The toy industry generated 2008 revenues of $21.64 billion in 2008, a drop of 3% from the previous year. And for the first six months in 2009, category sales declined another 2%. This year's busy season for toy sales is currently underway and analysts are not expecting a spectacular turnaround, given the general economic situation. However, several analysts expect to see an overall increase in sales in 2010.
According to analyst Richard Gottlieb, the following factors will drive 2010 toy sales:
Girl-related toys will be popular again. Specifically, Gottlieb sees Barbie (celebrating her 60th anniversary), Avon’s new Madame Alexander dolls (priced at $30) and Disney’s Rapunzel as items that will score big sales next year.
Toy marketers will increase their product distribution into non-traditional retail channels. The distribution of products into stores such as Barnes & Nobles and Borders is already apparent. In addition, the pop-up toy shop trend, especially around the holidays, is proving to be an important strategy for operators such as Toys ‘R Us and Spencer Gifts.
NPD predicts that 34% of consumers plan to buy toys this year. For this season and beyond, marketers still have to convince Mom and Dad to open their wallets to make the purchase. Here are the factors that sway Mom when she’s out shopping for toys:
- The toy is something the child likes or will play with for a long time: 45%
- Budget constraints: 40%
- The toy is exactly what the child requested: 15%
The good news for the toy industry is that about 4 million babies are born in the U.S. every year and these children are steady consumers of toys through age 12. Marketers can increase sales of their products by positioning them to satisfy the demands of parents and promoting availability in new retail channels.[Sources: NPD research, Industry Outlook 2010, Youth Markets Alert, EPM.com, November 1, 2009]