President’s Letter: It’s Imperative to Learn From and Act Upon 2019 Sales Results
January 27, 2020 | U.S. retail sales of toys generated $20.9 billion in 2019* compared to $21.8 billion in 2018, a decline of 4 percent, according to The NPD Group. Last year, toy sales fell 2 percent following four straight years of growth in the toy industry.
To be certain, a 4 percent annual decline is not welcome, especially against a backdrop of an overall 4 percent increase in holiday retail sales, and I won’t attempt to spin it here. In a year of both significant positives and negatives, the latter won out. What is important is that we look closely at specific influences and step back for a macro view of the environment in which we are operating. For both the U.S. and many global markets important to our companies, we are seeing social, economic, generational, and structural shifts to which the industry has not yet adapted. Retail evolution is moving with a rushing torrent; not a slow trickle of change. So how does a business community renowned for its creativity, imagination, and responsiveness apply those same talents to a changing world and unanticipated influences?
There is no question that a host of factors impeded the market last year. We just came off a shortened holiday selling season; we had the loss of the massive Toys“R”Us footprint with its expansive carried inventory, incremental sales, and impulse sales; experienced the constant uncertainty of China tariffs also with related FOB impacts on some companies and retailers; had a stressed supply chain combined with just-in-time-fulfillment and related retailer buying caution; a measure of millennial parents now prefer to buy experiences versus products; and we had little to no media buzz resulting from the lack of a must-have holiday toy that gets people in stores and online. There were solid successes from action figures to fashion dolls, and there are indeed growing brands and strength across the industry, yet even many solid performing products were impacted by these headwinds and many smaller companies struggle to find a path forward.
The indicators and threads of promise that can get us back to growth may include greater incentives to get in stores and shop (at both mass and specialty retail). Certainly stores that turn shopping into a fun and enriching community experience will have an impact. But an enriching shopping experience must then convert to sales. Shopping and buying are different things. Unsurprisingly, NPD reported that for the first time in tracking history, toy sales during the week of Cyber Monday were more than the week of Black Friday which speaks to the growing significance of e-commerce and consumers delaying purchase decisions. And with more consumers shopping online, online marketplaces will need to step up and take greater responsibility in the fight against unsafe counterfeit and illicit goods sold on their platforms. This is a critical issue that The Toy Association and our IP Committee continue tackle in meetings with top government officials and enforcement agencies, as well as in direct communication and advocacy with several marketplace platforms. Safety first – always.
As we approach Toy Fair New York (Feb. 22 to 25) the mood is still upbeat both within the industry and among media planning to cover the show. Even with the final 2019 sales tally, NPD Group looks to 2020 with optimism and reason for growth. We’re expecting to see some fantastic innovations in play at the Javits Center as well as movie/TV and digital-first properties helping to drive toy sales through the rest of the year. All Toy Fair exhibit space is now sold out, with 30 countries represented throughout the exhibit hall and well over 100 first-time exhibitors in the Launch Pad area of the show. Anticipation is building for Toy Fair NY and its many educational/networking opportunities. Our trends team, which has been previewing product over the past couple of months, will be unveiling the top trends of 2020 expected to spur consumer purchases through the holiday season. We can’t give them away before the show but expect to see a range of trends and toys that are reflective of wider socio-economic trends and the growing influence of digital on kids’ habits and preferences.
Getting back to growth is the imperative. Innovation and products that offer great play experiences while generating consumer buzz are the fundamentals, as always. Plain and simple. Today’s child and toy-buying adult are fundamentally different people with different interests and a host of buying alternatives. Relationships with brands are evolving, as are expectations about the products we bring into our homes. Helping our members navigate these facts is a responsibility The Toy Association takes seriously. Even with these myriad factors in the calculus, understood, and acted upon, the quality and innovation of the toy, the game, the plush, the vehicle, the doll, the building set and on and on must foremost be present. I know that can be done.
We have great faith in the people of the toy and play community and that together we will face up to these and other challenges, learn, build on our strengths, and deliver for the kids and parents and adults we exist to serve.
President & CEO
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