State of Sweden

In a small, high-tech country with a population of just 9 million people, Sweden's toy market managed to record sales worth 43 million euros in 2005. It's a business that looks forward to a bright future, even though Swedish toy retailers and manufacturers face the same tough challenges as companies in other countries.

For one, local manufacturers have diminished drastically during the last few years due to the competition from the large, foreign actors on the toy market, so the battle for market share keeps waging on, even if the worst crisis is behind us. And to make matters worse, the Swedish toy market has earned a bad reputation, mostly from critical media sources that claim Swedish toys are dangerous, expensive and too gender-specific—and that they are produced under unethical circumstances.

Another issue is that the high concentration of sales during the Christmas season continues, making businesses vulnerable during 10 months out of the year and putting pressure on everyone involved to be successful in the remaining two-month period.

To be known as a fast-developing country, especially when it comes to technology, is not always a good thing when you are trying to sell toys. Sweden's fast technological evolution is affecting children's interest in traditional playthings. Today, there's a huge difference in what an 8-year-old wants to play with compared to just a few years ago.

These days, what child doesn't have a cellular phone, play video games or listen to an MP3 player instead of spending time with dolls, cars, building bricks and other traditional toys? New technology and its products can “steal” market share from the toy business. It is a situation that has some in the industry wondering whether they should change their choice of goods to meet the changing demand.

On the positive side, there are more children being born in Sweden now than in previous years. Since 2001, the birth-rate has increased, and we may soon be talking about a new baby-boom. In 2005, there were 101,346 babies born in Sweden—compared to only 89,000 in 1998.

And the Swedish people, unlike in some other countries, still buy most of their toys (60 percent) in toy specialty stores. General dealers and department stores are responsible for 20 percent of the market's sales, while mail order and Internet retailers are a distant third at just 3 percent. The remaining 17 percent of toys sold annually are purchased at other dealers, for instance petrol stations.

Danish retailer Top-Toy has conquered the most market share in Sweden during the last few years through their BR Toys chain (57 locations) and the franchise rights to Toys “R” Us (11 stores in Sweden) throughout the Nordic countries. It controls more than half the market in Denmark and approximately 32 percent in Sweden, is expanding rapidly in Norway and is just starting to set up shop in Finland. It opened the first of a planned 40 new stores in that country in late 2005.

The company directly sources and imports most of the products it sells, giving it sole rights to most of its merchandise, which is then heavily promoted. This causes problems for the other toy dealers who cannot provide the same toys when customers come to their shops and want to buy something from a brand owned by BR Toys that they have seen advertised. This is a situation that points out another problem for the toy market in Sweden as a whole: chain retailers like BR Toys, or BRIO—the country's biggest chain, with approximately 100 shops—encounter problems wholesaling to the rest of the market because they are trying to be both toy manufacturers and retailers.

There are many challenges for the Swedish toy market, but there are many reasons to look forward to a bright future, too. The number of children is growing and retailers continue to improve their level of service, business know-how and the range of products they sell. All mean a lot for the competitiveness of Sweden's toy business today and in the days ahead.