Company Profile - Kandy Toys

Marginal gains

KandyToys has made a name for itself within the indie retail sector thanks to its raft of toy brands spanning every category you can name, all of which offer superb margins without cutting back on quality. Here, Freddie Martin, managing director of Kandy Toys, and retailer Terry Alford, managing director of Thomas Moore Toymaster, explain the importance of margins in the current economic climate and why Kandy Toys is so invested in supporting the indie sector.

KKandyToys and Thomas Moore Toymaster are practically neighbours, both based in Exeter; for Terry, taking part in this interview was a simple case of stopping by the Kandy head office on his way home for the day. Having stocked the company’s product range since 2019, the retailer and supplier have formed a strong friendship. On the call, they banter back and forth about Freddie’s seaside exploits the prior weekend (spending £20 on a 2p machine at the arcade, only to win one of his own toys) and which of them is most photogenic and should therefore be in the pictures that accompany this article (it looks like they both won that argument…)

“I now spend ten times as much on KandyToys product as I did when we first started out with it,” explains Terry, who’s talking to me from the supplier’s cavernous showroom. “As with any new supplier we were slightly cautious to start with, but the range has expanded exponentially, and the sales speak for themselves. Back when Toymaster halted its FOB programme I found myself looking for something to fill the void, and Kandy was a name that kept coming up among other group members. One of those was Gliddons in Sidmouth, just up the road, which prompted me to take a look. The rest, as they say, is history.”

Toy World can attest to what Terry says here: KandyToys does indeed get a regular mention by indie toy specialists, including our very own columnist Toy Barnhaus, and last month was also highlighted by Steve Kerrison of Kerrison Toys and Jack Chippendale of The Toy Shop. While the company’s customer service is often praised, it’s the margins it offers that get tongues wagging; Terry realises 50-55% on KandyToys products, the highest of any supplier on his books, which tend to average 30-35% margins.

“It’s all about getting the product mix right,” Terry adds, noting that while he can sell £100 Lego sets ‘all day long’, he’s able to achieve much higher margins on KandyToys product, at much lower prices, while still offering something for everyone. “I’ve seen consumer spending on lines from all my Top 10 suppliers decline over the years – with the exception of Lego, my biggest supplier, which is very much bucking the trend - as the credit crunch has hit and expendable income has been squeezed, but most people are happy to come in and spend £5-10 without thinking too much about it. At the same time, less well recognised suppliers are seeing their sales increase.”

Freddie says that while KandyToys is happy to suggest RRPs for its products, this decision is ultimately down to individual retailers and can be highly variable, based, for example, on their location. While some choose to assign RRPs at the higher end of the spectrum, others have the flexibility to be a little leaner and keener owing to the strong margins on offer. He adds: “You’ve got suppliers out there that insist on their retail partners holding fast to RRPs, all the while increasing cost prices - and then they wonder where the indies have gone. It’s no good; we all need to support this sector.”

As Freddie talks, Terry is nodding along emphatically. This is clearly a topic close to his heart. Describing pricing wars as ‘cutthroat’ when it comes to bigger brands and licensed product, he notes that consumers will happily vote with their feet and shop elsewhere if they feel there’s a saving to be made. In turn, this forces retailers to become increasingly more competitive on pricing – if not outright aggressive– which eats into margin and ultimately poses difficult questions about the viability of some ranges.

At Thomas Moore Toymaster, the year-round topperforming category is Pocket Money: anything £5 or less (and therefore able to be purchased without parental approval), squidgy, squishy or slimy, cute or collectible. Kandy Toys’ pull-back vehicles are also a hit, coming in at between £4.99-6.99. Terry sells hundreds of such toys a day, all week long, and at weekends sees that section of the store fill to the brim with excited kids.

For the past few years, KandyToys has designed all its artwork, from its logos to its characters, in-house, under the watchful eye of its incredibly talented lead designer, John. This investment into the aesthetic enhancement of its ranges has seen the company’s dolls, science kits and larger vehicles become year-round favourites, when previously they may have been more seasonal lines. The quality of the packaging, in Terry’s view, commands the same attention from consumers as that of branded product and looks undeniably impressive when you’ve got a range as substantial as he has. “It looks good on shelf, especially when sitting alongside a toy with double the price tag,” he tells me.

“Our focus on art and design is increasing all the time,” Freddie explains. “We have six full time employees in that department, and I envisage that within the next 12-24 months that will expand even further.”

It’s worth noting that Kandy Toys product, according to Fredde, is often made the same way, and in the same factory, as branded versions retailing at a substantially higher RRP (much like supermarket own-brand versus branded baked beans). The difference is in the presentation. KandyToys is therefore placing a much bigger emphasis on brand building by creating packaging and artwork that tells a story, and fleshing out brands with a raft of different sizes, features and price points. Within the Lullaby Baby doll range, for example, you can find core dolls, dolls that wet themselves or cry, dolls with dinnertime accessories, pushchairs, bathtime sets and so on - and all at a third of the price of big brand names.

“When you consider what this country is facing economically, and the hardships facing individual consumers, you realise people just can't afford a lot of the toys from big players anymore,” notes Freddie. “Look, I won’t say Lullaby Baby is better quality than some of the leading doll brands, but it’s still great quality and available at 25% of the RRP. If that’s all a parent can afford, that’s what they’ll buy. Retailers have to provide options and alternatives for all pockets if they want to make a sale, otherwise you risk that shopper with the smaller budget heading out of the door empty handed.”

Freddie has been working at KandyToys for two decades and still works with a number of customers whom he traded with at the beginning of his career. As evidenced by his comfortable, jovial interactions with Terry, this is a man who likes to create more than just partnerships; his goal is to forge relationships. While National accounts are a big part of the business, he says the near-constant turnover of buyers can make this tricky at best, impossible at worst. When your clients matter to you as much as they do to Freddie, this is obviously frustrating.

Freddie is also a firm believer in not overcharging. In a previous interview, he told me: “Now is not the time for greed. If we’re greedy today, we lose out tomorrow.” Six months later, he’s sticking by those words.

“Our products have to be accessible for all, not the few,” he argues. “Early in the year we faced some challenges related to currency and exchange rates, and as a result of that we could technically have put some of our prices up by 10% - but we haven’t. We’ve absorbed it. That affects our bottom line but we’re all in this together, suppliers and retailers alike, and we can’t just go whacking prices up simply because we have the ability to do so. If the containers arrive on time and the sun keeps shining, the majority of us of will get through this rough patch, and those of us that do will be looking at rosier times ahead, I’m sure.”

As an independent retailer, one of Terry’s biggest bugbears is getting partway through the year and putting in a repeat order, only to find the prices have gone up. (At this, it’s Freddie’s turn to nod emphatically.)

Reading all this, you’d be forgiven for thinking that if a retailer were to approach Freddie with an offer to fill half of their toy store with KandyToys product, he’d be delighted. But you’d be wrong. Apparently, Freddie would talk them out of such an idea. “You need the big brands to pull consumers in; if branded products usually fill around 7075% of a toy store, then ours can fill the remaining 30-25% - yet be just as profitable. Eagle eyed Toy World readers will spot that that’s not what I told you in October 2024, when I said 80% versus 20%, but since then things have changed dramatically. Some brands just aren’t willing to hold their prices to help indies, so I’m not surprised this sector is turning to us more and more.”

Speaking of brands, KandyToys recently announced that it has entered into a licensing agreement with Mattel that will see it introduce a range of Fisher-Price products across the UK. The collaboration, which Freddie says he is both proud of and excited by, will introduce a diverse selection of beloved toys and baby essentials to the market, from engaging play tents and innovative safety products to stimulating sensory toys and vibrant ball pits. In line with the rich heritage of Fisher Price, all KandyToys’ new licensed products are designed to spark joy and enrich the playtime experience for families nationwide.

Looking ahead to the rest of 2025, Terry is optimistic despite the challenges facing the indie sector. Exeter now has both a Smyths and an Entertainer, increasing the competition his store is up against, so Terry’s focus is on offering a tangible point of difference when it comes to product and an unrivalled in-store experience. “When I hear a child tell their mum or dad that Thomas Moore is their favourite shop, I know I’ve won that battle,” he says.

I ask Terry for his closing thoughts on KandyToys. The compliments came thick and fast: old school values - in a good way - a pleasure to deal with, easy to get in touch with, nothing is too much trouble. “You’d think Freddie is paying me,” he laughs, before Freddie chimes in with “I am!” (He’s not been paid, rest assured.)

KandyToys is actively looking to grow its account base, while still maintaining the first-class customer service it’s known for, so anyone reading this who wants to get in touch is encouraged to do so. The company will also be one of many suppliers heading to Harrogate in a few weeks for the annual Toymaster May Show. If you would like to chat with the team and view the full range, including the new Fisher Price licensed collection, head to the Upper Marquee on any of the three days.