Several factors have converged to pressure the specialty toy segment. Manufacturers once found success by distributing through independent retailers. But major changes in the retail marketplace are forcing manufacturers to change their distribution and marketing models and increasingly this means a shift to the online world and new agreements with their retail partners.

The American Specialty Toy Retailing Association (ASTRA) research shows that while toy sales grew about 2% last year, the online channel in this sector saw a 22% rise. Smaller, independent retailers have seen their markets shrink as Amazon grows organically and through its arrangements with third-party vendors on Marketplace. At the same time, analysts point out that online retailers have a distinct tax advantage in many cases over traditional local bricks and mortar stores. On the other end of the distribution chain, manufacturers of specialty toys want to distribute through local retailers because it is the unique touch and feel that often sells a child or parent on a particular toy.

For the upcoming holiday season, toy marketers may be taking the following steps:

  • Developing an online strategy that protects their brand image and their relationship with specialty retailers. This may mean holding firm on minimum selling prices and selecting exactly which channels will sell the toy.
  •  Industry players expect to roll out mobile applications that will use the best features of manufacturer websites and local bricks and mortar stores.

The toy season will be in full swing before long and time-pressed consumers will be looking for items with the best prices. Manufacturers and retailers who develop intriguing online marketing tactics may succeed in driving business to specialty bricks and mortar outlets.

[Source: Mitchell, Stacy. American Specialty Toy Retailing Association. June 2011. Web. 25 Jul. 2011]