I am just returning from New York, going through my numerous follow-ups, and trying to make sense of all the meetings I had and all the new toys I saw at Toy Fair (to foresee what big trends will emerge this coming Christmas). As much as I see clearly what is going to happen this spring—with an outpouring of unicorns, slime, squishies, toilet humor, and collectibles’ bonanza all trying to break through on social media with unboxing and user-generated content aplenty—I am not too sure about Christmas 2018 just yet.
The fact is, as we all know, last Christmas didn’t quite turn out as planned. Sure, some brands had resounding success and were sold out well before the big day. But all in all, Christmas 2017 has left me with a bitter taste in my mouth, and it’s not going away.
My colleagues and I spent most of November and December trying to reassure ourselves and our clients that the negative trends we saw in all countries were going to reverse in the last two weeks of the year, as consumers were going to rush in stores or frenetically click online to finalize their toy shopping, and all would be good in the end. Though this sort of did happen, it was just too little, too late. And although the industry is coming to terms with the fact that kids and parents start thinking about the holiday much later, the fact is fewer toys were sold in the last two months of 2017 than in 2016. Why? And how can we overturn that?
In NPD’s Global Holiday/Christmas Study, we surveyed thousands of parents after the holiday season to ask about their shopping behavior for their own children during Holiday 2017, with the objective to better understand what exactly happened. The first interesting thing parents told us is that, overall, they increased their gifting budget compared to 2016. So, the economy and potential strain on disposable income was not a negative factor – even though about one-quarter of parents acknowledged also buying a second-hand gift for their child, too.
Let’s say that we believe the parents when they tell us they spent more. Then what did they buy? Unfortunately, we discovered that between 70 percent and 80 percent of parents bought toys for their children, depending on the country; and even if toys is the category with the highest penetration, this is far from the 100 percent we would hope for, even when we drill down at younger age groups. Other categories were more popular, increased penetration, and possibly had more ‘wow.’ But on the whole, parents reported being happy with the choice of toys on offer, and they didn’t spend less because they failed to find exciting new toys.
So, did they buy more for less on promotion? Yes, to some extent we note that promotions, especially those running online, were a determinant factor to buy ‘that day.’ We also know that when consumers buy online they tend to stick to their shopping list and impulse purchases, which are quite common in-store, are almost non-existent online. We also found budget disparities between late and early shoppers.
With the challenges facing the toy industry today, it needs to find a new path for profitable growth. I think that one of our biggest opportunities is to restore the perceived value of toys and make sure that promotions are incremental, as opposed to taking value out of the industry. And if we are to win share back, we must work together to keep consumers interested. This needs to be a year-round activity, and it needs to happen in-store and online, with the best assortment possible and the most incremental promotions to make it happen.
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