Threats and opportunities
- Brands and retailers have benefited from increased ecommerce activity and rising consumer spending
- Games and puzzle sales are growing at a faster rate than outdoor and sports toys
- Ecommerce sales will account for a larger share of the industry as shipping and collection become more efficient and flexible
Over the past five years, online sales have surged upward. The industry includes online-only retailers as well as the online sales of companies with both an ecommerce site and traditional bricks-and-mortar locations. As online shopping has become more secure and easily accessible to shoppers, ecommerce sales have increased. In the US, although general retailers like Walmart, Target, and Costco account for the majority of toy sales on a bricks-and-mortar level, these retailers account for only a small portion of industry-specific online sales.
US toy sales grew by 5 percent in 2016, reaching $20.4 billion, according to retail sales data from The NPD Group. The industry was 16 percent larger in 2016 than 2013, which equates to a compounded annual growth rate of 5 percent.
Collectables was a top contributor to the industry’s 2016 growth, with sales growing 33 percent, or $432 million, to reach $1.8 billion and representing 9 percent of total toy industry dollars.
Juli Lennett, Senior VP and US toys industry analyst at The NPD Group, said: “The online channel continues to grow at the expense of brick-and-mortar, and the toy industry needs to address how to make up for the volumes tied to in-store impulse purchases – an important sales generator. Retailers and manufacturers who get creative in their strategies will win in 2017.”
The UK toy market saw a 6.3 percent uplift in sales in 2016. This increases the market value to more than £3.5 billion for the first time, according to The NPD Group who released figures in partnership with the British Toy and Hobby Association at this year’s Toy Fair.
The growth equates to a gain of more than £200 million year-on-year with 415 million units sold in 2016, an increase of 7.5 percent, driven in part by collectables. The UK is now the largest market in Europe and fourth largest in the world.
The path to purchase for ecommerce shoppers is highly fragmented. Whether a shopper begins their journey on a computer, smartphone or tablet, there are numerous potential disruptions that can prevent your product being placed in their shopping cart.
Products not returning in search results, poor product reviews and ratings, unclear product descriptions and out-of-date images all lead to a loss of consideration and an eventual sale.
Changing shoppers’ online experiences can transform sales and share. Suppliers can increase online share by enhancing simple sales drivers.
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