The toy industry is wishing for a holiday season that is strong enough to salvage a very tough year.
After seeing unprecedented sales growth during the pandemic years of 2020 and 2021, and flat sales in 2022, toy sales are expected to be down significantly this year, even with a strong fourth-quarter finish.
Industry experts are predicting holiday 2023 will outperform last year’s ho-hum holiday season, but say it won’t be enough to make up for weak sales during the first nine months of the year.
Isaac Larian, Founder and CEO of MGA Entertainment, maker of Little Tikes, LOL Surprise, Rainbow High, Bratz and other toy lines, and this year’s bestselling Miniverse collectibles, said he believes 2023 will prove to be “one of the toughest years for the toy industry that I have seen in 44 years.”
He expects full year sales for the overall toy industry to be down in the double-digits and says he is baffled when he hears major companies telling investors they expect to be flat for the year. “There’s no way they can catch up,” he said, noting when he was interviewed last week that there only 97 days left until Christmas. (Now there are only 89 days left.)
Hot toy lists predict the winners
There’s plenty of excitement building about holiday toys with the potential to be bestsellers, with manufacturers rolling out their star offerings, and toy experts and retailers releasing their “hot toy” lists. The annual New York Toy Fair, held in the fall for the first time this year, starts Saturday and will spotlight many of the toys manufacturers are betting will be hits this holiday season.
Toy review website TTPM held its annual Holiday Showcase in mid-September and released its Most Wanted List of top toys. Trade publication The Toy Insider held its Holiday of Play event and released its Hot 20 list of likely bestsellers. Amazon
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But these potential holiday bestsellers aren’t likely to lift overall toy sales into the positive range, in part due to decisions by toy manufacturers to keep toy prices lower this year. Toy companies had expected U.S. consumers to be pressured in November in December, either by ongoing inflation, or a growing recession, and planned their holiday 2023 toys, and price points, with that in mind.
Toy manufacturers cut prices
“Toy makers were very conscious of reconfiguring their own lines to get toys under that $30 range. Under $20, also,” said James Zahn, editor-in-chief of trade publication The Toy Book and senior editor of The Toy Insider, interviewed during the Toy Insider’s Holiday of Play toy showcase earlier this month.
That price sensitivity has increased as the year progressed, Zahn said, “A lot of toys that in early previews were showing a $24.99 MSRP (manufacturer’s suggested retail price) are now out, priced at $19.99,” he said.
MGA Entertainment made a point of keeping prices low this year, Larian said, and is offering 500 toys for $10 or less, twice as many as it offered at that price last year. It reduced the price on its top selling Rainbow High dolls from $39 to below $30.
Today’s consumer “is incredibly budget conscious,” Larian said. “They want newness and a great price.”
After booming sales, shortages, and supply chain challenges in 2020 and 2021, retailers and toy manufacturers had a lackluster holiday 2022, and found themselves in 2023 with too much inventory.
“This is a reset year for the toy industry,” Zahn said. “I think it’s going to take another full year to fully normalize to what we were doing before.”
“A lot of those double-digit increases that toy and game makers were enjoying throughout the pandemic, those are gone,” he said. “Outside of Lego, which has outperformed the industry so far, most of the major toy companies are down.”
“The biggest problem in 2023,” Zahn said, “has been lack of excitement,” largely due to overstocked retailers not bringing in normal amounts of new spring merchandise, combined with poor merchandising in stores.
That is starting to change,” he said, with lots of new, innovative toys being released for the holidays.
A Barbie boost
Jim Silver, CEO of TTPM, who has been tracking holiday toy trends and sales since the 1980s, said in an interview following his Holiday Showcase that even in a down year there always are companies that win big during the holiday season.
Silver is predicting that some of this year’s winners will be Mattel
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“As much as people have struggled this year, Lego seems not to struggle like everybody else,” he said.
Amazon, which sold over 2,000 toys per minute in the fourth quarter of last year, and was shopped by 60 million U.S. consumers looking for toys during holiday 2022, released its “Toys We Love” list in mid-September, with over 200 toys, 100 of them new to the list this year, and 80 of them exclusive to Amazon.
Anne Carrihill, who leads the U.S. toy and entertainment categories at Amazon, and is on the board of the Toy Association and chair’s the association’s Toy of the Year awards committee, said she expects three trends to drive sales this holiday.
Top toy trends on Amazon
“The first one,” Carrihill said in an interview, “are these big moments happening in pop culture – Barbie; the friendship bracelets craze meets Taylor Swift’s Eras tours; Disney’s 100th anniversary; the return of the 90’s with Teenage Mutant Ninja Turtles; and Transformers and Super Mario – all are translating to toys and play in really neat ways,”
The second driving trend, Carrihill said, is interest in smaller, quieter toys and activities, such as the MGA Miniverse kits that let you make tiny foods and other collectibles, or stress relieving toys like the Squishmallows plush toys by Jazwares.
The third big trend, she said, is kidadults, with adults embracing play and also seeking out toys from their childhood.
Several innovative tech toys, and a new version of a 1998 hit toy are expected to be hits this holiday. MINTiD Dog-E, a customizable, interactive robot dog by WowWee; Bitzee, an interactive digital pet by Spin Master, and Furby Interactive by Hasbro
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Dog-E expected to wow
Pre-orders for Dog-E sold out after the toy was unveiled at CES in January. The toy releases on October 1, and WowWee is seeing a high rate of pre-orders on Amazon, a company spokesman said.
Success this holiday “is going to come down to who has the innovative product, who has something that’s fresh, who has the best licenses – those are going to be the toys and the categories that win,” said Steve Pasierb, president and CEO of The Toy Association.
Retailers who entered the year with unsold inventory were slower than usual to place toy orders this year, but that has changed in recent weeks, with the pace of orders picking up, Pasierb said.
“The first six months of the year were very quiet, so I think everybody’s betting on the holiday,” he said.
Toy Fair begins this weekend
The year’s Toy Fair, which opens Saturday, was shifted to the fall, rather than the traditional February dates, to better align with the ordering cycles of retailers. It will include a display of “hot for holiday” toys that retailers can order and have on shelves in time for Christmas and Hanukah.
While consumers are showing that they will be selective about what they buy, and how much they spend this holiday season, the industry is seeing that when toys are involved “people are ready to buy when there’s quality innovation,” Pasierb said.
And, he noted, even when money is tight, gifts for children tend to be the last thing cut from the shopping list. “People don’t want to leave their kids hanging at Christmas time or Hanukah,” he said.
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