The prediction of the future for the toy industry in the year 2022 is subject to numerous moving parts and none of them seem to want to behave. Still, it is important to prepare for future developments.
So, before getting into predictions let’s take a look at some of the forces currently in play:
- Bricks and mortar retail is struggling, particularly big box. Toys "R" Us is in bankruptcy and some have concerns about the entire concept of bricks and mortar retailing. Which of the bricks and mortar retailers will be active and to what degree is anyone’s guess.
- E-commerce is on fire and there is no end in sight to Amazon’s almost exponential growth. Ironically, they could be the future of bricks and mortar retailing as they enter the market with new ideas and fresh strategies – like having stores with no employees.
- Consumers, particularly Millennials, are less likely to drive to a store than their Boomer parents and grandparents. Why because they see a previously unrecognized opportunity cost in driving to the store and not finding what was wanted. Simply put, buying on line saves time and is more efficient.
- An online shopper needs credit and access to the Internet and the lowest economic class has neither. It is for that reason that value operators like Dollar General and Family Dollar are bright spots in bricks and mortar. Simply put, they are the place to go for the digitally and economically disenfranchised. These chains are prospering and therefore energizing an already dynamic market for low, low price items offering outsized value to lowest income shoppers.
- China is emerging as a major consumer market for toys. In fact, Euromonitor predicts that China will replace the US as the number one country for toy consumption by 2021.
Based upon that, what is the toy industry going to be like in 2022?
- Baby Boomers and Generation X'ers will have exited the management ranks with Millennials taking their place. They will change the face of retailing and manufacturing with new ideas unchained to 20th century notions of doing business.
- China will be the #1 consumer market for toys in the world. Expect to make a lot of trips to China as American toy companies become increasingly invested in the Chinese domestic toy market.
- Amazon will be the number one toy retailer in the US and much of the world.
- Toys "R" Us will still be with us but with different owners, fewer and smaller stores and some surprisingly strong competition from independent toy retailers.
- Independent specialty retail will grow as operators move into zip codes abandoned by Toys “R” Us.
- There will be a return to pre-self service retailing. Shopping will be far more person-to-person and interactive.
- 3D Printing will have evolved to the point that it begins to cut into traditional factory based production. We will see this in both digital and physical locations that can supply personalized products on demand.
- We are already seeing companies like AMC and IMAX offer digital play / entertainment experiences so look for more competition for play dollars to be coming from those who offer an experience you cannot get at home.
- Licensing will still be highly important but an oversupply of shows (think YouTube, Netflix, Disney Channel, NBC Universal, Nickelodeon and more and more) plus a continuing parade of blockbuster movies will make choosing the right license a losing proposition.
- License royalty fees will come down for everyone except Disney while the entertainment industry goes through a shakeout.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of Spielwarenmesse eG.