Many countries are now heading into extensions of lockdown right now. It’s almost beginning to feel like normality, albeit a normality we don’t want. Thoughts are again with those suffering from this horrendous virus and those directly in the front line fighting it.
We’re now starting to see a lot of speculation about what can end the current situation, and then what kind of world are we going to emerge into afterwards.
We’ll leave the first question to the medical experts, but for the second question, there have clearly been some massive changes. The question though is which changes will be permanent and which will pass leading back to how things were before in some instances. Here are our thoughts on which changes are likely to be permanent and which are likely to pass:
- Accelerated virtual lifestyles – we’re just over twenty years into the ‘Internet Revolution’, which in the future will be looked on as being as big a change in human society, culture, work and living as the Industrial Revolution. The lockdowns which have reached across the world have vastly accelerated what has already been happening for the last twenty years – a move towards virtual over physical living. Entertainment and social interactions have been moving online throughout the current millennium, but this trend has rapidly accelerated during the pandemic and while this may regress slightly, human beings are above all creatures of habit.
- Accelerated shift from physical retail to online – this shift has again been ongoing for two decades by this point. The change here though is not just about changing behaviour on the consumer side. The major issue with retail is that many retailers were struggling anyway, and a period of paying rents and costs (even if some costs are reduced) combined with diminished revenue will be more than enough to push some well known retailers into insolvency. Alas there is just no way we are emerging from this crisis with all existing retailers in tact and profitably trading. Some non-food retailers are going to go out of business. Just was we lost a raft of retail customers for toys through the global financial crisis of the late noughties, now the current hard times will also take their toll. Food retailers who sell non-food items i.e. Grocery/hypermarché will come through this stronger and with increased market share which is a relief in some ways but a challenge in others as they aren’t always the easiest or most profitable accounts to trade with. Overall then, when physical retailers disappear, online appears to take up more of the slack than surviving physical retailers, and so the trend to online shopping will irreversibly accelerate coming through this pandemic crisis.
- Growth in board game playing – some categories of the toy market are really struggling right now, and others are flying. We’re seeing creative play, arts and crafts and science kits selling extremely well for this time of year in some markets. This though is more driven by everyone being stuck at home and parents wanting to gainfully occupy their kids. The big impact longer term is likely to be in board game playing, as hordes of dormant game players rediscover how much fun board games are and how socially connecting they are versus screen time. Research studies we have conducted across our 20+ years in the business have always highlighted the importance of word of mouth or played at a friends house for driving board games sales, but the bottom line is actually one step back from this – board game playing begets more board game playing. We predict that the board games category will reap the rewards of the current pandemic lockdown for a long time to come.
The global toy market may be down in 2020 or at least not grow as much as was expected, although this is hard to call because through tough times normally parents will go out of their way to treat and gift children to make up for the difficult times. It certainly won’t be plain sailing to meet demand however the final numbers come in. There are a number of issues caused by the pandemic though that will inevitably fade away once this pandemic clears either via fading away as happens with so many viruses or because a vaccine is developed.
- International travel – we foresee a return to near normality within 6 months of the end of the pandemic because business is so global in this age, and there isn’t any way to move back from that as the world is so easily accessible online today. Even if any struggling airlines don’t make it through this tough time, the planes will still belong to someone and the airports will still be there so someone somehow will meet the upsurge in travel demand that is likely to come.
- Disrupted supply chain – clearly China is now manufacturing again after being locked down, but at the time of writing some other countries with significant and ever growing toy manufacturing hubs are locked down including India. The long term shift away from China for a proportion of toy manufacturing is going to carry on regardles of the pandemic due to systemic and economic factors.
- Movies and toys – the toy business has historically been up or down for a particular year based on the movie slate and success of otherwise of the latest big movie releases. While media and content consumption is ever more fragmented, movies will come back in the way they always have with big global cinematic releases driving $billions of toy sales.
Aside from these predictions, we would also like to take this opportunity say thanks to all those on the frontline fighting this virus and to wish you all the best getting through this challenging period of time.
Our Consulting company – Kids Brand Insight works with toy companies of all sizes on a Consultancy basis. We recently launched a new ‘packaged’ up Consultancy service to help toy and game companies grow. While we appreciate some companies are just trying to get through this time, we have found increased demand as those companies who are still enjoying success through the pandemic have still been seeking our help. Our Toy Co Growth Booster program is open to all sizes of companies. For more information: http://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/