Toy story


While the demise of Toys R Us has cast a long shadow over the sector, at a product level, toys remain a breeding ground for innovation.

The global market for developmental toys will reach £28bn by 2019, according to Euromonitor, with STEM or STREAM (Science, Technology, Robotics, Engineering, Arts, Maths) toys constituting 76% of overall sales.

What’s driving demand?
More and more parents are concerned that too much screen time is unhealthy for their children and as a result are encouraging participation in more traditional toy categories such as collectibles (accounting for three of the top four selling toys in August 2017), slime and squishy toys.

Younger millennial parents, who grew up more accustomed to technology, are more inclined to expose their children to innovation-led toys. This is driving growth in segments that combine the benefits of traditional toys with the cognitive and developmental advantages from technology.

Who is innovating?
Established toy brands are responding to this changing market by adapting their offer to include augmented / virtual reality, coding and electronics and capitalise on this growth. K’NEX will launch K’Nected building sets in 2018 that allow kids to build roller coasters and then ‘ride’ them virtually. DUPLO’s new Steam Train, which comes with five action bricks, allows kids as young as two to learn the basics of coding and Learning Resources recently released Botly the Coding Robot, a screen-free introduction to coding for kids ages 5 & up. Amazon is also launching a STEM toy subscription club for parents in the US, which will deliver an age-appropriate educational toy each month.

Innovative start-ups are also emerging and growing in the space. Irish start-up firm Teddybot (seen in the picture above) has launched a soft-toy, designed for young people to develop cognitive skills and problem-solving on an interactive platform. Science4You, founded in January 2008, is a fast-growing Portuguese firm that specialises in science kits for children. Retailing at c. £300, coding adventure packs from Cubetto involves children putting coloured shapes on a wooden board to direct a cuboid robot. This business has enjoyed sales of $4m and investment from Randi Zuckerberg, former chief marketing officer of Facebook. And recently, Kano computer and coding kits raised $28 million of funding in November 2017 for their kits that allow children to create and programme a computer.

Who will succeed?
We believe both established and newer players must focus on these key areas to capitalise on growth in this space:

  • Ensure that developmental toys balance parental desire for educational content with popularity among children themselves – children remain powerful consumers and the ‘cool’ factor matters
  • Constantly consider the next step and the elements that can be built on the core proposition to keep the product relevant to fickle young consumers. Spin Master’s Hatchimals successfully did this with their 2017 launch of Hatchimals Surprise building on the 2016 success
  • Reassure parents around security concerns related to data sharing
  • Consider the importance of the school channel as a sales route and influencer

Jessica Williams