Brits spend the most on toys per child compared to their European neighbours but with flat sales last year, the industry is hoping film releases such as The Amazing Spider-Man 2 this Easter and new developments in outdoor and sports categories will give the sector a boost.
After electronics, such as tablets, the fastest-growing categories during 2013 were outdoor and sports toys, recording a 10 per cent value growth, according to analysts at the NPD Group.
That represents an increase of £37m on 2012, making the outdoor toy market worth just under £400m and 14 per cent of the total British toy market.
An unusually warm summer helped sales, which are usually highest close to Christmas. “Outdoor is a category with the advantage of having strong sales outside of Christmas and therefore helping to cushion the seasonal nature out of the business, which sees close to half its sales happen in the last quarter in the UK,” says Frédérique Tutt, toys global industry analyst at the NPD Group.
In 2013, December accounted for 15 per cent of annual sales, but June and July made up 14 per cent each in the same year. Toy sales at retail were worth £2.9bn in 2013 in an industry where British children under 12 years receive £350 worth of toys per year or a massive 39 toys.
According to Tutt, growth potential for the outdoor category could come from ‘blasters’ – toy guns that fire foam balls, discs or darts.
Hasbro’s Nerf products dominate the top selling outdoor toys chart, with six items making the top 10 and the number one outdoor toy being the Nerf N-Strike Elite Strongarm Blaster.
Tutt says rival manufacturer Mattel is launching a blaster to compete with Nerf, while Nerf is continuing to innovate with a video option, which will launch this year, where players can film a battle and share the video with friends.
In the top best-selling toys of the total market there is less dominance from one brand or manufacturer and a mixture of tech and non-tech toys.
Although tech toys are among the best selling toys in Europe, with value increasing by 27 per cent in the UK in 2013 compared to 2012, collectible figures such as Lego Minifigures, Moshi Monsters and Ninja Turtles all appear in the top 10.
Furby is the number one selling toy of 2013, a title it last achieved in 1999.
Stuart Grant, buying director at toy retailer The Entertainer, says: “Traditional toys will never go away and there will always be entrants and exits or people stealing focus from our core demographic. Things come and go.”
But he believes it is not a case of classic toys fighting against the technology toys. “It’s about how the industry moulds itself around the trends that the outside world is experiencing. We have to work out ways that we can deliver that experience of a product in traditional toys.”
However, there are two sides to the technology trend: the expectation and needs of children and those of their parents.
“The price of technology has to be at a level at which it can be integrated into the margins of the toy sector at price points which people are looking for,” says Natasha Crookes, director of communications at The British Toy & Hobby Association (BTHA). “To a certain extent, children expect more from a toy these days than they did before.”
The BTHA promotes different types of activity as part of its ‘Make time to play’ campaign, which includes an ideas app for parents. The campaign’s message to parents concerned about children spending too much time in front of screens is that there should be an opportunity to do both for a “balanced play diet”.
Crookes adds: “Technology is not bad but it does need to be balanced with lots of different activities so that kids can learn skills they need for the rest of their lives.”
Tutt says: “Both categories have managed to grow alongside each other. At Christmas, a child might receive a Lego set and a robot that is sophisticated and can interact with his or her iPhone or tablet.”
The factors that affect toy sales can vary. In the case of licensed products, the industry relies on blockbuster films. The NPD Group’s analysis shows that licensing makes up a quarter of the toy industry and that 2013 was a particularly bad year. The lack of leading new entertainment properties resulted in a loss of £44m in overall licensing revenue compared to 2012. But this year is set to be a top billing one for films.
Spider-Man 2 is released over Easter and Transformers 4: Age of Extinction, How to Train Your Dragon 2, Postman Pat: The Movie and Teenage Mutant Ninja Turtles are due for release later this year, while The Lego Movie has taken £31.6m at the UK box office to date.
While these films are likely to create peaks in the toy sales that follow, many characters are present throughout the year, Tutt points out. “Ninja Turtles is on TV every day. This is a steady business and retailers want categories like that.”
Crookes adds that film franchises help build faith in toy properties: “It’s hard for retailers or manufacturers to take a gamble on something unless it’s tried and tested. The big name movies are the things the industry is confident in.”
The NPD Group also suggests the British toy market has been affected by an increasing number of promotions over the past five years and can struggle to grow as a result. Grant says: “The internet has given consumers the ability to have full visibility of pricing across the whole retail landscape: that has changed promotional strategies for ever.”
He suggests that toy property owners should work with retailers to provide exclusives, which would avoid shops undercutting each other on the same products.
Tutt agrees that there could be differentiation if there were exclusive lines but says promotions are “detrimental to the toy industry because it gives consumers the idea that a product is not worth what the label says. It’s when promotions kill the business.”
Pocket money toys, those priced at £5 or under, also fell by 12 per cent in 2013. Sales of these toys represent almost 45 per cent of all unit sales so any decline has an effect.
Tighter consumer spending has also affected parents, says Crookes, but with the World Cup approaching, trading cards from the likes of Panini should generate a bump in sales.
Tutt says: “There are thousands of new toys on the market, if you come back with the same one as last year without any new developments you won’t stay in the market.”
International marketing director, LeapFrog
I think there will be growth in 2014 from different areas. First is innovation. The more innovative manufacturers can be, the more excitement and desire that we build up in the industry, and the more we engage with children and parents.
Technology can engage with kids and excite parents, and leads to footfall and desire to spend in the toy industry. In the UK, the LeapPad Explorer Tablet was number two in the total market and the number one kids’ tablet in 2013.
The other key part of our industry is engaging with children at pocket money price points and introducing collectibles – this year there are the Tamagotchi and The World Cup trading cards. These bring vitality and energy to the industry on a year-round basis.
Marketing director, VTech
Last year, the biggest growth category was youth electronics. The category has had a big effect on the industry; if you look at the past five years and the top selling toys, in four out of five of those years they have been technology based.
One key strategy is looking at technology in the adult world and putting it into children’s versions when it becomes affordable. Five years ago, camera sensors from digital cameras were more affordable so we built it into a children’s version.
It is a competitive market. Retailers are competing for share, manufacturers looking to grow, while UK parents are looking at the best deals on the internet. Online has made the retail landscape a big challenge and it’s our job to predict and respond to that.