Play Time Has Ended at Toys ‘R’ Us Clearly, the biggest news and effect on the US (and global) toy industry is the Toys ‘R’ Us bankruptcy, as it was fourth among all toy retailers based on number of shoppers and US revenues of $7 billion for the year ending January 2017. Many industry experts think Amazon was primarily responsible, but Walmart and Target also used pricing and inventory strategies to take market share from Toys ‘R’ Us. Although Amazon, Walmart and Target are apt to be the largest predators feasting on the Toys ‘R’ Us “carcass,” an industry association estimates the 3,500 North American neighborhood toy stores could experience a 20% increase in 2018 revenues.

Amazon Is Winning the “Toy-Market Board Game” When measuring where Toys ‘R’ Us shoppers have browsed for children’s toys and games during the past 12 months, Amazon, Walmart and Target are neck and neck, at 65.4%, 65.4% and 63.6%, respectively. Among the top 5 retailers, however, Amazon has a much larger lead over Walmart and Target in terms of where all toy shoppers browsed during the past 12 months, at 63.8%, compared to 54.7% for Walmart’s and 50.4% for Target. Toy consumers seemed to respond to the start of the Toys ‘R’ Us liquidation (March 15, 2018), as toy sales increased a substantial 36% from March 11 through April 7, which they often do during the two weeks prior to Easter, which was early, April 1.

Modest Sales Increase for 2017 After a rather robust 6% increase in total 2016 toy industry revenues ($20.56 billion), the increase for all of 2017 slowed to +2%, or a total of $20.89 billion. No doubt, Toys ‘R’ Us’ bankruptcy filing during September 2017 was partially responsible, although it was still trying to restructure its business, but then its poor revenue performance during the 2017 holiday season was a drag on the industry. For 2017, outdoor & sports toys generated the most revenues of the primary product categories, or $3.78 billion; however, plush toys had the largest increase from 2016, or +9%, following a 13% increase for 2016.

First-Half-of-2018 Performance Sets the Stage for an Excellent Q4 Some industry analysts attribute the significant improvement in total toy industry revenues during the first half of 2018, +7.0%, or $7.9 billion, to consumers responding to the pending closing of all Toys ‘R’ Us stores. According to research from CivicScience for The NPD Group, 56% of customers’ purchases at Toys ‘R’ Us stories during April 2018 were an immediate gift, 12% as a gift by June, 10% as a gift during Q3 and 22% as a gift during Q4. Just as during all of 2017, outdoor & sports toys generated the most revenues during the first half of 2018, or $1.936 billion, but youth electronics’ revenues increased a rather incredible 43%.

The Winning Toys for 2018 The latest New York Toy Fair (January 2018), where toys for the next holiday season are introduced, showcased more retro toys and fewer electronics- based toys. In addition, board games are expected to remain strong, which promote family game time. The perennial launch of licensed toys based on major movies will highlight Aquaman, A Wrinkle in Time and Jurassic World. Hasbro was honored as the Top Property of the Year during the US Toy Industry Awards ceremony at the Toy Fair for its Nerf line while the Top Selling Toy of the Year was L.O.L. Surprise! Doll Assortment from MGA Entertainment.

What Spoiled the 2017 Holiday Season for Toy Retailers The Toys ‘R’ Us bankruptcy announcement prior to the 2017 holiday shopping season caused many major toy makers to be unsure of future sales, since Toys ‘R’ Us stores had been responsible for 10% of revenues for Hasbro, Mattel and Jakks Pacific. Mattel’s Q4 2017 sales decreased approximately 6%, contributing to a 45% loss in the company’s share price during 2017. Hasbro had a better holiday season with its Disney Princess line of toys, Nerf, My Little Pony and others, but its stock declined 20%. Spin Master, a Canadian toy maker, was one of few with a “green” holiday, because of the substantial popularity of its Hatchimal toys, resulting in a 60% increase in its stock price on the Toronto Stock Exchange during 2017.

Advertising Strategies A possible bold promotion for local, neighborhood toy stores could be “Where the Toys ‘R’ for You,” featuring some of the more unique and exclusive brand formerly available at Toys ‘R’ Us.   Toy stores can benefit from the popularity of outdoor & sports toys by emphasizing how these products motivate children to be more physically active and spend more time outdoors. Toy stores could promote a “Santa’s Elf Free Delivery Service” to parents at their place of work or business who are last-minute shoppers the week prior to Christmas, with one or more store associates dressed as a Santa’s elf.

New Media Strategies Ask parents to share short videos on social media of the family playing board games, with each family member expressing why they love board games. Many consumers are attracted to stores that provide a digital buying guide or catalog, which stores can create like a traditional catalog or as a series of short videos of store associates introducing/explaining featured toys for the holiday season. Invite a child psychologist or similar professional to appear in the store during the holidays and/or online in short videos to help parents (grandparents) choose toys with the greatest educational value and/or most appropriate for various age groups of children.