This year, the US toy industry is expecting their BEST year in over a decade as the NPD Group predicts domestic toy sales to climb to $19.9B, an increase of 6.2% over 2014. Star Wars toys will lead the way with both children and nostalgic adults clamoring for more. Sales figures are expected to easily exceed the $531M that was spent on last year’s top toy brand, Frozen. Not to be left out in the cold, Frozen is still expected to be popular during the holiday season of 2015, as Disney has maintained the 2yr old film’s relevance by periodically releasing film shorts, with a sequel also in the works. Frozen’s new toy, a Sing-a-long Elsa doll has made Toy Insider’s Hot 20 list. Additionally and more importantly, multiple Star Wars toys have also made the list, including the Bladebuilders Jedi Master Light Saber, which allows kids to build over a 100 different light saber combinations. Toys ‘R Us’ CEO David Brandon said that they are betting on big brands this year like Star Wars to boost sales. Hasbro seems to be the real winner here, as they have major merchandising rights for Star Wars until 2020. They also have just contracted with Disney to get Frozen merchandising rights which previously had belonged to Mattel.
Star Wars isn’t the only reason toy sales are predicted to rise. Much attribution goes increasingly to inexpensive tech components which allow manufacturers to create affordable high tech toys to compete with smartphones and tablets. Mattel Exec. VP Geoff Walker said “You want to make sure that you give them enough (so) that they’re going to want to walk away from their iPads”. To that extent, Mattel has released the Hello Barbie, a $75 doll complete with artificial intelligence and voice recognition. The doll has raised concerns b/c of its capabilities as being an invasion of kids’ privacy. These concerns according to Laurie Schacht, publisher of Toy Insider, are overblown as the doll doesn’t have data storage capability. Other high tech toys include the Meccano MeccaNoid G15 Personal Robot ($150) which has over 600 parts that will let kids create multiple designs; it can respond to commands; and it can even mirror the toy player’s own movement. And then, there is the Sky Rover Voice Command Helicopter, which allows kids to control the RC helicopter by using simple voice commands.
Lego, a stalwart of the holiday season, will look to continue its reign as king of the construction toy market. The company has doubled its profits over the last 5 yrs. (NY Times, 11/21/15) This closely held Danish firm however, will have some competition this year. As a result of losing a trademark lawsuit in 2010 regarding interlocking bricks, a whole host of competitors have joined the mix. Major players like Hasbro and Mattel have broken into the international construction toy market ($9.3B in 2014) which is expected to increase to $14.5B by 2019. (Euromonitor International) Smaller companies, like McFarlane Toys, have branched into niche markets that the Lego brand won’t. Founder Todd McFarlane’s company has sets based on The Walking Dead and Game of Thrones, hit TV shows deemed too violent for the wholesome Lego brand.
Arguably, the most compelling feature of toy industry growth b/t 2013 & 2014 was the fact that BLDG SETS had the fastest growth at 13% followed by Action Figs/Accessories/Role Play, Games/Puzzle and Youth Electronics each at 10%. (Please see T-1.) The construction market led by the mega Lego brand that has caught everybody’s fancy. The world stage of toys has grown so vastly that we find from Jan-Sept 2015, the toy industry has increased by a remarkable 7%. Furthermore, the fastest growing 3 nations in the world of toys (of the 11 nations that NPD tracks including the US & CA) are Russia, (34%) Mexico (16.1%) and Poland (11.8%). To us the most intriguing nation is Russia. Gee Whiz 34% WOW! (Is this “Putin Power”, “Parents Power” or what?) Russia’s largest super-category is what else but the BLDG SET category which has been growing 50% faster than the rest of the toy market. (According to NPD the global toy market was over $84B in 2012 with the US being 19.6% of that makeup.)
So, here we are with BLDG SETS atop the toy world±, the path to toy success whether domestically or globally appears to be etched, accordingly. The problem however is that BLDG SETS (i.e. the world of Legos ±) is a male dominated world with Barbies and American Girl on one side almost tugging at the dollar strings of Legos and their competitors’ purse strings on the other side. Just looking at Table 1 below, we quickly notice that the total market for dolls ($2.22B) in 2013 was 35% greater than for BLDG SETS. This year it was ONLY 25%, you get the idea! It is true that dolls (such as Barbie & American Girl) have made wonderful electronic adaptations to be more contemporary and appropriate in today’s world of STEM education. BLDG SETS really have NEVER been part of the girls’ toy mix. Lego and a few competitors however, have made real effort towards directing these toys towards girls, too. Then, along comes Goldilocks, we mean GoldiBlox & the world of BLDG SETS with interlocking bricks changed, forever.
GoldiBlox founder Debbie Sterling looking to break into the male dominated world of BLDG SETS developed and started marketing GoldiBlox to young girls with aspirations of getting girls to accept the unlikely perceived reality that “construction play and engineering work can be fun”. The GoldiBlox starter kit ($29.99) is a board game/figurine/BLDG SET/book combo. The books tell a story of GoldiBlox, a young female engineer, who goes on adventures with her pets and friends. On the way the group face challenges that can only be overcome by building certain machines. Sterling, a mechanical engineer herself, hopes that her toys will help young girls become more interested in STEM subjects (science, technology, engineering and math) by exposing them to engineering at a young age. It is a steep staircase Debbie to climb, since about 90% of America’s engineers are male. (The Atlantic, 9/18/12) Having said that, we guarantee that GoldiBlox will help change all that with her 3 Bears (at least Baby Bear) following her lead! (We 1st learned of GoldiBlox on a recent CNBC report about “Squawk Box”.)
Table 1: Annual Sales Growth in NPD’s Toys from 2013-14
Category Annual 2013 Annual 2014 %
BLDG SETS $1.64 B $1.85 B 13%
Action Fig/Access/Role $1.15 B $1.26 B 10%
Youth Electronics $0.59 B $0.64 B 10%
Games/Puzzles $1.29 B $1.42 B 10%
Plush $0.89 B $0.94 B 6%
Dolls $2.22 B $2.32 B 4%
Outdoor & Sports $3.51 B $3.61 B 3%
Arts & Crafts $.91 B $0.94 B 3%
Vehicles $1.25 B $1.25 B 0%
Other Toys $1.08 B $1.08 B 0%
TOT TRADITIONAL TOYS $17.47 B $18.11 B 4%
*We used NPD’s sales information from 2013-2014. It should be noted that their data from 2011 was skewed due to changes in data source as well as measured categories.