Play It Forward: Forecasting the Future
Telling the future of the toy industry has an accuracy rate that is probably on par with that of a street corner psychic. It’s an industry whose doom is seen in every new technological innovation from television to the smartphone. It’s an industry where new trends in education and entertainment are perceived to be a threat.
The fact of the matter is that none of these fears have ever destroyed the traditional toy industry. Sure, technology has evolved at an almost mind-numbing pace. New modes of communication have changed how we interact and acquire information. But while this evolution has been fast, evolution of the human species is glacial in its speed. Thus, the needs and benefits of play as an essential element of child development have remained virtually unchanged throughout the modern era. Boiled down, play serves three very basic functions for children: it provides new experiences, facilitates exploration of the world, and gives children a chance to express themselves.
Mobile devices didn’t kill the business; they only made the toybox bigger. And we have every indication that in today’s market where the mobile device isn’t novel, kids are embracing traditional toys once more. Anyone who has been in this industry for any time understands its cyclical nature.
We do see a steady increase in costs, driven largely by changes in manufacturing and oil prices. The toy industry is a petroleum-dependent business, so the impact of those costs will be felt throughout the entire production and distribution channels.
Retailing will continue to move online, particularly for products that are kid-requested. The current 10 to 15 percent of annual toy sales online is steadily increasing every season as consumers do more research and shopping online and go to the store knowing what they want to purchase, which will be driving traditional retailers to be more competitive and innovative in attracting and retaining customers. Contemporary toy buyers are much more informed about the products they are looking for, and that trend is only going to continue. Online research is also having an impact on when a consumer goes to a brick-and-mortar store and the amount of time spent there. The unplanned purchase is disappearing to a great extent, and traditional stores are going to have to do a better job of making their toy departments a consumer destination.
Where this will have a strong positive impact is on the smaller companies and retailers who will be able to use online to leverage visibility and sales they might not get otherwise. Retailers are already looking for toys that they can sell exclusively online, either because of space limitations or because they serve a more narrow demographic than their key customers—and they don’t want to leave money on the table if they have the option not to. This effectively levels the playing field for smaller companies because, again, this is a product-driven business, and one never really knows where the next great product is going to come from.
As we saw at the outset, the traditional toy industry has remained constant in its size for the past 10 years, and there is no reason to think that will change any time soon. Though children have given up playing with many traditional toys at a younger age than they did in the 1960s, 1970s, and even 1980s, the process of child development is such that you’re not going to see a newborn on a tablet, and there is reason to think that the so-called age compression has reached as far as it will go.
Toys will always be responsive to the marketplace, and the successful toymakers will be the ones who are similarly responsive and nimble; that’s never changed. The business will remain highly unpredictable, but one thing that can be predicted without any reservation is that toys will continue to reflect the culture, the trends of the time, and the aspirations of children. Oh, and that successful toys will all have one thing in common: fun for the kids who love them.