Economic struggles dampen holiday cheer for toy makers
Toys made by Mattel, Hasbro and others are seen at a Macy's store
As the holiday season approaches, global toy makers brace for challenging times as shoppers in Europe and the United States prioritise essential goods over discretionary items, impacting the anticipated surge in holiday toy sales. Industry experts predict a tough season for retailers as consumers grapple with high inflation and sluggish economic growth, Reuters reported.
Loo Wee Teck from Euromonitor International notes that favourites like Barbie dolls and Hot Wheels cars remain on children's wish lists, but affordability concerns loom large.
Despite perennial favourites remaining at the top of wish lists, many parents face financial constraints this year, impacting traditional holiday spending.
Reuters cited Isaac Larian, CEO of MGA Entertainment, the maker of Bratz dolls, who spoke about the shift in priorities. "The most important thing for people this holiday is to have food on the table for their families," he said.
Reports indicate a significant rise in toy prices compared to the previous year, leading to concerns about decreased affordability. For instance, the Hot Wheels Scorpion play set, priced at 35 pounds in 2020, has surged to about 60 pounds on Amazon.co.uk this year.
Major toymakers, including Hasbro and Mattel, have already issued warnings about weakened industry sales, reflecting the broader economic challenges. Executives at MGA Entertainment anticipate a 10-12 per cent decline in holiday sales compared to the previous year, underscoring the severity of the economic impact on consumer spending. Nic Aldridge from Bandai anticipates more price cuts as retailers aim to clear surplus inventory, indicating a trend of deep discounting during the holiday season.
Global sales projections for action figures, such as Transformers and Spiderman, indicate a potential 2 per cent decline this year, according to Euromonitor forecasts. Recognising lower demand, retailers have cautiously ordered less product this year, potentially leading to quicker sell-outs of popular items.
Black Friday sales will serve as an early indicator of consumer behaviour, with industry leaders closely monitoring the market's response to offers and discounts. Mattel's president, Steve Totzke, acknowledged the challenging market conditions and the importance of gaining market share throughout the holiday season.
While the toy market has experienced a decline throughout the year, there is anticipation for a late surge in demand. Frédérique Tutt, Global Toys Advisor at Circana, suggests that despite a 7 per cent year-on-year decline in toy sales for the first nine months of the year, shoppers may turn out in the three weeks before Christmas.
Categories like games and puzzles, plush toys, building sets, and vehicles have shown better performance. Jerry Storch, CEO of consultancy Storch Advisors and former CEO of Toys-R-Us, told Reuters that fewer toys are being sold this year compared to the previous year. Yet he remains cautiously optimistic about a good holiday season for major players like Mattel.
Logo’s plans
Meanwhile, Lego, the famous toymaker is set to invest over $200 million towards expanding its plant situated in the northern Mexican state Nuevo Leon. Reuters cited a state government spokesperson on Tuesday, who said that the final figure will reach $205 million. Operations are anticipated to start in May 2025.
(With inputs from Reuters)
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