By Karina Masolova, additional reporting by Marcy Magiera
Toy sales are on the up, thanks to licensed goods, as researchers are predicting a very merry holiday season for toy manufacturers and retailers around the world. With no one brand or trend dominating this year, retailers are stocking up on a variety of toys and games—translating into financial success across the board.
Retail sales of licensed toys in the U.S. and Canada rose 7.0%, faster than any other licensed product category, to just a hair under $7 billion in 2014, according to TLL’s Annual Licensing Business Survey. Toys and games made up 11% of all licensed merchandise worldwide in 2014 and 7% in the U.S. and Canada (data presented by the Licensing Data Bank). In the same time period, The NPD Group estimates that licensed toys represented 31% of total industry sales and that licensed toys are expected to continue growing at twice the clip of regular toy sales. NPD has already predicted that global toy sales will finish this year up 6.2% from 2014, and major licenses are once again driving sales activity in key territories around the world.
Toy industry sales were up by 7% overall for the first nine months of the year in 11 global markets tracked by NPD. That’s a positive indicator for the fourth quarter, when about half of the toy industry’s annual sales occur. Sales in smaller countries including Mexico (16%) and Poland (12%) are growing faster than sales in more developed countries, with Russia (34%) showing the fastest growth among the countries tracked by NPD. The U.S., Germany, Italy and Canada all have posted growth for the first three quarters in the 7% to 8% range.
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While Frozen had dominated the toy industry in 2014, this year sees a wide variety of products and brands enjoying success. According to Frederique Tutt, Global Toys Industry Analyst for The NPD Group, “properties such as Star Wars, Minions, Paw Patrol, and Minecraft, as well as tech-enabled toys with more innovative features, and those with more authentic and traditional play value are all converging to create a robust holiday season for the industry.”
Top Brands this Season
Per the National Retail Federation’s top toys list for the 2015 holiday season, former No. 1 property Frozen has been crowded out by Barbie as the hottest brand for girls, with over a fifth of consumers stating that they will buy the classic doll. Boys are demanding Lego and Star Wars toys, which also feature in the top girls’ list. IBM’s Watson Trend App identified the two power brands as the top performers in consumer sentiment for this season.
Eight of the top-ranked brands were also featured in retailer’s top toy lists for the holidays: Doc McStuffins, Frozen, Lego, Marvel, Minecraft, Paw Patrol, Star Wars and Teenage Mutant Ninja Turtles. While Star Wars jumped significantly from last year in NRF’s ranking, perennial classics Lego and Barbie kept their top spots. With growing diversity on shelves as retailers take greater risks, we expect that they will be increasingly unable to cannibalize other brands as the economy improves, spending increases and parents purchase an increasing number and variety of toys.
Maker Movement
The growing maker movement does not only apply to DIY and customizable products, but also strikes at traditional family values embodied by retro, nostalgic properties and the ideal of America as a manufacturing powerhouse of high-quality goods.
For local manufacturers in former industry powerhouses like Chicago, licensed properties and technological innovations such as 3-D printing and robotics are making it fiscally possible to bring production back stateside. As well as being able to capture the “Made in America”-conscious segment, this means that licensors will have greater access to nimble production lines that can support a greater variety of SKUs and higher turnover.
And according to BMO Capital Markets, parental pushback against screen-based activities (tablets, phones and video games) is benefiting sales of traditional toys, particularly outdoor toys, construction sets and arts & crafts. For example, traditional board games are expected to grow by double digits.
Technology-enabled Toys
While parents are more sensitive about the perceived harm of screen-based entertainment, they are increasingly embracing educational toys, particularly STEM, with tech-enabled elements.
BMO notes that interactive figures like Skylanders, Disney Infinity, and Lego Dimensions continue to be strong. And despite privacy concerns, Mattel’s new talking Hello Barbie doll is expected to be a top seller. The greater category of smart toys, which connect to mobile apps and games consoles, is expected grow this year (reaching $2.8 billion in hardware and app content revenues worldwide this year) thanks to Skylanders, Amiibo (Nintendo) and Lego, according to Juniper Research.
Watson also called out edutainment toys, specifically the Paw Patrol Imagicard Learning Game (for LeapFrog tablets), as well as wearable tech, such as the Gameband for Minecraft, and VR headsets as top trends for the connected consumer this season.
Ranking: National Retail Federation | ||||
Rank | Boys’ Toys | % Who Will Buy | Girls’ Toys | % Who Will Buy |
---|---|---|---|---|
1 | Lego | 12.2% | Barbie | 21.2% |
2 | Star Wars | 11.7% | Frozen | 13.0% |
3 | Cars & Trucks | 7.1% | Dolls | 10.2% |
4 | Video games | 6.6% | Monster High | 5.6% |
5 | Hot Wheels | 5.7% | American Girl | 3.5% |
6 | Teenage Mutant Ninja Turtles | 3.1% | My Little Pony | 2.8% |
7 | Xbox One | 3.0% | Shopkins | 2.7% |
8 | PlayStation 4 | 2.8% | Lego | 2.5% |
9 | Nerf | 2.3% | Disney Princess | 2.0% |
10 | Marvel action figures | 2.0% | Star Wars | 1.9% |
11 | Paw Patrol | 1.9% | Doc McStuffins | 1.7% |
12 | Action figures | 1.9% | Tablets/iPads | 1.6% |
13 | Tied: Transformers/ RC vehicles |
1.7% | Apparel | 1.2% |
14 | Minecraft | 1.4% | Arts & crafts | 1.1% |
15 | Bicycles | 1.3% | Video games | 1.0% |
— | Other | 33.6% | Other | 28.0% |