Regardless of their length of experience, toy industry professionals are well aware of an old saying that industry insiders always repeat during economic downturns: "The toy industry is not easily affected by economic cycles. Even when faced with income growth difficulties, parents will always try their best to ensure that their children do not suffer."
Review of the toy market in 2023
The above jargon seems to have lost its persuasiveness in 2023. Just as the global economy is slowly recovering from the epidemic, the Russian-Ukrainian war has further triggered tensions in the regional situation and pushed energy prices to new highs. Admittedly, many parents would rather suffer than cut spending on their children, but compared with the expenses of maintaining a basic standard of living, especially gas and electricity for heating and cooking, car fuel, household food and mortgage repayments, toys are ultimately just a discretionary consumer product. In recent years, the cost of various necessities of life has continued to rise, and the increase is sometimes quite sharp.
As the world's largest toy producer and exporter, the operation of China's toy industry is, to a certain extent, a microcosm of the world's toy market. In 2023, China's toy exports reached 40.57 billion US dollars, down 12.2% year-on-year, with negative growth for 8 consecutive months. Therefore, even though the European and American Christmas toy market remains hot and China's "Double Eleven" trendy toy products have a good sales record, the overall market consumption is relatively weak. A detailed review of market information and data shows that there are obvious characteristics:
1. Market products are in oversupply
After the outbreak, epidemic prevention and isolation measures once made toys hot-selling, attracting a large amount of capital into the toy industry, which led to a surge in the number of toy-related companies. Reflecting on the market, there are a wide variety of toy products. Whether it is newborn babies or elderly people, there are always many toys on the market to meet the needs of people of different ages.
Public data shows that in 2023, there will be more than 70,000 new trendy toy sellers on e-commerce platforms in China alone. In the European and American Christmas market, as soon as various e-commerce platforms and large shopping malls entered the fourth quarter, they rushed to launch the "Hottest Christmas Toys" shopping list for children and parents to refer to. Each list often lists dozens or hundreds of products.
As a traditional toy, building blocks now have a dazzling variety of shapes, including buildings, cars, ships, airplanes, rockets, and even flowers and fruits. There are countless toys on the market, such as electronic remote control, animation IP authorization, etc., and the market situation of product oversupply is obvious.
2. Low-price strategy has become a consensus
The global economic downturn has a great impact on consumers' willingness and ability to buy toys. In 2023, both e-commerce and physical stores have vigorously launched low-priced products to attract consumers. This is an example. The list of "the most popular toys for children" given by Amazon, the world's largest e-commerce platform, has several products priced at less than $10, such as the Benzem 28-pack children's pull-back car, which is only priced at $9.99. Larger products such as the EsiPlay slot car track set, which comes with 4 slot cars, 2 controllers, and a double racing game circular crossing track, is only priced at $39.99.
The business strategy of physical stores is roughly the same. In the "Top Toy List for Christmas 2023" of the large supermarket Walmart, nearly half of the products are priced below $25.
3.Innovation is the lasting driving force for the development of the toy industry
The positive signals of the toy market in 2023 are noteworthy. The sales of classic brands such as Lego, Barbie, Squishmallows, PAW Patrol, and Pokémon have been enduring. In addition, the success of Spin Master's Bitzee, MGA's Miniverse, and Zuru's Mini Brands and other miniature toy series have proved that true innovation can often drive market excitement and stimulate sales. Many companies are actively developing various mini products at low prices. On "Black Friday" (Christmas shopping mall rush day), Mini Brand toys became the top five most popular products on the day, which shows that this is a successful strategy.
New features and trends of the toy market in 2024
At the beginning of 2024, global economic activity and world trade stabilized and rebounded, and strong exports in Asia (especially exports in the technology industry) stimulated trade activities. Many countries unexpectedly accelerated their economic growth in the first quarter. Driven by the improvement of service industry activities, Europe showed signs of economic recovery. The recovery of domestic consumption in China pushed the economic growth rate in the first quarter upward. The number of non-farm employment in the United States increased by 254,000 in September, far exceeding the expected 150,000, and the economic development was positive. According to the IMF forecast, the world economy will grow by 3.2% and 3.3% in 2024 and 2025 respectively. The stable and positive macroeconomic environment will drive the continuous development of the toy market.
1. Stabilization of the toy market
International consulting firm Circana announced that in the first half of 2024, the sales of the toy market in 12 countries (the United States, Germany, Britain, France, Italy, Spain, the Netherlands, Belgium, Canada, Brazil, Mexico, and Australia) in the world only slightly decreased by 1% year-on-year; among them, the United States, the largest toy consumer country, saw a slight year-on-year decline of 0.4% in sales in the first half of this year, proving that the market decline has stopped. The overall situation of China's toy exports also proves this conclusion. From January to June 2024, China's toy exports amounted to US$18.027 billion, a slight decrease of only 0.2% year-on-year, and the toy market is stabilizing. In the market, toy cars such as Double Side Light Stunt Car, Gesture-sensitive Off-road Climbing Car, and Remote Control Spray Stunt Car continue to be popular and are one of the segments that maintain growth.
2. Strong market for older kids
Basically, older kids (Kidults) refer to adults who buy toys for themselves. They are enthusiastic toy lovers, know what they want, and have the financial resources to buy decisively. Some toy retailers actively cater to this customer group and have now reaped considerable rewards. Those who have not yet entered this market are eager to try in 2024. At present, the brilliant performance of many best-selling toys on the market is driven by the strong purchasing power of the older kids group, who are gradually becoming an important target customer group for toy retailers. Circana, an international market research agency, released toy sales data in the US market from January to April 2024. It is worth noting that the 18+ consumer group exceeded the 3-5 year old children group for the first time. In the first quarter of this year, the 18+ consumer group contributed more than $1.5 billion in sales, surpassing the 3-5 year old children group and becoming the largest toy consumer group in the United States. In the past year, 43% of American adults bought toys for themselves, mainly for socializing, entertainment and collection. It is precisely because of the strong consumption of the 18+ older children group that the US toy sales have achieved a soft landing.
In short, toy companies need to strengthen technological innovation and brand building, deeply explore consumer needs, launch products with differentiated characteristics, and explore the older children's toy market in order to adapt to the changing market demand.
