Toys Market Research & Business Solutions

Toys is excited to be the first practice to combine multiple countries in a single DecisionKey database to allow for multi-country reporting. The additional frequency will allow for single-source multi-country data to maximize the value of our data for our toy clients who mostly operate in a global capacity. Clients can now have a view into 10 countries, ranging from Canada to Australia to France to U.S, in a single database with common currency view for all countries converted into U.S. Dollars and/or Euros. This capability strengthens the NPD position of being the Toy industry currency, allows global investor/public statements to be sourced from a single dataset, allows consistency of views between local countries and global departments, and offers immediate time savings thereby allowing more time to be spent on value-add global analyses.

While parents spend the most on toys, grandparents’ spending growth in the last 12 months exceeded nearly all other consumer segments, including parents. In addition, grandparents’ online spend has grown at a faster rate than any other toy consumers.

Market research company NPD Group provides total industry consumer spend on U.S. video gaming for the first half of 2018.

Across the global markets tracked by NPD, toy industry sales reached $18.4 billion in the first half of 2018. Traditional play patterns, collectibles, social media and innovation were the trending themes.

The U.S. toy industry grew 7 percent to $7.9 billion in the first half of 2018. Over these six months, which included the beginning and end of the Toys“R”Us liquidation, there were a number of catalysts for growth.

Market research company NPD Group announces its global industry and marketplace expansion with the launch of its Toys Retail Tracking Service in Brazil, covering online and brick-and-mortar sales of toy products.

U.S. toy sales grew in the initial weeks of 2018, when the industry was in a “business as usual” state. Then, two unique circumstances converged to further lift the market: the beginning of the Toys‟R”Us liquidation and an early Easter.

Global information company The NPD Group today announced the launch of its U.S. Kids License Tracker, a service providing a holistic view of licensed purchases in the U.S. spanning 17 industries, for kids ages 14 and under.

The NPD Group, a leading global information company, today announced the winners of this year’s U.S. Toy Industry Awards, which were shared with the recipients at New York Toy Fair. The awards were given to the manufacturers of the top-selling property and toy of 2017 in the United States, as well as the top-selling toys by supercategory, according to NPD’s Retail Tracking Service.

Toy industry sales grew by 1 percent in 2017 across the 12 global markets tracked by The NPD Group.

No holiday season is complete without a mad dash by consumers to capture the most desirable toys of the year. Based on velocity, or how fast they are already flying off U.S. shelves, global information company The NPD Group has named the top 10 toys that may be hard to find closer to Christmas.

When Cristiano Ronaldo announced this summer that he was leaving Real Madrid, it’s safe to assume that more than one child thought of his next season's sticker album. It’s a fact that the return to school also marks the return of one of the most repeated traditions year after year (along with putting the books in the backpack): collecting Football League cards (known as soccer in the U.S.).

In the last three years, the passion for ‘the beautiful game’ has triggered the increasing popularity of card collecting in our country. Through the end of August 2018, the sale of football cards has grown almost 30 percent compared to 2015. Some of this can be attributed to this year’s World Cup; but even before the World Cup, football card sales experienced double-digit increases.

If we look at the Top 10 of all the cards that have sold the most in the Spanish market between January and August 2018, we see that 8 of the 10 products correspond to football cards. And 7 of those 8 items belong to the collectibles of the Spanish League. We only find one product corresponding to the World Cup of Russia and two that have nothing to do with this sport: the collections of Gorjuss and Invizimals. This Top 10 shows that the domination of the League's cards is overwhelming.

The World Cup has less pull than the League

The attraction for collectible football cards has also been reflected this summer in the World Cup cards, whose sales have skyrocketed by 90 percent compared to the figures that were recorded four years ago, on the occasion of the World Cup in Brazil. Sales were concentrated mainly in April (when the collection went on sale) and June (the week in which the competition began). But when Spain was eliminated (July 1), interest in the competition fell sharply and that was reflected in sales.

Nevertheless, so far this year, the World Cup cards represent less than 30 percent of the total sales of football cards.

New League, new cards

In August, once the World Cup has ended, new cards of the next competition begin showing up. The new item of Panini, La Liga Santander 2018-2019 Blister of 10 Envelopes, broke into the market with force and directly reached the second position of best-selling toys in Spain during the month of August, coinciding with the start of the Football League. Its price stands at 6.90 euros.

This product continues to perform well in September, as it is in these days when collectors want to begin to complete their albums. In addition, the fact that many households bought stickers of the World Cup during the summer has caused slightly delayed sales of the  cards of the league 2018-2019, so we can expect to see continued, significant growth in the coming weeks.

A lot has happened in the last six months since the big announcement that Toys‟R”Us would be liquidating its stores in the U.S. Based on some of the news reports in mid-March, when this was first announced, you might have predicted that the sky would have fallen by now and the toy industry would be a shell of itself.

Well, that didn’t happen. Why not?

As I wrote in my blog back in March, NPD found that when parents bought a toy last year at Toys‟R”Us, over 70 percent of them were purchased for a specific occasion like a birthday or Christmas. In addition, 70 percent of toys purchased at Toys‟R”Us were purchased because kids asked for the specific toy or brand of toy. Even without Toys‟R”Us, Christmas and birthdays aren’t going away, and kids will continue to ask their parents and grandparents for their favorite toy and get it.

As we move into the most important time of the year when nearly 50 percent of all U.S. toy sales occur, the question is, what impact will the liquidation have on the U.S. toy industry’s holiday season? After all, parents bought a lot of toys during the 16 weeks of the liquidation and are hoarding them to give away at Christmas, right?

Well, yes, but to a small degree.

In a recent study that NPD conducted in the U.S., 83 percent of consumers who bought a toy during the liquidation at Toys‟R”Us reported that they already had or would give the toy away by the end of September. That leaves only 17 percent who reported that they would be giving the toy away some time in Q4. And, interestingly, the #1 occasion that the liquidation toys were purchased for was for a birthday. Christmas came in third place, behind “No Special Occasion.”

What does this mean to the toy industry in Q4? It’s pretty simple actually. Based on my estimates, pantry loading will have a negative impact of 1.4 percent on Q4 sales. In addition, we can expect to see about 20 percent of Toys‟R”Us sales simply evaporate. This translates to an additional negative impact of about 2 percent. The total negative impact on Q4 should be about 3.4 percent if everything else remains status quo compared to last year.

But, that’s the big question mark. Is everything going to remain status quo compared to last year?

I think the Toys‟R”Us news has re-energized the toy industry. Existing toy retailers are making bigger investments in toys, new toy retailers are emerging, and manufacturers are looking for new avenues of distribution. Another likely outcome is that toy manufacturers will become more creative and we’ll see more interesting and unique products coming down the pike.

If there is one thing I feel confident about, it’s that the toy industry will be anything but status quo in Q4.

Last week’s news of Toys“R”Us shuttering its doors sent shockwaves throughout the toy industry, as noted by my colleague, Juli Lennett, in her latest blog. The global toy industry is bracing itself and trying to work out what this ‘reset’ will mean and how it will navigate the upcoming months. And the question on everyone’s lips right now is who will benefit from Toys “R”Us demise; and if it happens, which retailers will see this disruption as an opportunity, country by country. 

In the U.S., Toys“R”Us captures in excess of 90 percent of toy specialty sales; in Europe, it accounts for about one quarter of the toy specialty market. Toys“R”Us is the largest toy specialty retailer in Europe, but it is not the only specialty retailer. In fact, there are no significant international toy chain stores that cross all of Europe. Rather, in each country, we have local players with up to six major chains as is the case in France, which means the specialty trade is not going to be orphaned if and when Toys “R”Us closes down or fails to secure a buyer. These other specialist chains are in a prime position to pick up some of the Toys “R”Us business.

Beside specialty retailers, online seems to be an obvious destination for the Toys “R”Us shopper.  As described by Juli Lennett, the typical Toys “R”Us purchase is either occasion-driven or from a direct request from the child.  As such, the shopper will easily navigate online to find a replacement for its closed Toys “R”Us store and might order online for sheer convenience.  You have to remember that online toy sales comprise a bigger piece of the pie in Europe compared to the U.S. In the U.S., approximately 24 percent of toy industry sales happen online; in Europe, it’s 30 percent. Every brick and mortar toy retailer today has an online presence, but to compete with online pure players, brick and mortar retailers serious about the toy category will have to combine strong pricing and promotion with state-of-the art digital marketing to compete effectively in this space.

This reset is also an opportunity for other channels to step up to the plate – I tend to see the glass half-full rather than half-empty.  What I mean is that on the whole, grocery stores in Europe have been considering the toy aisle as a loss leader and footfall driver in the last quarter of the year.  They have historically only carried a small amount of toys in spring and summer, with increased inventory over the holidays.  What I think is that smart grocery retailers will look at the Toys“R”Us closure as an opportunity – like the U.K. grocers did when Woolworths, then the second largest toy retailer, went bankrupt there in 2009. In Europe, as online sales continue to climb, the one channel that is not as impacted by online sales or footfall decline is food retail. Increasing toy inventory as a year-round proposition would surely compel shoppers to purchase more within this channel. I imagine these retailers are beginning to consider increasing this space to offer more toys and drive their non-food trade. 

Beyond grocery, other non-traditional retailers should consider doing the same. For example, outdoor and sports toys could be carried with success by sporting goods retailers, while arts and crafts toys could be carried by hobby and office supply stores (more than they do today). Major manufacturers are also already targeting food and non-food discounters, so taking this approach isn’t a stretch.  

While the Toys“R”Us outcome is not the news we wished to hear, and the industry will encounter some turbulence as it navigates its way through this period of flux, manufacturers and retailers do have a chance to view this situation as a global business opportunity.

The news last week that Toys‟R”Us will be closing all its stores in the U.S. has been a blow to the toy industry. Employees at Toys‟R”Us, many of whom we consider our friends, will lose their jobs, and children and parents will lose an experience they so loved, of going to a toy store that had everything under one roof.

What has disheartened me above all is that analysts have been saying the toy industry will decline by 15-20 percent in 2018. These numbers defy both math and common sense. Parents that would go to Toys‟R”Us for a birthday or Christmas gift will not stop buying that gift; they will likely go somewhere else for it. Consumers will not put an end to buying toys because their local Toys‟R”Us store closed its doors. That just defies logic.

Let me set the record straight, using actual facts and figures, on what will likely happen to the toy industry when Toys‟R”Us closes all its doors in the U.S.

Toys‟R”Us represented about 12 percent of U.S. toy industry sales in 2017, according to NPD’s Consumer Tracking Service . Assuming that every single parent that would have purchased a toy from Toys‟R”Us now decides their child isn’t getting a toy this year because Toys‟R”Us isn’t there anymore, the worst case scenario is that the toy industry will decline by 12 percent.

Also worthy to note, NPD found that when parents bought a toy last year at Toys‟R”Us, 70 percent of them were purchased for an occasion like a birthday (23 percent) or Christmas (34 percent). The other 30 percent bought a toy for no special reason. In addition, nearly 70 percent of toys purchased at Toys‟R”Us were purchased because kids asked for the specific toy or brand of toy.

Let’s crunch the numbers a bit more and assume some parents instead choose to buy that toy from another retailer. We can safely assume that parents will continue to buy for occasions like a birthday and Christmas, and we can assume that some parents will still buy presents for no special reason. Let’s apply the 80/20 rule and say that 80 percent of those Toys‟R”Us parents actually do still buy toys. If this happens—which I argue is the more likely scenario—the organic decline for the total toy industry will be in the low single digits.

Since I have your attention, I’d also like to address the recent conversations that have emerged suggesting the demise of Toys‟R”Us is due to the “fact” that kids aren’t playing with toys any longer. The fact of the matter is the global toy industry* last year was the largest it has ever been in the history of the industry. In the U.S., the toy industry has grown 4.5 percent on average over the last three years. Does that scream “kids aren’t playing with toys?”

Technology has impacted toy sales, without a doubt, but the industry has a track record of responding and recuperating. When tablets were all the rage, we saw a slowdown in toy sales, but sales have recovered. In 2017, the video game industry had a great Q4 and was likely a contributor to the slowdown of toy sales during that quarter. I expect toys will recover again, as the video game industry also goes through cycles. Let’s remember that kids are not myopic in their “play.” They have the innate ability to enjoy playing with toys, games, and video games as well as watching television, playing sports, sending snaps, and getting good grades. It’s amazing they can do all these things, and it’s important to not lose sight of the fact that each activity holds its own role in their development.

The noise level is rising in light of the Toys‟R”Us news to the point where much of what we’re seeing in the press is being over exaggerated; and this has to stop. Collectively, we must focus on the facts, and use them to inform our decisions. As an industry, we also have to plan for a successful holiday season, as there will be plenty of amazing new toys to spark our kids’ imaginations.

*Source: The NPD Group/Retail Tracking Service/G11

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.  

The first ‘Black Friday’ email landed in my inbox with Thanksgiving still a week away. May I just say that I think this is a really bad idea? What is the point of discounting toys in the weeks and days before Christmas? The global toy industry earns 50 percent of its revenue in the last quarter of the year, so why is there a need to cut margins right at the moment when parents and givers want to (and will always) buy toys? The fact is, toy sales during Black Friday declined in UK, France, Germany, and Italy last year; only Spain – where the adoption of the event is very recent – saw an increase, so it is likely that they will follow in the footsteps of the other European markets.

What we should collectively think about is how to drive growth for the global toy industry outside of the peak season. How can we convince consumers to part with their cash in the summer, for Easter, for back-to-school, for their holiday trips, for children’s day or grandparents’ day, and so on… anything other than the run-up to Christmas!

In fact, there are some wonderful examples of occasions around the world which have grown the toy market. In my opinion, the best one for a long time has been the ‘Toy Cat’ event in Australia. Pure invention from retailers, the event started with a dual purpose: clear the decks to make space (discount) and launch brand new autumn/winter toys in the middle of their (cold!) winter as kids spend more time indoors. Though it has now fizzled out a bit as some retailers have changed their strategy, it worked well for a number of years, so much so that the ‘toy cat’ period was almost as big as December at one point.

There are many other examples from around the world where we see an uplift in toy sales: Children’s Day in Mexico; Women’s Day and Men’s Day in Russia; Chinese New Year and Singles’ Day in China; the Epiphany in Spain and Italy; and Saint Nicholas’ Day in the Netherlands and Belgium. In truth, we ARE full of good ideas and initiatives, and I have not even mentioned advent calendars or movie releases. But please, don’t discount toys in November. If anything, it brings sales forward a little and empties stores for the next two weeks. There has got to be another way.

I’m sure many of you have felt this same feeling as I have… I might look older on the outside, but I feel like I’m still 25 on the inside. I’m a grown woman with teenagers, but sometimes I want to act more like them than the Baby Boomer I am!

And, I think many Baby Boomers like me feel the same way.

Baby Boomers (born between 1946-1964) represent 74 million or 23 percent of the U.S. population today. When the last of us reaches retirement in 2029, let’s call it age 65, there will be 21.6 million more Americans who are 65+years old than there are today. That’s growth of 42 percent for the population of ages 65+ from 2017 to 2029. That’s a heck of a lot more people needing products and services suitable for a senior citizen’s lifestyle.

What does this have to do with KGOY or AGYO? Kids Getting Older Younger (KGOY) has been a topic in the toy industry for at least a decade. The idea is that kids are aging out of toys at younger and younger ages—that’s a topic I could debate, but we’ll save that for a later time.

AGYO is my made-up acronym for a new revolution—Adults Getting Younger Older. I think there are many of us who are going to do whatever we have to in order to delay getting old. We’re taking better care of ourselves and want to continue being active, enjoy life and, more importantly, have lots of fun in retirement.

I think the opportunity is tremendous for many industries to start thinking about products specifically for the aging Boomer population. Not only will this amazing group of people have a lot of time on their hands, but they will want to have fun, keep their brains active, and they have money to spend. What better way to spend your time as you get older than with play. Play doesn’t have to be for the young; let’s get people thinking about play for everyone, including seniors.

Here’s my call-out to the toy manufacturing community: can you start thinking about the future now? Can you think about how to better serve the Boomers with toys and games just for us? We are going to want you to think about us when you design new products, and we will want to feel special. We will not want the same toys and games that you make for an eight-year old. I’m hoping that by the time I retire, there will be a whole bunch of new toys, games, and puzzles that will interest me and my 74 million “young at heart” friends that allow us to have the fun we deserve. Who knows, you might just be able to carve a new niche for yourself. Better get crackin’.

It’s hard to think about the topic of back-to-school when my kids just wrapped up school only two weeks ago here in New York. But, alas, we at NPD have already started to talk about it as retailers are preparing for the next big shopping season for many industries, from apparel to school supplies.

But, what about toys?

For the toy industry, August in particular is a bit of drag. Though this is a period when many new toys are being introduced to the market, sales reach a low point. In terms of absolute dollar sales for the toy industry, August tends to be among the bottom two or three performing months of the year, right there with January. While the product changeover on store shelves may factor into this, I think the primary reason is quite obvious: back-to-school expenses. For many families, back-to-school can suck up every ounce of a family’s disposable income, and then some. For that moment in time, a pair of shoes, a new outfit, and school supplies become the more important decisions.

Does this mean the toy industry should walk away? Absolutely not. There is a place for the toy industry during this period, and it can support the back-to-school initiative.

Educational toys—particularly flashcards—sell more than usual during the back-to-school season. Digging a little deeper, these educational toys are slightly overdeveloped for preschool children and lower income households (<$50K/year) on a bi-annualized basis. My theory is that lower income families of preschoolers are looking for ways to educate their children through inexpensive toys, perhaps because their communities don’t offer free preschool as an option.

Can the toy industry do more, particularly during back-to-school, by creating more fun and educational preschool toys? Can retailers, particularly those in lower income neighborhoods, carry more inexpensive, high quality preschool education toys? There are back-to-school related opportunities for the toy industry that just might benefit everyone.

In early April, I searched for fidget toys online. They were in the news thanks to Autism Day, and I was curious to see what was available on my local site in France. There were very few, and they were relatively expensive, at €20 each.

Three weeks later, my son discovered fidget toys via viral Instagram posts and asked me to buy one for him. I went online again. Suddenly there were more than 20 to choose from, and the price had dropped from €20 to €10, or even less if I could wait for them to ship from China.

What happened?

In a nutshell, social media happened.

In the past, it would have taken weeks for a hot trend to filter into my remote part of France and into the consciousness of my son and his friends. It would have taken many more weeks for that toy to become available in my area. The manager of my local toy store once told me, “We are a bit slow with hot trends here. We need to wait 6 months after it takes off in Paris.”

Not anymore.

Today, my kids absorb trends via social media at the same moment as a child in Tokyo, New York City, or Buenos Aires. And that is upending the business. The product cycle has been shaken up by the internet; social media has put it on fast forward.

Today, the toy industry must be more reactive, more adaptable, and, above all, faster. Design, production, selection, marketing, and performance tracking are on a tighter schedule than ever before. Regional differences are being flattened as viral sensations cross borders indiscriminately.

We’ve already seen the impact with Pie Face and Speak Out. We’re now seeing it with fidget toys and the LEGO tape Nimuno Loops. Innovative products are picked up by big manufacturers, and then—in record time—pushed out globally to stunning success. We’ve seen it in a slightly different iteration with L.O.L. Surprise! Dolls, a toy inspired by unboxing videos and then pushed to market at break-neck speed. Again, to great success.

But I suspect that what will also happen is that fads will hit and burn out faster. Gone are the days when fads could rely on the slow percolation into remote regions. Just as product cycles have grown shorter, so will life cycles. Retail prices will fluctuate accordingly.

Unlike a decade ago, my son will tire of fidget toys at the same pace as his peers in New York City, Tokyo, and Buenos Aires.

Kids today are being raised in a technologically advanced digital world that provides the ability to personalize and customize their gaming and non-gaming online experiences.   87% of Canadian kids engage in Technology Play (on a computer or video game) and 77% in Mobile Play (on a smartphone or tablet) according to NPD Canada’s Kids Share of Time and Wallet Study.  Not only can kids create their own profiles for their favourite games and customize their characters, but in some instances they also have the ability to impact the gameplay experience themselves. 

A great example of this type of personalized gameplay is best illustrated by the online game, Roblox, which capitalizes on the increasing demand by gaming consumers for user-generated content, or UGC. Roblox has a whopping 48 million monthly visitors playing the over 22 million user-generated online games that have been created by the players themselves.  Given the growth Roblox has been seeing in both their user-generated community as well as the number of monthly players, they recently announced a licensing deal with toy manufacturer Jazwares, to launch a line of action figures and collectibles which are in stores now.

Action figure collectibles grew 60% in 2016 vs a year ago (NPD Canada Retail POS Toy Industry data), underscoring how important digital & online content is in fuelling merchandise sales, particularly in toys.  Many of the most popular selling collectibles in Canada are based on online games or digital apps such as Minecraft and Five Nights at Freddy’s.  Stikbot, a line of action figure collectibles by Zing Toys that allow kids to create their own stop motion videos to share online using the Stikbot Studios app, rose to be one of the top selling lines this past Holiday.

It is clear that kids are growing up with this technology, they know how to use it and it gives them the platform to not only be creative but share their inspirations with their friends and fellow gamers.  We expect to see more growth of these types of toys in the future as technology allows toy manufacturers and developers to integrate online and toy experiences in even more creative and possibly unexpected ways.