsen-Eber in Larvik. (Part of the former J.L.Carlsen Ltd. in Larvik has been rented by the newly organized, half Swedish Carlsen-Eber of Malmo in southern Sweden.) Most of these companies have sales offices, large showrooms and stock warehouses situated along motorway E6.

From Oslo, buyers can reach these distributors within an hour and a half. For international buyers or buyers from northern Norway—who are coming in on flights from Stanstead to Torp International Airport (just outside Sandefjord)—these facilities are only a few minutes away.

The big Brio partner chain, with shops in Sweden, Norway and Poland, is managed from Tunsberg, a small town southwest of Oslo. The Swedish-owned Brio Norwegian headquarters is situated in the same place as many of the influential agents, importers and wholesalers, plus several catalog chains. Brio is currently reorganizing and outsourcing many of its operations in Norway.

Beside Brio’s partner chain, Norstar has a Toy Club chain and VN Leker has the Buddy chain. Ringo Import & Distribution is shutting its doors because of financial problems. As a result, many Ringo retail members are being heavily sought after by the other chain managers.

Mattel and Hasbro continue to do well among the Norwegian toy retailers. Both manufacturers are known for their efforts in supplying safe and reliable products for all ages.

Of special note is Fisher-Price, which did remarkably well last year after launching its baby care products in Norway and the Nordic countries.

While the traditional Norwegian toy and hobby markets may be getting smaller, the baby care business is growing. The second edition of the BabyExpo trade fair opened its doors the last three days of September. The country’s 600 baby care shops had a golden opportunity to order baby articles and safety equipment from top brand names with good margins.

One week later, a similar baby care trade show, BIS, opened in southern Sweden in Joenkoeping, between Stockholm and Malmo. Many retailers are now asking for a combined Scandinavian baby care trade fair in Gothenburg on the Swedish west coast, which is easily accessible from both Norway and Denmark by car or plane.

The baby care chains of both Norway and Sweden are now aggressively seeking new alliances and partners in Scandinavian countries. They have seen what has happened with their colleagues in the hobby and toy trade.

Perhaps another healthy area to note is the book-selling business. The bookstore chains of Norway are doing well after the price-regulated market was opened to free pricing earlier this year. The same shops sell a number of international family games and educational toys—with acceptable margins, to boot.

“Look to Norway” indeed, says a member of the Norwegian toy industry. He concludes that after a downturn in the economy, people again will consider simple and affordable down-to-earth luxury instead of expensive cars, houses and international traveling. Perhaps then, baby products and toys will boom again!