K’Nex Industries is applying a little building know-how to its European business, taking back some rights from international distributor Hasbro in favor of setting up a network of tapped-in local partners.
Hasbro has distributed the Hatfield, Pennsylvania-based company’s products globally since the early ’90s. But for the past three or four years, K’Nex has been reclaiming distribution rights in European territories that Hasbro has chosen to exit or where its lines weren’t selling well.
‘We still have an excellent relationship with Hasbro, [which continues to distribute K'Nex products in the U.K., Holland and Belgium],’ says Steven Brandt, international business development manager. ‘But obviously when you do some things yourself, they get a bit more attention than when someone else is doing them.’
The company plans to start its Euro expansion effort in Germany, where a robust construction toy market accounted for 10% of total toy sales in 2003, according to industry tracker the NPD Group. Brandt says K’Nex’s goal is to be the leading non-brick line in Germany and control a 15% share of the country’s construction toy biz.
K’Nex is focusing on keeping its prices low and offering more competitive retail margins, while supporting launches with extensive marketing campaigns that include product trial events in malls and offering Kid K’Nex samplers at community events. ‘We’re also working with distribution partners that are very skilled at brand-building,’ says Brandt.
It’s a strategy that worked well for the company in Australia, where last year’s launch nabbed K’Nex a 5% share of the construction toy business, up from no presence at all in 2002.
To increase its take in Germany, where the line has been off shelves since the late ’90s, the company has hooked up with toy distributor Ruland Product & Marketing to get K’Nex into specialty outlets including Vedes and Idee & Spiel and mass chains.
The first shipment in March was made up of new lines such as 2002′s Kid K’Nex and the Screamin’ Serpent and Rippin’ Rocket roller coasters, as well as original products K’Nex Tubs & Cases and the Musical Ferris Wheel. In early 2005, the toyco is also launching the K’Nex Alive! line, featuring characters based on mythological creatures like the Fighting Phoenix and the Clawing Chimera.
Brandt says France is the company’s next port of call, and distribution company SARL Alt. Partners initiated a limited rollout last month to tease the full line’s launch next spring. K’Nex was previously in the French market in the late ’90s, and Brandt says the company would like to pull a 15% market share in this territory as well.
‘We’re not necessarily in any rush to be in 40 countries around the world,’ Brandt explains. ‘We want to maximize our potential in each market we go into. But just looking at the percentage of what construction represents to the European toy industry, the region is obviously very interesting for us.’ K’Nex has locked down all of its Euro distribution partners for now, but Brandt says the company may cast its gaze to South America and parts of Asia next year.