WHAT PEOPLE BUY: TOYS, DOLLS, AND GAMES


WHAT PEOPLE BUY: TOYS, DOLLS, AND GAMES

The purchase incidence of toys, games, and dolls has been up and down since 2000, ranging from 45 percent in 2000 to 54 percent in 2001 and 50 percent in 2003. While children represent the core user market for toys, more adults are buying toys, not just for kids, but for their own playtime. Toys are popular adult collectibles, and more toy companies are recognizing that adults, just like their kids, want to play with toys.

Industry Snapshot

American consumers spent more than $43.8 billion on toys in 2002, according to statistics compiled by the U.S. Bureau of Economic Analysis (see Figure 7.17). There is an expanding market for toys, as evidenced by growth of 5.6 percent since 2000 when personal consumption was $41.5 billion. Notoriously given to boom-and-bust cycles, the toy industry's biggest categories in 2002 according to classifications used by the Toy Industry Association, were video games, with sales of $14.8 billion; infant and preschool toys, $4 billion; dolls, $3.5 billion; arts and crafts, $3.1 billion; vehicles, $3 billion; and games and puzzles, $3 billion.

 

2000

2002

% CHG '00–'02

Total Personal Consumption in millions

$41,510

$48,825

5.6

Video games

9,879

14,786

49.7

Infant and preschool

3,445

4,019

16.7

Dolls

4,358

3,478

-20.2

Arts and crafts

4,483

3,125

-30.3

Vehicles

3,404

3,008

-11.6

Games and puzzles

3,196

2,999

-6.2

Plush

2,988

2,226

-25.5

Action figures and accessories

1,577

1,801

14.2

Sports toys

 

1,413

 

Building sets

 

1,076

 

Ride-ons

2,200

811

-63.2

Pretend play

 

793

 

Learning and exploration

 

531

 

Trading cards and accessories

 

408

 

Models and accessories

 

362

 

All other toys

5,978

2,987

-50.0

Source: Bureau of Economic Analysis; Toy Industry Association; Unity Marketing


Figure 7.17: Toys, Games, and Dolls Industry Snapshot

Retail Overview

While Toys R Us, with some 1,600 stores and $11 billion in sales, is a prime mover of toys at retail, Wal-Mart stores are recognized as the nation's number one retailer of toys. As a result, the mass merchant and discounter channel of distribution commands an estimated 39 percent of the total retail market for toys, according to the NPD Group who compiles statistics for the Toy Industry Association. National toy stores, including Toys R Us, K-B Toys, and FAO—which resulted from the merger of Zany Brainy and the FAO Schwarz specialty stores—hold about 20 percent share of the market (see Figure 7.18).

 

2002 SALES

Toys R Us (1,600 stores)

$11 billion

K-B Toys (1,325 stores)

2 billion

FAO/Zany Brainy (about 100 stores)

460 million

Source: 2002 Directory of Discount and General Merchandisers by Chain Store Guide


Figure 7.18: Toy Retail Market Share Leaders

With Wal-Mart replacing Toys R Us as the nation's largest retailer of toys, it is not surprising that toy shoppers today favor the discount department stores as the place to buy. Nearly three-fourths (72 percent) of toy buyers bought these products from discount department stores. Trailing far behind with just under one-third (31 percent) of toy shoppers are other specialty stores, which includes the category of toy stores. Traditional department stores are next, patronized by nearly one-fourth (23 percent) of toy shoppers.

Competition in toy retailing has been particularly fierce in the past three years as Toys R Us and Wal-Mart battle it out for market share leader. A major casualty of the "toy wars" is the luxury-positioned FAO Company. After filing and emerging from bankruptcy in early 2003, the company once again filed for bankruptcy protection in the midst of the 2003 holiday shopping season. FAO plans to sell off its FAO Schwarz and Right Start toy-store chains, while liquidating the Zany Brainy stores.

Because the retail market for toys is so highly dependent on the Christmas shopping season with about 53 percent of the industry's sales during the fourth quarter, many other retailers get into the toy game only seasonally. Card, gift, and stationery stores, department stores, grocery and drug stores, mail order, and e-tailers together take about 20 percent of the total toy market. Due to the dominance of national retailers in the toy business, the traditional mom-and-pop toy stores are facing a squeeze and today command less than 5 percent of toy industry sales.

Purchase Drivers

American parents cannot do enough for their kids! That is the simple reason behind the steady growth in the toy market. The toy industry enjoyed many years of growth as the baby boom generation progressed through its prime childbearing years. However, in 2003, with the leading edge of the baby boom generation reaching age 57 and the trailing edge now at age 38, the toy industry faces challenging times as boomers' kids progress beyond the age of toys and the much smaller GenX cohort enters its family formation and childbearing years. The total number of households under age 45 will decline from 2000 to 2010—down 3 percent among the age group 18 to 24; 7 percent for the group aged 25 to 34; and 14 percent for the group aged 35 to 44.

However, there is a second wave of baby boomer spending on toys coming soon as their grandchildren arrive. The babies of the baby boomer generation are called the millennial generation whose birth years extend from 1977 to about 1994. The leading edge of the millennial generation today is 27, the age associated with first marriage. As this generation starts to marry and have children of their own, proud boomer-aged grandparents will lavish spending on age-appropriate toys for the new generation.

Demographic Variables

Toys are more likely to be purchased by women than men, with their purchase incidence reaching 56 percent in 2003, compared to 43 percent for men. Consumers aged 25 to 44 are far and away the most likely to purchase items in this category, as these ages represent the prime childbearing and rearing age ranges. Purchase incidence drops off after age 45. Middle-income households making between $35,000 and $50,000 annually are the most likely to purchase toys, games, and dolls.

Household size and presence of children are major predictors of purchase. Not surprising, households with children are two times as likely to purchase toys, games, and dolls than are households with no children. All education levels are equally likely to make purchases in this category.

Key Demographics of Buyers of Toys, Dolls, and Games.

  • Women take the lead in this category.

  • Prime market for toys is ages 25 to 44.

  • Middle-income households, between $35,000 and $50,000, buy more.

  • Children in the home are a key predictor, along with larger house-hold size.