The Toy Industry Brings Its A-Game to 2021

by | 01 February 2021

The total U.S. toy industry, which includes video gaming, predicts more than $27 billion in sales revenue for the first time in its history. Primarily driven by the pandemic’s stay-at-home order, the significant double-digit growth in toy sales peaked in March 2020, as parents sought alternative options in managing their children’s time.

Three key players dominate the Top 25 list of Toy Brands: Lego, Hasbro and Mattel. Lego retains the title of the world’s most valuable toy brand, valued at $6.6 billion, with 38% of its net sales generated in the Americas. The brand’s mission to “inspire and develop tomorrow’s builders” maintains its popularity with kids of all ages. Hasbro and Mattel have held their market share with top-selling products My Little Pony, Nerf and Transformers (Hasbro) and Barbie, Fisher-Price and Hot Wheels (Mattel), respectively. They are not the only players on the board, however. In recent years, newcomer Bandai Namco, a Japanese video game developer, and publisher, joined the ranks, followed by boutique toy brands like Asmodee, Funskool and Spin Master, among others.

Collectively, toy manufacturers–those that produce the world’s most famous toys, account for over 13 million square feet of commercial real estate in the U.S., with Cartamundi North America holding court. The Belgian company also has the largest market share in the Toy, Doll and Game segment generating over $500 million in revenue, followed by K’nex Brands L.P., and eco-friendly toy manufacturer Green Toys Inc.

The Art of the Game

Analysts have an eye on the China toys market, which was worth $14.9 billion in 2019, predicting China to generate substantial revenue growth, upwards of $27.2 billion during 2020-2025. Aside from principal U.S. players, the China toy market has seen internal growth from Shantou City Big Tree Toys Co., Ltd., Playstream Education Limited, and underdog Miniso, a discount retailer known for selling low-cost household goods and electronic gadgets. Miniso, who recently opened its first flagship in New York City, launched Toptoy to fill the gap left by Toys ‘R Us’ absence. The shop will sell collectible cartoon figurines and “blind boxes” of dolls based on anime characters. A phenomenon in China, “blind boxes” leave the consumer guessing as they don’t know what’s inside until after purchase.

Pop Mart International Group, China’s leading toy manufacturer, charms millennials with its mystery box retail, raking in millions of dollars in retail sales. The “blind box” wonder capitalizes on the FOMO of must-have collectible figurines, inspiring the proliferation of art toys to enter the market. Created by artists, the pop art figurine market has exploded. The art toy collectibles are available in various sizes, from the standard 8-inch figure to 3.5-inch-tall minis or 4-foot-tall models, with the most coveted pieces from artists KAWS, Yoshimoto Nara and Takashi Murakami snagging millions of dollars at auction. The current valuation of the collectibles market in China is approximately $60.7 billion. Although the U.S. collectible toy segment is quickly growing, we’ll need to up our game beyond the Star Wars Mandalorian or Marvel superhero collector edition to generate above and beyond analysts’ prediction of $3.75 billion by 2023.

Two Brands Can Play at That Game

Licensing and strategic brand partnerships have increased dramatically within the toy industry over the last year allowing toys to crossover and, in some cases, blur the lines between other retail segments. This past holiday season, Target announced a strategic partnership with luxury toy retailer FAO Schwarz. The two brands teamed up on a specially priced 70-piece toy collection, promoted in-store to cross-pollinate products to consumers. FAO Schwarz’s NYC headquarters carried the line, along with more than 300 of Target’s exclusive brands, including Cat & Jack kids apparel and Pillowfort home collections.

Melissa & Doug announced a global licensing partnership with ViacomCBS to create products based on the beloved PAW Patrol and Blue’s Clues & You! children’s programs. The purpose-driven global brand designs toys to educate and empower preschoolers, with plans to introduce their hands-on, skill-building toys to ViacomCBS’ 6.3 million viewers.

Eco-friendly furniture and decor retailer West Elm entered into a partnership with direct-to-consumer Piecework Puzzles, a high-end jigsaw puzzle brand. The homeware retailer has been at the forefront of partnering with up-and-coming brands to refresh its merchandise. With Piecework on board, West Elm customers have the opportunity to purchase a selection of creative and stylish puzzles to calm the soul and complement their home decor.

DTC’s the Name of the Game

During the 2020 holiday shopping season, 36% of shoppers shopped for toys and games, second only to apparel (53%), with 66% of consumers purchasing toys both in-store and online. Online purchasing by children increased by 50% in 2020, a rising trend since nearly half of 10- to 12-year-olds have smartphones.

According to Kids Insights’ Future Forecast report, direct-to-consumer retail will become a significant trend for 2021. The direct-to-consumer retail channel has received much attention as consumers grow more accustomed to shopping for toys directly from the manufacturer. Eliminating the middleman, aka retail distributor, streamlines logistics and decreases the chance of coronavirus contamination.

Earlier in the year, both Hasbro and Mattel expanded their direct to consumer operations to meet the growing demand for e-commerce. Toy business veterans like FAO Schwarz and Hamley’s of London are also making a play for digital. Hamley’s of London expanded its online footprint with an eBay shop, offering its full range of toys and games to eBay’s 28 million U.K. customers. FAO Schwarz launched the Academy of Wonder as part of its online offering to bring its flagship experience through online education. Big box retailer Walmart piloted an in-app social shopping experience partnering with TikTok influencers to shorten the purchasing funnel.

More Than Child’s Play

The best toys of 2020, as reported by TIME, have a nostalgic hands-on appeal: board games, arts and crafts, jigsaw puzzles and blow-up balloons. These positive distractions provided a creative outlet and an escape from the chaos that was 2020, prioritizing happiness above all else. As the days turned into months, the modern family experienced a bit of a renaissance, consciously engaging in playful activities with their children. In many ways, this solidified toys as an essential item.

The toy company’s role has evolved exponentially as parents and families look to brands to offer support services. Dollmaker Zapf Creations launched its Baby Annabell Ask the Experts campaign to encourage good mealtime routines through doll play. Crayola compiled a DIY online toolkit with art-focused lessons, downloadable coloring pages, and gratitude cards for children to share with essential workers. Lego, Mattel, and Hasbro are also playing their part with content hubs, social media initiatives, and mindfulness campaigns to ease household stress.

One More Piece of the Puzzle

As families gathered to play board games, card games, and jigsaw puzzles, the games and puzzles segment exhibited 77% growth. The global jigsaw market expects to reach $730 million in sales by 2023. In the first weeks of the pandemic, The Puzzle Warehouse (St. Louis, MO) reportedly sold 10,000 jigsaw puzzles, and German jigsaw puzzle maker Ravensburger’s U.S. sales rose 370% year over year. This increase in consumer demand is taxing the puzzle supply chain and inspiring a new generation of puzzle makers to enter the market.

The global board games market brought an estimated $13.1 billion in 2019, with brick-and-mortar accounting for the largest share (65%). Even before the pandemic, board games had a following, with nearly one thousand board game cafes opened worldwide. According to The NDP, board games’ popularity has resulted in sales up 48% year to date. From chess (thanks to The Queen’s Gambit) to Chutes and Ladders and Exploding Kittens, board games have had a resurgence at home, too.

Note: Although the pandemic has been influential across all gaming sectors, this article focuses specifically on traditional toys and games, omitting video games and video consoles. According to IDC data, 2020 revenue predictions for the global video game sector included a 20% to a game-changing $179.7 billion. Read more here.