How Is The Toy Business Doing During The Pandemic & Does It Matter

How Is The Toy Business Doing During The Pandemic & Does It Matter?

We’re nearly at the point when the major stock market listed toy companies share their Q2 2020 results. This period of time covers the lockdown of western societies and the period most likely to have seen supply of toy & game products impacted by Covid-19 hitting Chinese manufacturing back around Chinese New Year.

The interesting thing from an observer’s point of view is that there are some massive winners and some massive losers coming out of this pandemic. Not every business or every category has seen the same impact. Some companies and some categories have been hard hit by changes in consumer behaviour, some companies are flying and sales are significantly up for the last few months in a time which is traditionally quiet for the industry outside of a brief sales spike around Easter and any blockbuster movie related toy sales.

Anecdotally we have heard from friends and colleagues on both sides of the fence, and we feel sympathy and concern for those who have been hard hit, and obviously we are pleased for those who are doing well in the circumstances. But what is the actual total picture? This should become clearer once we get the quarterly results through from the likes of Hasbro, Spin Master, Mattel and others.

NPD Group (a leading data/market research company) has released some market data to leading trade publications The Toy Book (USA) showing how the toy business in the USA has performed during the lockdown period. You can read more about that data on their website in the news article featuring the data:

Needless to say, the picture is mixed, but spoiler alert: overall there has certainly not been a catastrophic drop in sales for the toy business.

The issue though like always is that what we all really care about is not the total market size. In fact, while we wouldn’t go so far as to say that is irrelevant, it really doesn’t matter for most toy companies. If you are a $multi-billion toy company you may need to pay attention to what is happening with the overall market as you are effectively at that point in a market share battle with the other major players, but for the vast majority of toy companies market size is in practical terms an irrelevance! What you care about is your shipments, your orders and your future prospects. You may feel a little jealousy for a competitor who has a massive hit, but in the end as long as your busines is doing ok what does it really matter from your perspective.

Even from a retailer perspective it doesn’t really matter what the market size dynamic is if your own toy department sales are doing good.

Every single year, whether the market is up or down there is a massive churn beneath the surface of some companies on the up and some on a downward curve. Sometimes it is a good thing if topline sales for the total toy market are down – for instance when there is a strong movie year, many companies focus on the high volume movie related toys at the expense of their own brands, which can lead to higher sales for the year but not necessarily higher profit and certainly not long term stability.

In the end then, it is largely irrelevant to individual companies and toy businesspeople how the market is performing, because we are all in our own battles against our strengths and weaknesses and against our threats and opportunities.

Needless to say, this not a great year if you are a company heavily reliant on movie license toys, because movie releases have been so disrupted. Also, if you are a Plush toy company things may be tough because Plush (unless licensed, in which case see the previous point!) tend to be products which are picked up and held prior to purchase, which is a tough dynamic if a). physical stores are closed and b). people are reticent to pick things up due to fear of picking up something the virus may be on.

If you are a company in one of the categories which has been hard hit, you may benefit from our last article about toy product line diversification:

The harsh reality is that if you are in a badly affected category it’s going to be tough for a while, and if you are in one of the more parentally approved categories like games, puzzles, science kits or other area you may thrive despite the crazy times. In the final analysis though, what matters more than total market size dynamics is keeping a close watch on consumer behaviour and adapting to those changes.


We run a Consultancy business advising toy companies on how to grow their business by a combination of strategic analysis and export sales facilitation. We have helped more than 100 toy and game companies grow. For more information on our process and methodology for growing toy sales:

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