The resilience of the global toy business
In this millennium there have been three really tough periods of time so far: the aftermath of the dot com crash and 9/11 at the start of the millennium, the global financial crisis of the late noughties and the COVID-19 pandemic of 2020. During all three periods of time global toy sales performed well, especially in comparison with other categories of consumer goods. The primary reason for this resilience is the fundamentally sound foundation of the toy business: that being the desire of parents (and grandparents) to bring joy to their children and to aid their development. Unless the entire fabric of global society changes, it is hard to see how this underlying demand driver for the toy business would not continue.
When you add onto this the massive advancements in economic development in countries away from the traditional core toy markets of Western Europe and North America, the future both short term and long term looks safe for the toy business. In particular, the growth of consumerism in China offers the biggest growth opportunity of our generation for consumer products businesses of all kinds. Other developing economies of the world are growing fast as well though, and this again bodes well for the prospects for the toy business.
Based on the Kids Brand Insight’s analysis, the prospects for growth for the global toy business look good for each of the next ten years. To look at specific factors affecting the outlook for 2021 though, there are some key trends, opportunities and challenges we can consider:
The pandemic – what happens in 2021
This is obviously the biggest short term question facing mankind. The good news is that some kind of reduction in the severity of the health crisis is likely looking into the first six months of 2021. Vaccines come online from various sources and admittedly with probably varying effectiveness. There is a realistic prospect of most major toy markets being able to inoculate the most vulnerable in their societies by Easter 2021. That should allow for a more normal back half of 2021. Either way though, whether vaccination is effective or not we can expect a good year for toys in 2021. Should the vaccination be effective and should humankind be able to enjoy a normal summer, then year on year toy sales could be down for the first half of the year. However 2020’s unseasonal sales boom should be viewed as a one off, and comparisons with 2019 would be more appropriate to gauge 2021’s sales performance.
Should the pandemic largely lift by summer 2021, we can hopefully look forward to a summer boom in toy sales off the back of a raft of toyetic movie blockbuster releases. Major movie studios have a backlog of output waiting to come forward to cinemas. Even if cinema attendance is down versus pre-pandemic expectations then the movie studios have at least had time to plan for digital distribution as a primary way of getting their films to market. In fact, one major positive impact of the pandemic for the global toy business has been the meteorically successful launch of Disney+ with more than 60 million subscribers worldwide already. It took Netflix around seven or eight years to get to this level of subscribers. This gives the biggest children’s and family entertainment movie producers a fantastic Plan B, and ensures that any toy company’s signing up for licenses can be sure of some level of global impact with or without movie theatres re-opening in 2021.
Trade shows & Sales cycles
Clearly the selling process will be more challenging for peak season 2021 with the absence of the major toy trade shows in January and February this time round. Trade shows such as Spielwarenmesse® are so important in terms of creating and strengthening relationships between buyers and sellers on a massive scale. They also offer an immersive and fun environment for buyers to preview thousands of buyers with as little stress or boredom as can be possible when looking at so many products in a short space of time. But again, technology is offering us a manageable (albeit inferior) alternative. Even 10 years ago it would have been very difficult to share the magic of new toy products with buyers without face to face meeting. Now at least we have something. We will all breathe a collective sigh of relief when normal service resumes, but at least for now we have some way of presenting our new products for 2021. Moreover, with Spielwarenmesse® rescheduled for the summer we could find our industry having a significant boost after a really tough period of time.
Accelerating growth in online retail
One area of significant impact coming out of the pandemic is the acceleration in the shift from physical to online retail. Some of this acceleration is likely to fade away once societies around the world can re-open their physical retail en masse and without restriction, but there is no doubt that THE major winner in toy retail so far due to the pandemic has been Amazon.
Undoubtedly Amazon will continue to be a major part of the market for 2021. Time will tell how much of the sales Amazon garnered from families in lockdown in 2020 will stay with them into 2021.
For the critically important and much-loved specialist toy retailers, 2020 has been beyond tough in many ways. For those companies with advanced online offerings there has been some opportunity but compared with the online power of Amazon and even the mass market multi product retailers it has definitely been tough to compete. Here’s hoping 2021 is better for toy specialist retailers around the world.
Whatever happens in 2021, we should be thankful for working in an industry which is fun for us and for millions of children who play with our products around the world. We should also be thankful above all for the resilience of the toy business, long may it last.