Priya Chandarana
Priya is a Senior Research Analyst in Mintel’s Retail team. Prior to Mintel, Priya specialised in analysing the grocery discounter sector and has experience as a buyer.

As shoppers across Britain start scouring shops and websites in search of the perfect Christmas present, toy retailers are gearing up to battle for their busiest time of year. With the dramatic demise of Toys R Us last year, we look at how new entrants Aldi and FAO Schwarz are trying to fill the gap and take on Amazon in the process.

Aldi adds toy shop to online offer

Aldi has launched an online toy store, building on its already existing non-food online offer. While the German discounter has sold toys before, they have been limited-time-only lines and part of its SpecialBuys offer. By bringing this category online with a dedicated toy shop in time for Christmas, we can expect to see Aldi’s toy sales to grow considerably. Its toy range consists of a variety of products to entertain children including wooden toys, branded toys, educational toys and more. On the discounter’s website, shoppers can easily navigate the range by category or brand, making the shopping experience fuss-free and simple. To make the offer more attractive, shoppers who spend over £20 get free delivery.

Consumer research from Mintel’s  report on toy retailing revealed that for two thirds of toy shoppers, price is the most important factor when choosing where to shop. This bodes well for Aldi. Being a discounter, it is synonymous with low prices and more importantly value, incorporating quality as a key part of its discount proposition.

FAO Schwarz opens in Selfridges

Just a week before Aldi’s online toy launch, America’s oldest toy retailer, FAO Schwarz, opened its first European store in London’s Selfridges. The two are a great fit considering they are well-known brands, both appealing to shoppers with their heritage, quality products, and flagship stores. The 22,000 sq ft space in Selfridges looks promising and we expect it to have plenty of shoppers in the run-up to Christmas.

Ways in which FAO Schwarz plans to stand out is by incorporating ‘experience’ stations in-store and bringing its iconic interactive piano to London, which we expect to resonate with adults just as much as kids. Another way in which FAO Schwarz is meeting current trends is with a National Geographic toy range. Protecting our planet has become increasingly concerning to both adults and children as a result of the ‘Blue Planet’ effect and by acknowledging this, FAO Schwarz is able to position itself as a moral brand.

While we know that toy buyers are just as likely to buy online as in-store, FAO Schwarz is far more likely to excite shoppers with its in-store experience and give them compelling reasons to visit. This creates a strong opportunity for FAO Schwarz to bring theatre and interactive experiences to the toy retail market, something which online cannot match.

Competing with Amazon during key Christmas trading period

The timings of Aldi’s launch online and FAO Schwarz’s shop-in-shop are no coincidence. With Halloween out the way, shoppers will start shopping for Christmas, and toys are an integral part of present-buying.

Amazon has been trying to attract Toys R Us shoppers by highlighting its extensive toy range, with a catalogue called ‘A Holiday of Play’. The online giant is now the most popular place cited by consumers to buy toys from, with Amazon’s Prime membership and quick delivery options making it stand out in the market to attract those buying last-minute gifts for children.

While we expect Aldi’s toy category to perform well over the coming weeks, to truly compete with the likes of Amazon it could make its toy offer more experiential by opening pop-up sites for kids to engage with its products in the lead up to the festive period. The same could be said for Amazon, as a pop-up event would help to bring its toy offering to life.