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Consumers are Paying the Price for Toys this Holiday

Dec 8, 2016
Juli Lennett, Senior Vice President, Industry Advisor ;
Toys

I had to do a double-take when I saw the data for U.S. toy sales during Thanksgiving week. While I predicted last month that higher-priced items would be a growth driver for the industry this holiday season, I don’t think any of us expected that 85 percent of the industry’s growth during this week would come from price-points over $20. Digging deeper into this price phenomenon, the story – believe it or not – only gets more interesting.

To put these figures into perspective, comparing Thanksgiving week this year to last, we see the gap that existed in higher price-points is now starting to be filled. The $30-39.99 range was underserved last holiday season, while this year it grew at the highest rate over this important week. The strongest dollar growth came from toys priced over $70.

 

NPD Group Chart | US Toy Sales

 

The top two categories driving growth in these higher price-points during Thanksgiving week both fall under the Outdoor & Sports Toys supercategory: Blasters/Foam Shooters & Accessories filled in the hole we saw in the $30-39.99 range last year, and Skates, Skateboards & Scooters drove most of the growth for the over $70 pricing. Looking back to last year, we may recall that the “hoverboard” types of skateboards were very popular until they were banned due to fire issues. With the issue now resolved, we’re seeing explosive growth once again with these items.

What’s driving this trend in higher-priced toys? It begins with the fact that the toy industry experienced growth over the last couple of years. With this growth, I believe both manufacturers and retailers are more open to investing in new ideas and taking risks. Success breeds innovation, which breeds more success and innovation, and the snowball effect continues to roll.

I also believe that retailers this holiday have become more bullish to higher price-points and accept that parents are willing to pay more for the climactic moment on Christmas morning, when their child opens that big gift under the tree.

There’s also a bigger picture trend at play that we’re seeing around the country and across industries. Consumers are building their personal brand on social media, whether through selfies on Instagram, videos on Facebook, and so on. They want to be part of a broader, social community in an individual way. We’re seeing that toys has a role in this development as well; parents and family members seek that big reaction on Christmas morning, to film and photograph and to share on social media for their family and friends to see. They seek that special reaction, and they are willing to pay a high price for it.    

Each week throughout the holiday season, NPD publishes its Holiday Shopping Bag 2016 Weekly Report, sharing weekly point-of-sale results for key general merchandise categories including toys, apparel, technology, athletic footwear, and prestige fragrances. Week after week, the story has been positive for the toy industry, and I expect this optimism will continue in the time to come.


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