Toys take a back seat in kids’ wants and needs
On a recent shopping trip with a sevenyear-old who had a bit of birthday money to burn, it was clear just how much competition there was for his spending power.
The first stop was a clothing store, where, after some indecision, a Ninja Turtle fleece top was purchased. The next port of call was a sporting goods store, where the tough decision between soccer boots, a cricket bag or wickets was mulled over.
The bookshop did not get a look-in, despite my efforts to persuade him otherwise, and the toy shop would have been entirely sacrificed if I had agreed to go to the Nike store. But what was left of his stash would not have gone far in that haven of brand power, and I didn’t want his excitement to be dashed.
If on a shopping excursion the toy store is a third choice, it is no surprise that this retail category is taking strain. In the US and UK, Toys R Us is shutting shops. And Lego, the Danish toymaker, recently reported an 8% decline in revenue, its first in 13 years.
Euromonitor toy analyst Matthew Hudak said this week the closure of the stores would hurt toy manufacturers as Toys R Us outlets are an important distribution channel for their products.
Dealing with fickle young consumers with short attention spans means it is not easy to always strike it right.
Lego sales in 2017 slowed compared to 2016 due to its reliance on Stars Wars products following the release of The Force Awakens in 2015.
“A big issue that Lego has now is that it’s grown so quickly with only one product that it inevitably had a slowdown and hit a wall,” Hudak said.
Even so, the numbers that little plastic bricks can yield are substantial. With revenue at 35-billion kroner (R53billion) and net profit at 7.8-billion kroner, Lego is still going strong, unlike 13 years ago, when, saddled with debt, it almost collapsed.
Toys R Us is now in that position in part due to a leveraged buyout in 2005 by US private equity firm Bain. Bain used the same model for the purchase of Edcon, the owner of Edgars, which did not end well for it and may still not end well for Edcon, even though Bain no longer owns the South African retailer.
Lego is pricey. So when it comes to parents weighing gift options, it will, by necessity, mean that what your child needs will be prioritised over wants.
Even if you can splash out, technology is now taking a far bigger slice of that spend.
According to Bloomberg, screen time among the key toy market of nought to eight years rose between 2011 and 2017. Data from Common Sense Media shows that TV still accounts for the largest percentage of screen time at 42%, but this is down from 2011, while mobile-device screen time has risen dramatically to 35% from 4% in 2011.
Of course, give or take a few years, the balance of this year’s birthday money — and that to come — will be spent on a muchsaved-for computer. Toy stores, then, will be so yesterday.
It is no surprise that this retail category is taking strain