THE FORCE IS STRONG WITH THESE TOYS
Toy sales are easily going to be the driver of US retail numbers this season
As the holiday shopping season formally kicked off on November 27, US retailers and analysts debated how big a bite online buying would take out of brick-and-mortar business, whether purchases of electronics would cool off, and whether apparel retailers would get a sales jolt after a nationwide warm spell crimped sales of winter clothes. But no one doubted the allure this year of one category. Toys. The next few weeks are set to punctuate the toy industry’s best year in over a decade, one in which a crop of new movies and a spate of technological innovations have playthings flying off shelves. That was particularly evident on Black Friday, when customers pounced early on the must-haves on their shopping lists.
Overall, the early signals for the holiday shopping crush suggest retailers are likely to ring up decent but not spectacular sales. Shoppers spent $1.7 billion online November 26, a record-breaking level for Thanksgiving Day, and were on pace to spend $2.6 billion in e-commerce November 27, according to data from Adobe, whose software is used by many shopping sites. Although the Black Friday blitz is spread over several days, retailers such as Target reported strong in-store traffic at the kickoff of its big sales run on the evening of November 26.
Several forecasts say the retail industry expects a 3.5-4 per cent sales growth in November and this month, which would make for a slightly less merry Christmas than last year, when sales grew 4.1 per cent.
The toy industry is poised to be a particular bright spot. Toy sales, which haven’t risen more than 4 per cent in the past 10 years, are projected to surge 6.2-7.3 per cent this year, according to researchers at NPD Group.
At the Toys “R” Us in Alexandria, Virginia, on Black Friday, Jennifer Dalbey was on the hunt for a Fisher-Price Bright Beats toy, an anticipated hot-seller for the under-3 set this holiday season. “I’ve been to five different places trying to find this stupid thing,” Dalbey said, standing beside a stroller containing her one-year-old twins.
If she wasn’t successful on the first gift, she was at least able to check one item off her Christmas list: a set of Mega Bloks. Another potential gift, a Darth Vader chair for little ones, got passed over when Dalbey joked that for $79.99 she could get an adult chair at Ikea.
Another shopper, Tim Rossignol of Fort Belvoir, Virginia, was trying to keep up with his son Ricky as the four-year-old zoomed around an aisle of Toys “R” Us in a mask of Kylo Ren, a character in the upcoming Star Wars movie. Rossignol has picked up some large-scale Star Wars action figures and Star
Wars toy vehicles for Ricky, and he expects that his haul of Star Wars merchandise will grow bigger as Christmas gets closer.
Star Wars fans, who span generations, should provide some of the greatest tailwinds for growth in the toy industry in the next several months. Star
Wars: The Force Awakens, scheduled to hit theatres December 18, has generated enormous hype and has reportedly pulled in a staggering $50 million in advance ticket sales.
When the first slate of new Star Wars toys were released in September on a Disney-designed holiday called Force Friday, $1 of every $11 spent on toys that week was on Star Wars gear. Analysts say the franchise is likely to gain even more steam as young children - not just longtime fans and collectors - get more familiar with the characters after seeing the movie.
Star Wars isn’t the only movie propping up the toy industry this year. Jurassic World and Minions were also blockbusters whose characters were easily transformed into toys. Even Frozen, whose heroine Elsa was a fixture on many Christmas lists last year , continued to heat up the toy industry in 2015, though to a lesser extent.
Wal-Mart US chief executive Greg Foran told reporters that he thinks the big-box retailer is in for one of its best holiday seasons for toy sales in a long time, saying that “the electronic componentry is now getting put into these toys and they’re becoming interesting again for customers”.
In other words, technology is giving toys fresh appeal. Experts said this marks a shift from just a few years ago, when manufacturers were larding up toys with the tech feature du jour, even if it didn’t add much value. Toymakers are getting better about incorporating technology in ways that feel more natural and useful, experts said.
“The further we get away from the [economic] downturn, the more the toy companies take out projects that they may not have been eager to take to market in weaker times,” said Gerrick Johnson, toy industry analyst at BMO Capital Markets. “There’s a little bit more risk-taking.” Among the more innovative toys to hit shelves this season are Playmation, a smart toy from Disney and Hasbro in which children can carry out live-action missions, with guidance from a tablet or smartphone app; and Mattel’s Hello Barbie, a doll that can converse with a child, thanks to voice-recognition software. But sales have also been healthy for toys with fewer bells-and-whistles.
Lego has surpassed Mattel as the world’s largest toymaker and is projected to ring up big sales this quarter, thanks to items such as its Star Wars-themed sets and its girl-oriented Lego Friends line. The Paw Patroller, a truck for transporting Paw Patrol pups and their vehicles, and the Hot Wheels Ultimate Garage are also selling at a high volume, according to NPD Group.
“It’s just across the board, and it’s across manufacturers big and small,” said Juli Lennett, NPD toy industry analyst.
Thanksgiving Day sales
Target said in a statemen that Thanksgiving Day sales were strong in properties as varied as Lego, Barbie, Disney Princess and Star Wars. In the quarter just before the holiday season, Target said toy sales increased a robust 12 per cent in many areas including action figures and board games.
Even as retailers and manufacturers welcome the demand for their products, they could face challenges if supplies run low. Hasbro chief executive Brian Goldner said his company is selling through its Star Wars merchandise faster than it expected and is working to catch up, because “inventory has been light in recent weeks.”
Dave Brandon, chief executive of Toys “R” Us, said he is confident that his chain will have enough Star Wars gear and other products in high demand. “We’ve really built up our inventories,” Brandon said. “We really feel that we want to make sure that we are well-positioned for a significant rise in business over and above the normal holiday run.” When hiring seasonal workers this year, Toys “R” Us moved to bring them on earlier and give them more hours in hopes that they would be able to learn the business and thus be better prepared to handle the crush of shoppers.
Disney Store, meanwhile, said it will undertake its usual steps in preparing for the holiday rush, including packing the store floor with 30 per cent more products, stacking merchandise a bit higher and bulk-stocking larger toys, such as the $99.95 Frozen Castle of Arendelle play set, that it doesn’t keep in the store year-round.
But this year will bring some changes, too: The specialty retailer has doubled its space dedicated to Star Wars items. And while it typically would have all of its holiday merchandise on shelves by Black Friday, this year it will be making a late-inthe-season addition of Star Wars toys that Disney didn’t want released earlier for fear they would give away hints to the plot of the movie.
Those new toys will arrive December 18, just before what is typically Disney Store’s busiest week of the year.
“We already know that will be our biggest week, but are definitely preparing for that onslaught after the movie release,” said Elissa Margolis, senior vice-president and general manager at the Disney Store.
Generally, the tech-powered toys hitting stores this year come with a relatively high price tag, Brandon said.
“One of the things that will be interesting to evaluate at the end of the season is how accepting the consumer was of these higher price points to get the entertainment value that’s delivered by these toys,” he added.