Despite the tough competition from online commerce, which is gaining an increasingly larger market share in the industry, or the problem caused by the decline in birth rates, toy stores that have reduced their potential audience have also managed to leave the consequences of the epidemic behind. Reduce your risk of default. Especially those in the province of Alicante, which is among the most solvent states in the country as a whole.
At least that’s the conclusion of the latest data from Iberinform’s platform Insight View, which reflects the improvement in the balance sheets of companies in the sector last year. A development that has reduced the number of toy stores at the maximum or high level of default from 21% last year to 19% nationwide, and this is even more evident in the case of Alicante. Especially in the province, the decrease increased from 22% to 16%.
In this context, the report reminds us of the unique characteristics of this business, which concentrates approximately three-quarters of its turnover in the last months of the year. Likewise, it is pointed out that electronic channels continue to gain weight, but also that demographic changes clearly affect their goals and that they also suffer from the loss of purchasing power that inflation means for the majority of families.
Despite all this, the study shows that after a “very complex” 2020, Spanish toy stores managed to recover commercial margins of around 5% at the end of 2022, which is already “in line with pre-pandemic values.” . In addition, the average lead time, which shows the days that stocks remain in the company, reaches 204 days.
Distribution
Regarding its structure, Insight View data shows that the sector is highly dispersed, with 96% of the structure consisting of micro and small businesses. Geographically, toy retail companies are concentrated in the provinces of Madrid, which account for 22% of the stores in the sector; Barcelona with 15%; and Malaga and Alicante about 5% each. Also noteworthy is the data from Valencia, which accounts for 4% of all Spanish toy stores, Seville, 3%, and Vizcaya, 3%.
The study notes that “industry concentration has a detrimental impact on the financial health of toy stores”; because Madrid is where 31 percent of organizations at high risk of non-payment are in this situation. Malaga (28% of companies), Seville (25%), Valencia (25%) and Barcelona (24%) are also above average.
On the other hand, the markets with the lowest turnover in a complex situation in this segment will be Vizcaya, where only 11% of toy stores are at risk of non-payment, and Alicante, with the above-mentioned 16%. In this way, the province has moved from an above-average situation to a point where it offers a better situation.
On the other hand, as a result of the analysis of the data, it is seen that only 15% of the companies in the sector have been operating for more than 25 years and only 31% are over 15 years old. Age is a significant factor in the sector’s credit risk: 24% of companies in the top ten years are at the maximum or high default level. This rate drops significantly to 14 percent in companies between 11 and 25 years old, while it rises to 19 percent in companies over 25 years old.