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Dedicated Licensed Cartoon Merchandise Retailer Launches in Russia

Suppliers sought for Mult retail chain, the new home for Masha and the Bear and Kikoriki and Fixiki toys and games.

Photo: Store stars: Masha and the Bear, Russia’s favourite mischievous minx and her ursine sidekick.
Store stars: Masha and the Bear, Russia's favourite mischievous minx and her ursine sidekick.
Photo: Store stars: Masha and the Bear, Russia’s favourite mischievous minx and her ursine sidekick.
Store stars: Masha and the Bear, Russia's favourite mischievous minx and her ursine sidekick.

A new range of toys, games and other licensed merchandise inspired by Russia's hugely popular array of animated properties is set to go on sale via a new retail chain, which is scheduled to open its flagship Moscow outlet in time for the Christmas sales rush. Taking its name from the country's first cartoon-only TV channel, which began broadcasting back in 2014, the new chain – Mult – is backed by Digital Television Russia (DTR), itself a joint venture between VGTRK, Russia's national broadcaster, and Rostelecom, the state-owned telecoms giant.

With plans for 10 more outlets to open in St Petersburg and a number of Russia's other key regional cities over the course of 2018, the chain will be trading on the popularity of such home-grown international success stories as Masha and the Bear and Kikoriki and Fixiki. Over recent years, many of the country's most popular animated characters have been exported widely, with their adventures broadcast in markets as diverse as China, Israel, Germany and Canada, as well as in many of the former Soviet countries of Eastern Europe. At the same time, the popularity of these characters has seen associated merchandise on sale in many of Europe's most prestigious outlets, including Berlin's Kauf Galleria and El Corte Inglés in Madrid.

With the new venture said to have already secured the rights to all of Russia's premier league of animated properties, orders are believed to have been placed with some 40 Russian toy manufacturers and importers, with Simbat, the Moscow-based toy importer and wholesaler, playing a leading role. While many of the soft toys on offer will be manufactured in Russia or Belarus, it is expected that the majority of the other items destined for Mult's shelves will be sourced from suppliers in Asia.

Overall, Mult is almost unique in Russia in that none of the country's existing retail giants have been recruited as stakeholders in the new business. This is largely because DTR sees the project as somewhat unprecedented and has been keen to keep conventional retail thinking at arm's length, particularly with regard to sales and marketing.

While many Russian retailers in the toys and games sector rely on cross-promotion with related children's products, such as diapers or clothing, to drive sales, Mult's backers want to take a wholly different approach. In essence, they want the new stores to resemble entertainment and child development zones, while providing interactive leisure opportunities for kids and their parents.

Another idiosyncrasy of the new retail operation is that its launch will not be backed by a big push via conventional media. Instead, it will be promoted solely via the Mult TV channel, with its reach alone believed to be high enough to ensure success, while the close connection between the two businesses will ensure that the marketing spend can be kept to a minimum. A similar approach will be taken during the second and third phases of the Mult retail project – the launch of an online sales platform and the further expansion of the store network on a franchise basis.

Overall, the launch of the Mult high-street concept is seen as a timely one, with Russia's licensed-properties sector seen to be in expansionary territory. Exact figures as to the value of the sector, however, are hard to come by. Although, in 2016, the value of licensed cartoon-character-related IP sales and royalties in Russia officially amounted to just US$25 million, this fails to take into account the fees accruing to the many special-purposes tax vehicles established by a number of IP rights holders in overseas jurisdictions as a way of optimising their tax savings.

Although Cyprus, with its long-standing double-taxation avoidance agreement with Russia, is the current favoured recipient of such arrangements, there is now scope for Hong Kong to also tender its services. As of April this year, a new double-tax treaty between Russia and Hong Kong came into effect, giving the SAR the opportunity to offer similar benefits to those currently put forward by Cyprus, but with the added inducement of access to its own globally compliant legal regime.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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