NPD Column
How will the toy industry fare in 2013?
Frederique Tutt, global industry analyst at The NPD Group, provides some possible answers to the question on everyone’s lips.
on winning recipes, and so on and so forth, to make sense of the emerging trends for 2013. The same question seems to be on everyone’s lips: how will the industry fare this year? 2012 was a disappointing year for the toy industry.
A
Retail sales declined in most countries except for the German economic zone (Germany, Austria, Belgium and Poland). Elsewhere, including the UK, sales declined in value and in volume. 2012 marked the first time in the past eight years when the five largest toy markets in Europe recorded an overall decline. There are several reasons behind the 1% decline
reported in the UK, one being the level of disposable income consumers had to spend. Sources indicated that consumers in the UK had the smallest amount of disposable income in 2012 for eight years (ONS Q1 2012); this made them more fickle and shrewd than ever. They were constantly looking out for promotions and special offers, and waited until the 11th hour to make their Christmas purchases. These promotions wrote off some market value in the UK, France and Italy, but reports from Germany indicated that promotions actually inspired consumers into upgrading their purchases, as opposed to buying the toy they originally intended to at a lower price. Christmas was also very late in the calendar, falling on the Tuesday of the 52nd week of 2012. Shoppers all over Europe and the USA delayed their purchases, and we saw a surge in sales in almost all countries we track in those last days of the year. This obviously had a strong impact on the supply chain, and prevented some retailers from taking repeat orders because warehouses were not emptying. In 2013, with Christmas falling on a Wednesday, we anticipate a similar scenario.
Another factor was the smaller impact new
products had on the market. In the UK, NPD reported an increase of 9% in the number of new products brought to the shelves, but those 45,000 new products failed to generate as many sales as the new products brought into the market in 2011. Innovation is key in our market; even if a toy is unique in a child’s life, it has to compete with music, a category which sees a new number-one single almost every week. Toys have to compete with
22 Toyworld
fter several weeks spent touring showrooms and analysing 2012 trends, the NPD team is now digesting an array of new products, range extensions, new licences, technology advances, twists
Aggressive Retail Environment Drives Promotion Sales In Most European Countries
Increase/decrease of promotional sales 12 Months to Sep-12
10 15 20 25 30 35 40 45
0 5
UK YR/YR +3% FR +18% GE +10% Source: NPD Group | Consumer Panel Service IT +9% SP -11% 41 43 37 32 25
fashion, where new collections come on the shelves every six weeks or so, and video games, where regular, new releases can make or break a licence. And since we are self-condemned to grow, somehow we need to be able to provide excitement and new reasons for consumers to consistently buy into toys. Based on our data, we are tempted to say that a
portion of the decline reported in Europe also comes from no ‘special occasions’ and a fall in impulse purchases. The impressive development of online sales all over Europe is potentially having an impact on impulse sales; when consumers buy online, they usually have a specific purchase in mind, and are less likely to browse the site before going to the checkout desk as they would do if they were in a
shop. So, if consumers are cutting down on ‘special occasions’, how can we grow the market for ‘special occasions’? Is it pertinent to create and market occasions, or to highjack occasions? We already have Mother’s Day, Father’s Day, Valentine’s Day, Halloween, Easter, what about having Toy Day? Should we extend Children’s Day to become ‘Toy Day’? Shall we promote the purchase of toys at Easter instead of chocolate eggs? Should we develop more advent calendars with toys in like they have in Germany, or even Easter calendars like the one Playmobil is launching in 2013? There must be other ways to bring toys to the forefront outside the key occasions.
“In the UK, NPD reported an increase of 9% in the number of new products brought to the shelves, but those 45,000 new products failed to generate as much sales as the new products brought in during 2011.”
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