While income elasticities play a role in demand for toys and games, soft drivers have been critical in shaping industry growth in 2020. Consumers’ need for entertainment and e-learning at home led to a surge in a number of toy categories and video games, which also created opportunities for wider social events. Licensing remains strong in 2020 and long term. Also, channel shifts and digitalisation highlight the need for robust omnichannel retail and communication strategies in 2020 and beyond.
This report comes in PPT.
While GDP and income elasticities would be expected to play a role in the growth trajectory of toys and games, soft drivers have played a critical role in shaping dynamic and healthy industry growth in 2020, including the need for entertainment at home and e-learning, demand for value-added products, the acceleration of digitalisation, and the surge of e-commerce.
Categories within traditional toys such as scientific/educational toys and games and puzzles performed exceptionally well in 2020 due to demand for toys that provide entertainment and educational benefits. Additionally, console gaming sales, software and hardware, received a boost in 2020 in view of the hometainment trend, with expected growth past 2020 not least due to the release of PlayStation 5 and Xbox Series X/S.
Licensing remains high on the agenda for many toy manufacturers and others looking into the industry, and 2020 saw significant focus on new launches of successful licensed characters by players such as Hasbro, Funko, and Mattel. The categories they play in, dolls and accessories and action figures, built on their pre-COVID-19 popularity and will continue to show positive results moving forward.
Drawbacks of focusing on narrow distribution strategies have become apparent for some retailers and manufacturers in 2020. Adopting a strategy that focuses on a variety of engagement and selling avenues to tap into a broader consumer base – e-commerce, flagship store opening, virtual selling events, virtual try-outs – will provide more opportunities for potential success in the future.
Many small retailers struggled in 2020 due to closures and poor e-commerce logistics, while larger retailers like Amazon, Walmart and Target were not forced to close down, but were able to continue capturing sales from others in the industry. As a result, many small independent specialist toy retailers face the possibility of permanent closures, leading to more retail consolidation across markets.
This is the aggregation of traditional toys and games and video games.
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