- Since 2008, the profit margin on toys has fallen by 53.9%, with a 7.3% drop in the last five years.
- Only 11% of consumers prefer to shop for toys on the internet
- Sales of scientific and educational toys have bounced back, but dolls and their accessories are the biggest-selling traditional toys.
- • The top ten toy manufacturers account for more than half of all sales, with Spanish companies having hardly any presence
EAE Business School has published its report “The Rules of the Game 2020", which reveals that turnover in the toy sector are set to drop by 28.4% in 2020 and will not recover until 2023. Moreover, the profit margin on toys has decreased by 53.9% since 2008, when the economic crisis began. In comparison, in the last five years, it has fallen by 7.3%.
“The Spanish industry has managed to maintain its competitiveness thanks to great efforts in terms of creativity and efficiency. The coming decade will not be easy and this delicate stability may be threatened by new brands gaining ground in emerging countries that previously competed on price more than quality. The pie is too tasty for them to ignore and they also have a far larger internal market that the West, which enables them to maintain their economies of scale”, explained the EAE lecturer and author of the report, Eduardo Irastorza.
As the report reveals, over the last five years, the manufacturers that top the sales list are practically the same firms with slight variations in terms of their market shares and positions. The top ten manufacturers account for more than half of all sales, with Spanish companies hardly present among them at all. “The first, which was the great national leader, Fábricas Agrupadas de Muñecas de Onil S.A., better known by its acronym, Famosa, was bought by the powerful Italian firm Giochi Preziosi, which is strongly committed to leading the traditional doll and action figure segment at a European level. We hope that, as in the case of the automobile sector, the fact that we do not have any of our own manufacturers will not mean foregoing a strong industry in the sector”, explained Irastorza.
Catalonia and the Valencian Community are the two Autonomous Communities with the strongest presence and tradition in the toy sector. Catalonia is home to brands such as Diset and Educa Borràs, while the Valencian Community is the base for Famosa, Playmobil Ibérica and Industria Toyra, among others.
E-COMMERCE AND THE REINVENTION OF RETAIL
In the case of shopping for toys, only 11% of consumers prefer to shop online, compared to 37% in other sectors, such as fashion. “Once people of all ages and social classes overcome their fear of e-commerce, they get into the habit of shopping online and do so more frequently and strongly. Manufacturers must really bear this “new reality” in mind when designing their marketing strategies”, emphasized Irastorza.
In this respect, the EAE lecturer gave the examples of Lego, Hamleys and Warhammer to highlight “the reinvention of the point of sale to offer the best and fullest brand experience”. “Lego leads the way in this respect. Its flagship stores throughout the world can successfully compete with the kings of interactivity to date: the British firm Hamleys, the store with more most experts and opinion leaders per square metre. The most dynamic and innovative firm has proven to be Warhammer, which brings together consumers of all ages, social classes and education levels willing to spend hours and hours in their stores”, explained Irastorza.
THE MOST POPULAR TOY CATEGORIES
In this remarkably atypical year, only two toy categories have managed to achieve growth: dolls and their accessories, with a rise of 0.8%, and fancy dress costumes and role playing games, climbing by 0.6%. The categories expected to grow most strongly by 2024 are, first of all, dolls and their accessories, with a growth rate of 19.7%, followed by scientific and educational toys, at 10.4%. The toys set to grow least, or maybe even decline, will be soft toys (-23.1%) and remote control toys (-20%).
“Although there has been an upturn in demand for scientific and educational toys, the toys with the most promising future ahead of them are dolls and all their accessories. They are an excellent example of the successful application of upselling and cross-selling strategies. It is hard to be sure of the reasons for this popularity. Perhaps they embody the great “safe haven” value of traditional toys. Alternatively, it may be due to the fact that, in our country, scientific and educational toys are categories that have yet to take off as they have done in other parts of Europe. We will have to wait a few years to see this panorama change”, added Irastorza.
Click here to download the report