For generations, the Star was synonymous with toys. Now, close to turning 85, in debt and far from its peak, the group bets on a new business to try to get out of the red: children’s makeup. The strategy will make Estrela open its own stores for the first time.
The analysis of this market began in 2017, according to the president and controller of Estrela, Carlos Tilkian. He says the bet came after the realization that girls are giving up playing with dolls at an earlier age. Therefore, it was necessary to keep up with the change in the target audience.
“We realized that, in order to convey what we wanted, we would have to have our own store. This would not be possible if our products were only available in stores or pharmacies,” Tilkian explained to Estadão.
The search for new recipes, however, is justified. The company’s total liabilities, according to data from the end of 2021, are around R$ 145 million. The result is negative: last year, the loss was R$ 15 million, which adds to losses from previous years.
The businessman says that the idea is not to impose an aesthetic standard on children or encourage precocious vanity, but to provide a pleasant experience to show the products that the brand has already developed. Contrary to what happens with toys, the production of cosmetics is outsourced.
To grow in the makeup segment, Estrela wants to enter the world of franchises – for now, there are already five stores in operation, all of them own. According to the company, the investment to open a unit is R$ 500 thousand. Tilkian sees potential for 250 Estrela Beauty stores.
Retail specialist and founder of Varese Retail consultancy, Alberto Serrentino points out that diversification always carries the risk of losing focus. However, he says that Estrela is trying an alternative because its sector has been growing little. “Today the makeup market grows much more than toys”, he says.
He points out that, if the strategy is well executed, the brand can strengthen the relationship with the consumer. “Estrela is a brand in the universe of children, who have an emotional bond with their parents. If I can translate those reliability attributes, it could be something interesting.”
Estrela was once the absolute leader in the toy market, but it began to suffer strong competition from imported toys, starting in the 1990s. In the pandemic, the situation improved. Faced with China’s “zero covid” policy and the expensive dollar, imports ended up falling during this period.
Tilkian arrived at Estrela after opening up to imports, in 1993, with the purchase of the founders’ business.
In the midst of the search for new recipes, Estrela has been in a legal dispute with the American manufacturer Hasbro for 15 years. At stake is the sale of traditional toys, such as Super Massa, Detective and Real Estate Bank.
Hasbro’s allegation is that Estrela does not pay royalties for the use of the intellectual property. At Hasbro, the Super Dough equivalent is Play Doh. In the case of Monopoly, Hasbro owns Monopoly.
“We registered these games with the INPI (National Institute of Intellectual Property) before Hasbro marketed these products in the country,” he says. Estrela argues that games, like chess, are always the same – what changes in disputed cases are the external elements, such as the name and packaging.
Estrela and Hasbro reached an agreement more than two decades ago, in which Estrela maintained the licensing of the brand in the country and sold Hasbro games and toys here. When Hasbro decided to sell its toys directly in the country, the contract was broken. Estrela, since then, maintained the sale of games, with a new guise.