Retailers in Toyland Showdown
For Mattel and Hasbro, consumer shopping during the holidays accounts for 40% of the retailers annual revenues, according to Ad Age.
According to estimates by Euromonitor, the U.S toy market has generated sales ranging from $17 billion to $20 billion between 1998 and 2012, fluctuating between growth and decline any given year. In 2013, it’s forecast to be worth $19.9 billion.
But in the search for new revenue, the brands are now creeping across target audiences… No. 3 Hasbro (best know for making Transformers and G.I. Joe) is focusing on girls’ toys where No. 1 Mattel has dominated for years; while Mattel is investing more in content and entertainment where Hasbro has been ahead. However, Lego, steady at No.2, continues to focus on the building-block aisle.
There’s also a tug-of-war going on with the concept of “boys vs girls” targeted entertainment. Hasbro has struggled to retain its marketshare by relying on the boys market that has a “hit-drive” cycle. For instance, it maximizes gains when movies for franchises come out and rides that profitability during years without movies… this year results in 17% sales slump for Hasbro boys toys in Q3.
As a result, Hasbro increased ad spending to about $422 million in 2012 to offset lower sales in entertainment based properties. It’s capitalizing on the renewed success of “My Little Pony” by developing “Equestria Girls” for teens. It has also extended its Nerf line with “Rebelle” gear – the same shooters and projectiles it markets to boys but in prettier packaging.
The Toy Industry Association stated licensing will continue to be an important trend, with 2014 expected to be the “strongest year in recent history” for toys tied to movies.
Mattel on the otherhand, spends about 11% of net sales ($717.8 million in 2012) on advertising. With a core focus on girls (Barbie, American Girl and Monster High), it has begun to seek new segments for marketing. For instance, its pushing Fisher-Price on new millenial moms and targeting Hispanic moms with “Toy Feliz” campaign, which recognizes how hard Latina moms work to keep families happy.
Of course there’s always the growing competition of tech companies like Microsoft and Apple as children grow older and start using technology at younger ages. Plus with the release of Xbox One and PS4 this season, parents will be stretching budgets for limited big ticket items.
In its 2012 annual report, Mattel identified the phenomenon of kids outgrowing traditional toys at a younger age as a risk factor for the company. But it also flagged an “increasing use of sophisticated technology in toys.”
Brands are also seeking new ways of engaging kids with added online content for their favorite toys. Barbie, Monster High and others have incorporated apps and online games to expand the interest of a toy and ways a child can play with it.
Private label toy makers also take about 20-30% of the market. Disney and Nickelodeon are now creating their own shows and licensing the toys. Indy toy makers can break into the market with ease using website, social media and channels like Amazon, Zulilly and ebay.
But, the Christmas season’s not over yet and many parents are still shopping… so we’ll have to wait and see who comes out on top.