NPD Column
A focus on the UK and promotions
NPD’s Rory Partis takes a look at the rise in promotion-driven purchases and what that means for market growth in the UK.
A
t the London Toy Fair in January, NPD presented a review of the big trends of the toy market in 2013. After the presentation I chatted to a number of people who attended and just about
every single one of them commented on one particular slide. The slide in question was comparing the percentage of toy sales made on promotion in the top five European countries. And surprisingly, or unsurprisingly depending on your viewpoint, the UK came out on top as having the highest proportion of sales purchased on promotion. Looking at full year 2013, consumer panel data shows that UK toys bought on promotion accounted for 43% of the total market. That’s a big number, and in actual fact the value spent on promoted toys in the UK is greater than the total value for toys in Italy and Spain. So in the UK are we just a more deal-hungry bunch? To put that 43% figure above into context,
the European average is around one third and France is as low as 26% of toys bought on promotion. But it does also seem like 2013 was an exceptional year, or the start of a new trend in the UK. The percentage of toys bought on promotion since 2008 has usually been between 35-38% of the total toy market, but in 2013 this jumped to 43%; that’s over £100m more being bought on promotion than in 2012 and over £250m more than in 2008. When thinking about these figures we
have to consider the rising popularity of online purchases, which help feed this rise in promoted prices. In the UK, around 35% of all toy purchases are now bought online, which is significantly higher than the European average of 22%. Although, it must be pointed out that I am including Click and Collect in that online figure, which is much more popular in the UK than the rest of Europe. For all the online purchases in the UK over half, around 55% in fact, of consumers say that they are buying on promotion. This is much higher than the 33% of consumers who
28 Toyworld The NPD Group, Inc.
Promotional Sales Value (£%) FY 2012 vs. 2013
Promotion Non Promotion 56% 52% -6%
38%
43%
+12% 2012 | Proprietary and Confidential Source: NPD Consumer Panel 2013 1
buy on promotion when buying in stores. The ease of being able to search for the sales online is surely a factor in this. And whilst UK consumers state that they shop in traditional toy shops for a mix of convenience, price and the shopping experience, they choose online based on price and convenience, with 84% of online shoppers stating they go here for good prices/promotions or for the convenience of online shopping.
Looking at the data, it is also clear that the
promoted activity now is not the traditional clearance type sales, where only items that retailers want rid of are being reduced. We are now seeing promotions across a wide of range of top sellers, too. Some of the top sellers in toys saw dramatically lower average prices for 2013 compared to 2012, and these were items in the top 50 toys for the year. The average price of those items in the top 50 toys
that were not new had gone down in 2013 vs 2012. So if we look at the items which are still popular, they are selling for less this year than they were last year. Looking across the items in the top 50 we are seeing decreases in average price of as much as £14, but with quite a few of around £5 less. If we look at the all-important Q4 period in 2013, we can see that promotional activity was huge with 47% of all toy purchases in the UK being bought on promotion, an increase of +14% over Q4 the prior year. However, this period was flat in total value terms, so this large percentage of promoted purchases is not delivering market growth, and keep in mind that the total market was -1% in terms of value in the UK in 2013. And in Q4 2012 we saw total market growth of +1% with a much lower percentage of sales coming through as bought on promotion…
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