How to start a toy shop

Snapshot

For fun-lovers and people-persons with a good understanding of marketing and market trends. You'll likely need upwards of £50,000 in the bank to help fine-tune your cash flow, stock management, and to cover property rental. This is generally, though not always, more a labour of love than a make-a-million business.

Check out our day in the life article with PlayLounge owner Aidan for more of an idea.

Day-to-day

Toy shops offer up fairly reasonable hours, and your suppliers and customers operate within the normal nine to five. You need to get to your shop before it opens to make sure shelves are looking exciting and well-stocked and to tidy your premises. Many toy shops only open at 10am or 11am, then close at 5pm or 6pm. You will need to work Saturdays though, if not Sundays too.

Don't expect to ever have a stress-free Christmas period again: 55% of an average toy shop's revenue comes in during the festive months, with only 15% per quarter for the rest of the year. You need to be financially prepared for that, and your accounting and money management throughout the year will have to be tightly controlled.

Pick your location wisely, and your day will be busy serving customers, placing stock orders and, when you have a few moments spare, keeping track of trends in the industry via kids' TV channels, adverts, magazines and trade publications. You'll also be keeping kid-disrupted shelves in order throughout the day.

The nature of your business will hinge on the size of it, but also on what type of toyshop you are: a retailer of all and any popular products; a specialist in old-fashioned or wooden toys; a shop aimed specifically at under-fives or another age group; a toy shop with clothing and learning lines on the side.

The industry and market

The toy market is tough - independent shops face competition from household names. Toys "R" Us and Argos are the biggest retailers in the market, with Hamleys, the Early Learning Centre, The Entertainer, department stores and supermarkets not far behind. You'll need to find some way to outcompete big names like those if they dominate people's shopping patterns in your area. Try quality, niche-ness, some environmental advantage, customer service, or any of the suggestions in our feature on 37 ways to beat your competitors.

Online retailers are scooping up a good chunk of the market too, and can often outdo offline shops on price.

Good news is, the market is also growing. Things are moving towards electronic, computer-based and educational toys. The Toy Retailers Association says, "sales of traditional toys and games have been relatively static over the last 10 years in real terms". That said, the increasing life expectancy of grandparents and fashionable nostalgia for wooden and old-fashioned toys could spell an opportune resurgence in older styles.

Ever more sophisticated marketing has played a massive part in which toys children choose. TV and film characters have swept up the ranks, as have heavily branded products such as Bratz. Pre-teens tend to want more 'grown-up' toys than their predecessor generations did.

Most independent toy shops join a buying group. This means they team up with other toy shops to buy big bulk orders, so the price of individual units drops, cutting costs.

Natural skills

  • Passionate about toys and the wonder they hold for children, and able to convey that passion to customers.
  • Naturally good with children.
  • Full of energy, and certainly not prone to grumpiness!
  • Very good at customer service.
  • Able to keep calm during busy periods.
  • Good project manager (for stock).

Training

You don't need vocational training to be a toy shop owner, but the following will help:

  • Direct experience of working in retail - it will be invaluable.
  • Learn about your products in-depth.
  • Learn about your industry and trends.
  • Tons of market research.
  • Short courses on essential business skills.
  • Any course on retail skills.

There are also some industry-specific short courses you can take:

Premises

  • Size will depend on your ambitions and stock requirements.
  • Need a sizeable area to keep stock ready to fill shelves.
  • A toilet may be a good idea to help out parents of desperate kids!
  • Costs depend on the expense of your area and all of the above factors.
  • Staff
  • Whether you take on staff depends on how much time you want to spend in store and how big your shop is.
  • Taking someone on part-time is a good half-way house if you find it too much to handle solo.
  • Recruitment shouldn't be too tricky. In our video on starting a toy shop above, Playlounge's Aidan Onn says he receives CVs every day looking for work.
  • Staff will need to be dynamic, massively energetic, customer service gods with plenty of expertise in your products and who they suit best.
  • You will get what you pay for - it's worth going above minimum wage to secure employees who meet all the above desirables.

Money

  • Start-up costs depend entirely on property rental prices but think tens of thousands.
  • Expect to pay £60 - £90 per square foot for a shop fit on top of that.
  • Aim for 20 - 40% margins on products.
  • Online catalogs and big retailers are good for checking your price points.

First steps

  • Do tons of market research.
  • Decide what type of toy shop you're going to be and what you'll stock.
  • Decide whether you're going to rent 'blank canvas' premises and start the business from scratch, or buy an existing toy shop (which will be easier but more expensive and with less scope for individuality).
  • Look into commercial property rental prices in your chosen location.
  • Start conversations with potential suppliers then select which you want to stock. Suppliers can include wholesalers, specialist toymakers, factories overseas, importers. Find them via the resources at the end of this guide.
  • Make sure all products meet the correct safety accreditations (more on those below) and consult a solicitor.
  • Read our feature on a comprehensive checklist for how to start a business.

Tips

  • Popular products marketed heavily on TV make lower margins, while pocket-money friendly items (around the £5 mark or less) tend to make most and sell in bulk.
  • Make sure your stock is a mixture of fad items and longer-lasting staples with better shelf life.
  • The more spectacular, fun and visible your shop and shopfront are, the less you need to spend on marketing, and the more kids will ask their parents if they can visit.
  • Host children's book readings to give your brand a nice boost.
  • Ask to leave flyers in ante-natal classes, play-groups and parents' coffee meetings. Offer a lucrative discount or organise a free event for parents and kids via the flyer to entice the group organiser, rather than just spamming them.
  • Get on Mumsnet and start building a presence there as a helpful individual to drive interest in your business.
  • Join a toy shop buying group.

Common pitfalls

  • Safety. This is an absolute must. If something goes wrong with one of your toys and a child gets hurt, the damage to your reputation could kill your business. Stick strictly to all accreditations (more on which below), triple check that your products have them, and avoid manufacturers in far-flung countries if you can't be sure they've stuck to UK safety marks.
  • Not keeping in touch with the zeitgeist. Read children's mags and watch kids TV channels to see what will sell well. Know what will appeal to parents in your area too - are they trendy, environmentally-aware, looking for a bargain?
  • Not keeping close track of what lines are selling well and which aren't - this will change quickly and you have to be right on top of changes to keep in control of stock.
  • Being left with a backlog of stock when a toy or brand becomes unfashionable. Again, you need to be very vigilant about stock, and don't over-order.
  • Some bank lenders may see a toy shop as high risk. Be ready to make a solid case or look for alternative finance routes.
  • Being undercut on price by big retailers - so differentiate yourself in other ways like these instead.
  • Aiming your marketing and range too much at what adults want. Kids have just as much say on what gets bought for them, if not more.
  • Not planning your financial year out properly (to account for the fact most revenue comes in at Christmas).
  • Shoplifting - how will you monitor it and how will you respond? Will you have different rules for adults and children?
  • You need to adhere to the following, by law:
  • Be aware of age-specific safeguards (e.g. 'Not suitable for children under three')
  • Get the product testing certificate from manufacturers to prove they've passed all the right tests.
  • The regulations on TV advertising of toys and games aimed at children under 15 years old, if you happen to have enough cash to splash on TV ads.
  • Get public and employer's liability insurance.
  • The Sale and Supply of Goods Act, Workplace (Health, Safety, and Welfare) Regulations, the Consumer Protection Act. Ask the Trading Standards Office and your local Chambers of Commerce for help on this.
  • Get the advice of a solicitor with experience of this sector before launching your business. The rules are constantly being updated, and when it comes to businesses involving kids, it's just not worth the risk of not doing things by the book.

Support and resources

Use what's out there to help you. Software like Smarta Business Builder will make it easier to keep track of all aspects of your business. Other resources include:

Organisations:

Suppliers:

Trade publications:

Buying groups:

  • Toymaster Ltd
  • AIS/Playroom

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