Date February 2021
- The toy industry fared well with many families quarantined at home during the COVID-19 pandemic. Toy sales increased 19.1% in the first three quarters of 2020.
- Toy giants Mattel and Hasbro experienced exponential growth for the holidays beating analyst expectations.
- Sustainable toy trends are gaining traction as consumers become more environmentally conscious and willing to pay for eco-friendly toys.
- Educational toys remain popular and YouTube and other media continue to drive demand and sales.
approximate net recovery on cost
Pandemic Boosts Toy Sales: The toy industry fared well in 2020 amid the COVID-19 pandemic. Growth was driven in large part by widespread lockdowns and school closures, which forced many families to stay home. From January through mid-March, total toy sales were flat; however, sales increased 17% in the weeks following once non-essential businesses and schools had largely closed in late March. This initial boost was aided by an additional 27% increase in total sales from April 19 to August 1 when federal stimulus checks were distributed.
Despite supply chain disruptions in most economies, sales of outdoor and sports toys grew 31%, games and puzzles grew 42% and building sets grew 30% in the first three quarters of 2020, according to data from market research company the NPD Group (NPD). Outdoor and sports toys, which represented 36% of sales, remained the industry’s largest category, with almost $3.5 billion in sales for the same period. NPD data showed overall toy sales increased by$2.2 billion, or 19.1%, to $13.7 billion in the first three quarters of 2020 given the increase in demand.
Holiday sales did not disappoint and largely beat projections for the segment. Toy giant Mattel experienced its best end-of-the-year quarter in more than 10 years after toy sales increased by double digits in the fourth quarter of 2020, outpacing the industry, according to CEO Ynon Kreiz. Mattel’s overall net sales increased 10% to $1.63 billion for the quarter ended December 31, 2020, beating estimates of $1.58 billion, according to market data company Refinitiv. Sales for Barbie, Mattel’s biggest brand, posted the largest growth of the company’s product lines, with sales surging 16% year over year. Mattel’s Hot Wheels also grew 13% in the fourth quarter.
Similarly, Hasbro reported a 3.6% increase in comparable holiday quarter revenue over 2019, also beating analysts’ estimates. According to NPD, the industry’s top selling toys of the first three quarters of 2020 included products from L.O.L. Surprise!, Barbie, Star Wars, Marvel Universe, Pokémon, Disney Frozen, Nerf, Hot Wheels, Little Tikes and Paw Patrol. Combined, the top 10 products grew 29% from 2019. Amazon Prime Day also contributed to industry growth. The annual shopping event was pushed back from its traditional mid-July date to mid-October, benefiting from the extended online holiday season and generating a sales increase of 54% over 2019.
Gordon Brothers has observed some hot items in out of stock positions over the course of the year and into the holiday period, including popular Lego sets, puzzles, games, and outdoor toys. These are indicative of some lingering supply issues as consumers continue to entertain their kids largely at home.
Sustainable Toys Gain Traction: As children become accustomed to changing their toy preferences more frequently, toy and game manufacturers are introducing new products on a regular basis, focusing on sustainability, innovation, technological advancements and digital products. Although plastic toys still account for 90% of the toy market, the demand for eco-friendly toys is increasing. Environmental-friendly products, such as wooden baby toys, plastic-free games, recycled plastic games and organic cotton stuffed animals are gaining popularity. Approximately 73% of shoppers said they would alter their spending habits to support sustainable brands, and millennial parents are the key target group for the movement, according to information published by market measurement firm The Nielsen Company.
Top toy brands including LEGO, Hasbro and Mattel are making efforts to achieve 100% sustainability by 2030. LEGO plans to make 100% of its packaging sustainable by 2025 and uses plant-based plastic for certain products, such as its LEGO Treehouse set. In 2019, Hasbro announced it was phasing out plastic packaging by 2022. The company has also published it goals of reducing energy consumption by 25%, cutting landfill waste in half, reducing greenhouse gas emissions by one-fifth and reducing water consumption by 15% over the same period. In 2020, Mattel introduced new 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 began using 93% recycled materials for packaging.
At the same time, smaller and newer brands have begun producing environmentally conscious toys, such as Eco Kids, Green Toys, Legler, Le Toy Van, PlanToys and Tegu.
Educational Trends and Media Influences: Some of the top electronic toys for 2020 included tablets, drones, robots, smart watches, cameras, virtual reality products and interactive pets as well as coding and programming products. Additionally, parents opted for stimulating and educational toys with a focus on “STEAM” skills, which include science, technology, engineering, art and math. The global educational toy market grew 10.1% in 2020 and is set to register an incremental growth of $24.3 billion over the next five years, based on data from market research company Technavio.
YouTube-based influencers continue to drive toys sales with their “unboxing” videos. According to Forbes magazine, YouTube’s three highest earners brought in a total of $76.5 million between June 2019 and June 2020, garnering millions of followers and billions of views. Of the platform’s 100 channels with the most subscribers, 20% are about toys. Ryan’s World, Dude Perfect and Guava Juice are among the toy brands founded by YouTubers and promoted on the website.
These products are driving sales of tie-in items including games, crafts, figures, vehicles, slime and plush toys. For example, Jazwares LLC, which makes toys and products based on licensed properties, such as “Fortnite” and “Peppa Pig,” released merchandise based on three YouTube properties in 2020: Blippi, a preschool education-and-entertainment character with more than 21 million subscribers on the video platform; toy-unboxing and reviews channel CKN Toys, which has 14.7 million subscribers; and Cocomelon, a channel known for nursery rhymes, which has 74 million subscribers.
The YouTube marketing world will continue to be a major catalyst for toy sales, as over 95% of teens have access to a smartphone, and about 60% of parents claim their children aged 12 or younger interact with smartphones. Additionally, about 81% of parents allow children aged 11 or younger to watch YouTube, according to information from the Pew Research Center think tank in 2020.
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Reference sources: FORBES, THE NPD GROUP, THE NIELSEN COMPANY, CNBC, PEOPLE, PR NEWSWIRE, SUSTAINABLY CHIC, MARKETPLACE, EURONEWS, CREDITNTELL