through Juli Lennett, Vice President, Industry Advisor, American Toys, The NPD Group
Retail sales of the toy industry in the United States grew 16% in 2020, generating $ 25.1 billion, a year-over-year increase of $ 3.5 billion. The US toy industry surpassed $ 32.6 billion in annual sales for the first time in history, when projected to be 100% of the total market. This record growth occurred despite the fact that unit sales for the year were flat at $ 2.1 billion. The average selling price in 2020 has increased by 16% *.
Much of the growth in 2020 was directly correlated with the COVID-19 pandemic and the change in consumer behavior associated with widespread closures and school closures, disposable income diverted from other types of entertainment to toys, as well as the start of federal stimulus checks. While toy sales until mid-March 2020 were flat compared to 2019, widespread foreclosure measures have resulted in a sharp increase in sales. This was further amplified by the distribution of stimulus checks from April, resulting in the strongest growth month of the year in May (+ 38%). Growth in the toy industry peaked again in October with a 34% increase when the holiday season kicked off with Amazon Prime Day along with other retailer offerings the same week.
Another key consideration is that many of the classes that experienced the strongest dollar growth (i.e. collectively these higher priced segments were responsible for nearly 80% of the winning price segments. In contrast, the lower prices at $ 5 is the only price segment that fell in 2020. This drop correlates directly with a sharp drop in impulse buying. Simply put, the pandemic has impacted performance by price segment in several ways.
First, families bought more expensive items to occupy their children; and second, due to much higher online sales, there were fewer consumers shopping in stores – where most impulse purchases occur. From our consumer data, we know that for the cumulative period of September, impulse purchases accounted for 32% of physical sales and only 18% of online sales. While units decreased in seven of the 11 supercategories, the average selling price increased in each supercategory. The increase in the average price was one of the main drivers of the growth in dollar sales and was motivated by a change in product line towards more expensive categories.
As mentioned above, another major theme in 2020 was the growth of online shopping. Store closures and the reluctance of consumers to shop in stores have led to an increase in online toy sales. In the first three quarters of 2020, the online channel gained 10 market share points from 2019’s 23% share, leading to a 75% growth in overall online toy sales year-on-year. ‘other**. Not only did online toy retailers perform well, but traditional retailers that offered online shopping, in-store pickup, or curbside options also outperformed.
The highest dollar growth sub-segments in 2020 were sports toys, which include roller skates, skateboards and scooters (+ 31%); fashion dolls and accessories (+ 56%); construction sets (+ 26%); games (+ 29%); and seasonal summer toys (+ 24%). Major properties for 2020 included LOL Surprise !, Barbie, Star Wars, Pokémon, and Marvel Universe. The top five properties combined accounted for 13% of all toy sales for the year.
Movies in 2020 had a smaller impact on toy sales than in 2019, due to the lack of blockbuster movies compared to 2019, but also due to limited and postponed releases due to COVID-19. As a result, licensed toys underperformed during the year with a 2020 toy share of 28%, which is similar to the 28% share in 2017. Licensed toy sales increased by 15% in 2020, while unlicensed toys increased by 17%. . Licensed toys have underperformed the rest of the market; given the lack of blockbuster movies and the impact of the pandemic, this underperformance was not as bad as some might have expected.
After the most difficult year the world has seen in over a century, the toy industry has officially managed not only to maintain its momentum, but also to reach a level of growth never seen before. The industry’s resilience is largely underpinned by the fact that, in times of hardship, families turn to toys to help their children stay engaged, active and excited. Simply put, toys are a big part of the happiness equation. While it will be difficult for the industry to match the unprecedented growth we have seen in 2020, 2021 has the potential to be another strong year for toy sales in the United States. With 65% of U.S. K-12 students learning at least partially from a distance ***, entertainment venues still closed, and a third round of stimulus checks due to be approved by April, we can expect what toy sales continue to be high above normal sales levels in the short term.
* Source: The NPD Group / Retail Tracking Service, January-December 2020 compared to 2019
** Source: The NPD Group / Consumer Tracking Service / US / YTD September 2020 vs. 2019
*** Source: Burbio / January 19, 2021
Data is representative of retailers participating in The NPD Group’s retail sales tracking service. NPD’s current estimate is that the Retail Tracking Service represents approximately 78 percent of the US retail toy market.
This article originally appeared in the February 2021 edition of the Toy Book. Click here to read the full issue!