Kids Brand Insights CEO Steve Reece details his outlook for the global toy industry this year.
Despite the difficult times we are going through, the outlook for the global toy trade in 2021 is good.
2020 has been a terrible year for humanity in terms of disrupting our way of life and the way we do business.
However, all indicators of Q1-Q3 results for publicly traded toy companies up to market data released in the public domain show a significant increase in the overall toy market year-over-year over nearly all years. large markets.
The resilience of the global toy trade
During this millennium, there have been three really difficult periods so far: the aftermath of the dot com crash and September 11 at the start of the millennium, the global financial crisis of the late 2000s and the pandemic of COVID-19 of 2020.
Over all three periods, global toy sales have performed well, especially relative to other categories of consumer goods.
The main reason for this resilience is the fundamentally strong foundation of the toy business: that is, the desire of parents (and grandparents) to bring joy to their children and help in their development. .
Unless the entire fabric of global society changes, it’s hard to see how this underlying demand driver for the toy industry does not endure.
When you add to that the massive advances in economic development in countries far from the main traditional toy markets of Western Europe and North America, the near and long term future looks secure for the toy industry.
In particular, the growth of consumerism in China offers the greatest growth opportunity of our generation for consumer product companies of all kinds.
However, other developing economies around the world are also experiencing rapid growth, which again bodes well for the prospects for the toy industry.
Based on Kids Brand Insight’s analysis, the growth prospects for the global toy industry look good for each of the next ten years.
However, to examine the specific factors affecting the outlook for 2021, we can take into account some key trends, opportunities and challenges:
The pandemic – what happens in 2021
This is obviously the biggest short-term question facing humanity.
The good news is that some sort of reduction in the severity of the health crisis is likely to be seen in the first six months of 2021.
Vaccines are available online from a variety of sources and, admittedly, with likely varying effectiveness.
There is a realistic prospect that most major toy markets will be able to vaccinate the most vulnerable in their societies by Easter 2021.
This should allow for a more normal rear half of 2021.
Regardless, whether the vaccination is effective or not, we can expect a good year for toys in 2021.
If vaccination was effective and if mankind could enjoy a normal summer, toy sales could decline year on year for the first half of the year.
However, the 2020 off-season sales boom should be viewed as unique, and comparisons to 2019 would be more appropriate to gauge 2021 sales performance.
If the pandemic were to escalate widely by the summer of 2021, we can hopefully expect a summer toy sales boom thanks to a string of successful toyetic movie releases.
The big movie studios have a production backlog waiting to show up to theaters.
Even though movie theater attendance is down from pre-pandemic expectations, movie studios have at least had time to plan for digital distribution as the primary means of marketing their films.
In fact, one of the main positive effects of the pandemic on the global toy industry has been the meteoric launch of Disney + with already more than 60 million subscribers worldwide.
It took Netflix about seven or eight years to reach that level of subscribers.
This gives the biggest producers of entertainment films for children and families a fantastic Plan B, and ensures that any toy company that signs up for licenses can be sure of some level of global impact with or without the reopening. cinemas in 2021.
Trade shows and sales cycles
Obviously, the sales process was more difficult for the peak season 2021 with the absence of the major toy shows in January and February this time around.
Trade shows such as Spielwarenmesse are so important in terms of creating and strengthening relationships between buyers and sellers on a large scale.
They also provide an immersive and fun environment for shoppers to preview thousands of toys with as little stress or boredom as possible by viewing so many products in a short period of time.
But again, technology gives us a manageable (albeit inferior) alternative.
Even 10 years ago, it would have been very difficult to share the magic of new toy products with face-to-face walk-in shoppers.
Now at least we have something.
We’ll all breathe a collective sigh of relief when normal service resumes, but at least for now, we have a way to showcase our new products for 2021.
Accelerate the growth of online retail
One area of significant impact resulting from the pandemic is the acceleration of the shift from physical to online sales.
Some of that acceleration is likely to fade once companies around the world can reopen their physical retail outlets en masse and without restriction, but there’s no doubt that Amazon has been one of the biggest winners of toy retailing so far due to the pandemic. .
There is no doubt that Amazon will continue to be an important part of the market for 2021.
Time will tell how much of the sales Amazon made to families stranded in 2020 will remain until 2021.
For critically important and highly regarded specialty toy retailers, 2020 has been more than difficult in many ways.
For companies with advanced online offerings there were opportunities, but compared to Amazon’s online power and even mass market multi-product retailers, it was hard to compete.
Hoping 2021 is better for toy retailers around the world.
Whatever happens this year, we should be thankful to be working in an industry that is fun for us and for the millions of kids who play with our products around the world.
We must also be grateful above all for the resilience of the toy trade, that it lasts a long time.
Steve Reece runs Kids Brand Insight, a toy and game consulting firm that has helped more than 100 toy and game companies build brands and increase revenue from export sales. They have also delivered millions in manufacturing cost savings through new factory finder services. | Publication of Outlook 2021 courtesy of the online magazine Spielwarenmesse Play spirit