Everything to play for
The demise of Toys R Us provides an opportunity for toy retailers to pick up share of a lucrative market.
Whilst most of the growth in the global toys market is coming from the Americas, the UK remains Europe's largest toy market (£3.4bn in 2017) and Toys R Us accounted for c.£500m (15%) of it.
Interest in toys remains high; this was exemplified again this month as Ryan, the seven-year-old mastermind behind toys review channel "Ryan ToysReview", was named YouTube's highest-earning star of 2018, earning $22m dollars and accumulating an audience just shy of 17.5m followers.
With Christmas such a key period for the toys market, and with the financial year of many key players running until the 31st December, we will not have a true picture of the winners and losers until early next year. However, there are early indications of who is gaining ground.
Unsurprisingly Amazon seems to be one of the key beneficiaries; GlobalData predicts that Amazon will overtake Argos to become the UK's largest toy retailer by 2020. On the other side of the Atlantic, Ascential reported that in the USA Amazon's Q3 toy sales increased by 30% vs the same period in 2017.
Supermarkets are also increasing their focus on toys - the new Sainsbury's store in Selly Oak features `branded experiential zones' for children, with partnerships from Hasbro, Mattel and Lego. Likewise, in the USA, Walmart has expanded its toys range by 30% throughout stores over the Christmas period.
Whilst it is true that shoppers are increasingly going online and to supermarkets for convenience, a good toy store will attract footfall.
The Entertainer appears to be taking share, which is not without precedent when we consider that it saw major sales growth when Woolworths closed in 2009. Currently operating 153 UK stores, the plan is to expand to 200 before the end of 2019. Added to this, after a successful trial it now runs 59 concessions in Matalan stores, trading as ‘Totally Toys’, as well as 21 franchised international stores and plans to expand further with five new international partners.
The continuing popularity of Hamleys shows that it's not all about price; shoppers are willing to pay more for something as part of an all-round experience. Not only do parents want to see which toys their children are interested in before purchasing, but children also want to access the latest crazes. It is also worth bearing in mind that toys are not just for children; Research carried out by NPD and the British Toy and Hobby Association shows that 11% of spending on toys is by adults spending on themselves. The most popular toy bought by adults for adults is unsurprisingly Lego, followed by trains sets, radio-controlled vehicles and Scalextric.
Make it "EEEsy"
To attract and convert customers in the toys market, we believe retailers should focus on three "Es":
Exclusivity: Unique ranges, such as Hawkin's Bazaar's exclusive Harry Potter range, help restrict `showrooming', drive people to store and shield it from Amazon. In a similar vein ID Kids, the vertically integrated operator which opened its first UK store in March this year, offers an exclusive range of own-brand toys to both attract and convert footfall.
Ease: Through the offering of instant purchase, click-and-collect, and home delivery (via online and in-store order points), making purchasing easier is a basic prerequisite for success.
Experience: To compete against price and convenience, retailers must focus on customer experience (both for children and adults), offering an in-store experience that is unique, relevant and entertaining.