Of all the questions we’re asked at NPD, one of the most difficult to answer is, “What do you think is going to happen in the next 12 months?”
I’ve always been reasonably confident about what trends would be developing and who the “winners” would be over the holiday shopping season. But today, predicting what’s going to happen is far more difficult than it was before the pandemic. A lot of our markers have moved; and they keep on moving.
WHERE THE MARKET WAS:
The global toy market has increased a lot over the past two years, with close to 80% of the growth coming from the U.S. This came as a pleasant surprise after the disruption caused by Toys’R’Us’ closure.
However, the pandemic was tough on the toy industry in regions like LATAM and Europe, particularly during the first year because of brick-and-mortar store closures, people staying at home, and fear of uncertainty, to name a few. Thankfully, in 2021, most markets started to see a return to normalcy, with 11 out of the 13 global markets tracked by NPD managing to see sales reach or exceed pre-pandemic levels.
WHERE THE MARKET IS GOING:
As we moved into 2022, the industry’s biggest concern was with how consumers would continue to deal with COVID-19. Would people buy toys in the quantity and value that they used to before the pandemic, or would they continue to buy at the same pace as they had during the pandemic?
Fast forward to today, and the economy and its impact on pricing has taken precedence.
We’re facing an economic disruption larger than anything we have on record, but you wouldn’t necessarily know this if you looked only at the toy industry.
Global toy sales are up 1% for the first four months of this year. Value sales across all countries tracked by NPD are above 2019 sales, so we’re selling more in terms of value sales than pre-COVID-19. Unit sales have declined 5%, while average selling price has increased 7%. In other words, we are still witnessing an elevated level of toy sales, driven by an increase in the average price.
I’ll break down what I’m seeing in the UK as an example. In March, the average price paid for a toy increased by 5.1%. But the base price across all toys that were already selling the year before – like-for-like – was up by a record +11.8%, which happens to be the highest increase among the largest countries in Europe. This is unheard of. That, combined with the rising cost of energy (electricity bills in the UK have increased 50% since last year, and petrol has increased 30%), the war in Ukraine, some remaining uncertainties around COVID-19, and disruptions in the supply chain would lead you to expect new cautious consumer behavior.
Yet, what’s driving sales today in the UK and globally? Collectibles. One out of every five toys sold globally this year has been a collectible. Value sales are around 9% and have been increasing 23% year on year, also driven by a more premium product range.
This speaks to me about the power of brands, the compelling value of the toy market, and its appeal across all age groups. It illustrates that even when facing the biggest adversity we’ve seen in decades, the toy industry continues to perform well.Makeup Trends | Beauty Industry News