- COVID-19 pandemic-driven demand continued in 2021, with toy, game and
hobby stores’ sales up 39% over 2020.
- Toys ’R’ Us made a comeback in 2021 while Target, Walmart and Amazon
continued to dominate in market share.
- Imaginative and interactive toys generated the most growth.
- Manufacturers have doubled down on sustainability initiatives in the
- While the toy sector is highly seasonal, rising fuel and food prices resulting
from ongoing inflation in the U.S. may put pressure on sales in the near
Sales Trends – U.S. Toy, Game & Hobby Stores
COVID-19 Pandemic-Driven Demand Continues: The toy industry’s strong performance in 2020 continued in 2021, largely driven by increased time spent at home because of the ongoing pandemic. Aided by government stimulus checks and the Child Tax Credit, year-over-year dollar sales increased 13%, or $3.2 billion, from 2020, according to research firm NPD Group.
Unit sales and average selling price increased 8% and 4%, respectively,
during the same period. The top brands of 2021 included Pokémon,
Barbie, Star Wars, L.O.L. Surprise!, Fisher-Price, Marvel Universe, Nerf,
LEGO and Little Tikes. Outdoor and sports toys remained the largest
category with $5.9 billion in sales in 2021, while explorative and other toys
had the largest dollar gain with an increase of $557 million. The industry
benefited from fewer promotions, less price sensitivity and consumer’
trading up to higher-priced products in 2021, according to The NPD Group.
Toy giant Mattel had a strong 2021 with net sales up 10% compared with
2020 . Hasbro reported similar gains with revenue up 17% to $6.42 billion
and net earnings up 93% to $428.7 million . Toy companies found creative
ways to connect with consumers to make the holiday shopping experience
easier amid continued pandemic-related concerns. For example, Hasbro
hosted its first virtual livestreamed toy event on a microsite and the
brand’s social media channels ahead of the 2021 holiday season. Viewers
could browse and purchase the company’s toys and games directly while
watching product demonstrations. Livestream shopping events like these
have grown in popularity over the past few years, further boosted by
ongoing pandemic precautions, according to digital news source Marketing
Battle for Market Share: After closing all U.S. stores in 2018, iconic toy
company Toys ’R’ Us is making a comeback under the new ownership of
brand management firm WHP Global, which acquired a controlling interest
in the company in March 2021. Toys ‘R’ Us opened a two-story flagship
store inside New Jersey’s American Dream megamall in December 2021
and launched an online store in partnership with Macy’s ahead of the
holiday season. Additionally, Macy’s expects to add Toys ‘R’ Us shop in
shops in more than 400 of its U.S. stores in 2022.
Leading retailers Amazon, Walmart and Target continue to dominate the
toy market. Walmart performed well in 2021 finishing the year with a 6.4%
increase in comp stores sales in the U.S, on top of an 8.7% gain in 2020.
The company’s e-commerce sales increased 1% for the fourth quarter of
2021 and 70% on a two-year stack. Although Walmart’s holiday season
foot traffic dropped 0.1% from 2019,according to Placer.ai. the big-box
giant accounted for 25.4%, or $20.4 billion, of all orders purchased online
and picked up in stores in 2021, a volume reflective of pandemic-related
Target’s 2021 holiday season foot traffic increased 13% year over year
and 6.2% from 2019. Sales for the first half of 2021 rose 19.8% year
over year , while comparable toy sales increased approximately 40% in
the first quarter and 20% in the second quarter. Store comparable sales
rose about 10% in the third quarter, while digital comparable sales grew
29%, according to the company’s financial reports. Target added over 160 Disney shops inside its stores ahead of the holiday season, expanding its
brand visibility. Additionally, the retailer is working with children’s book
author Christian Robinson to create home goods, apparel and books for its
kid’s category. Amazon’s 2021 net sales increased 22% to $469.8 billion
year over year. The e-commerce giant’s holiday season generated a 324%
increase for its toys and games category. Amazon released its biggest
annual “Amazon Toys We Love List” yet in September 2021, which featured
over 155 items from brands including Barbie, Fisher-Price, LEGO, Little
Tikes, NERF and Play-Doh.
Major retailers kicked off the holiday season early by releasing their toy
lists by late September. Both Kohl’s and GameStop released a holiday list
in October, complete with designated toy shops. In 2021, retailers including
Kohl’s, GameStop, BJ’s and Costco competed with Amazon, Walmart and
Target for market share. Macy’s’ partnership with Toys ‘R’ Us, experiential
retailers like Camp, Inc., and value-priced chains like Dollar Tree, Five
Below, Ollie’s Bargain Market and Citi Trends increased competition.
Interactivity and Sustainability are Trending: Explorative and
interactive toys experienced the most growth in 2021, increasing 33% and
24%, respectively, over 2020. Top holiday toys from Amazon, Target and
Walmart included the Crayola Light-Up Tracing Pad, Magna-Tiles kits, the
Insect Lore Butterfly Garden kit, and LeapFrog’s interactive 100 Animals
Book. Additionally, retro toys like Lite Brite, Tamagotchi and marble sets
made a comeback during the 2021 holiday season.
Top toy brands are still focused on sustainability with LEGO, Hasbro and
Mattel continuing their efforts to become 100% sustainable by 2030.
LEGO uses plant-based plastic for certain products, including its LEGO
Treehouse set, and plans to make fully sustainable packaging by 2025.
In 2019, Hasbro announced it would phase out plastic packaging by the
end of 2022. In 2020, Mattel introduced new sustainable product lines,
including Mega Blocks manufactured from bio-based resins and a version
of its Fisher-Price Rock-A-Stack made of sugar cane plastic. The company
also exceeded its goal to achieve and maintain 95% recycled materials for
packaging in 2020.
Smaller and newer brands like Eco-Kids, Green Toys, Legler, Le Toy
Van, PlanToys and Tegu are producing environmentally conscious toys.
Rising raw material costs for toys have made sustainable materials more
desirable. The U.S. producer price index for plastic materials and resins hit
a five-year high in October 2021.
Valuation Outlook: Gordon Brothers believes appraisal values should
remain relatively stable for the toy industry given the retail sectors ongoing
momentum from the pandemic. It is likely the digital sales share for
major retailers like Target and Walmart will remain strong as consumers
have become accustomed to shopping online, via delivery or BOPIS, for
While the toy industry is highly seasonal, rising fuel and food prices
resulting from inflation in the U.S. may put pressure on sales in the near
term. The Conference Board’s Consumer Confidence Index® fell slightly
in February 2022 to 110.5, from 111.1 in January. However, the Board’s
Present Situation Index, which is based on consumers’ assessment of
current business and labor market conditions, increased slightly to 145.1
in February 2022 from 144.5 in January, indicating consumer sentiment is
relatively stable for the time being.
Should consumer confidence drop further, it remains to be seen how the
retail industry may perform for the 2022 holiday season. To the extent
economic uncertainty is still pressuring domestic and international markets
heading into the fourth quarter, net recovery values would need to be
reassessed based on current sales volume and inventory levels.
Influencers Drive Toy Sales: YouTube-based influencers continue to drive toy sales with their “unboxing” videos. The top 10 YouTube earners collectively made about $300 million in 2021, up 40% from 2020, according to Forbes. Ryan’s World, Dude Perfect and Guava Juice are among the toy brands founded by YouTubers and promoted on the website.
Among the top earners is 10-year-old Ryan Kaji of the Ryan’s World brand. In 2021, his YouTube channel had nearly 32 million subscribers and generated $27 million in profit in 2021. Seven-year-old Anastasia Radzinskaya, known as Nastya, had over 80 million subscribers across her 11 YouTube channels and made an estimated $28 million in profit in 2021. YouTube marketing opportunities will continue to play a major role in driving toy sales as more than 67% of U.S. children enrolled in schools have at least one smartphone at home, according to the 2021 Annual Status of Education Report survey. As of January 2021, about 40% of U.S. parents allow their children to have a cell phone by the age of 10, according to SellCell.
High Seasonal Demand Affects Recovery Rates: The toy industry traditionally relies heavily on holiday sales, up to 50% of which typically occur in the fourth quarter. For toy retailers, annual inventory levels and operational decisions must be managed accordingly. With a significant percentage of total annual revenue generated in the months of November and December, clients lending on toy inventory should understand the impact of seasonal values on their collateral with a significant percentage of total annual revenue generated in November and December. Seasonality and the obsolescence risk related to often fickle consumer purchasing trends in individual categories are primary drivers of gross recovery values for toys.
Inventory mix drives changes in gross recovery as higher-recovering categories like licensed action figures, games and bicycles must be managed in conjunction with lower-recovering categories including plush and seasonal toys. Miscalculations in purchasing, supply chain shortages in popular items or vendor fulfillment issues can quickly derail a retailer’s holiday season sales momentum, resulting in stock-to-sales ratio imbalances by category that can affect sales capacity for months. In turn, normal-course overstock and sales capacity issues may severely affect appraisal sell-through by category and overall sales capacity, ultimately taking a toll on already highly seasonal net orderly liquidation values.
Note: THIS PUBLICATION IS PROVIDED FOR INFORMATIONAL MARKETING PURPOSES ONLY. THE MATERIAL
CONTAINED HEREIN SHOULD NOT BE REGARDED AS ADVICE, NOR RELIED UPON TO MAKE FINANCIAL,
OPERATIONAL OR OTHER DECISIONS; NOR SHOULD IT BE USED AS A SUBS TITUTE FOR AN ASSET APPRAISAL.
ACTUAL RECOVERY VALUES MAY VARY FROM TRANSACTION TO TRANSACTION AND THE RECOVERY VALUES
REFERENCED HEREIN ARE FOR REPRESENTATIVE TRANSACTIONS WITHOUT REGARD TO SPECIFIC KEY FACTORS.
THIS MATERIAL MAY BE REDISTRIBUTED ONLY IN ITS ENTIRET Y, INCLUDING NOTICE OF COPYRIGHT. ALL RIGHTS RESERVED. ©2022 GORDON BROTHERS LLC.
Reference sources: U.S CENSUS BUREAU, THE NPD GROUP, MATTEL, INC., HASBRO, INC., TARGET CORPORATION, REUTERS, PR NEWSWIRE, CNBC, AMAZON.COM, RETAIL DIVE, FORBES, STATISTA, MARKETING DIVE