Toy Product Range Diversification – Risk Insurance For Tough Times

Toy Product Range Diversification – Risk Insurance For Tough Times

There are plenty of toy and game companies, as well as toy & game retailers out there having a really tough time right now. There are also some companies having a really good time in the circumstances. The question is what separates these companies out? How can some companies do well while some are really suffering?

Let’s start the answer to that question by looking at the age-old cliché in the toy business – the toy and game business has proven historically that it is recession proof or at the very least recession resistant. Even through the global financial crisis of the late noughties, the toy business performed fairly well, staying flat over that really tough period of economic stress and downturn.

The covid-19 pandemic has been so different from any other difficult time in living history in that it has rewritten rules and cut off many features of modern life and economic activity which we completely took for granted. The aviation industry for instance has been decimated by people not travelling. From the perspective of the toy business there has been supply chain disruption, but also perhaps much more critically the movie toy business has been decimated, and along with that in general licensed toys, for so long a major part of the toy business, has been hard hit.

Consumers have moved from buying across all categories to reducing purchases significantly which seem frivolous and increasing those that seem important. In particular, parentally approved toy and games products have seen sales uplift, as desperate parents seek to gainfully occupy children who have not been attending school.

None of this is news at this point, these trends are well known by now. The key finding here though should be about risk reduction via product range diversification. If you have a business which relies on just one product category, product range or retailer, then you are putting your business at major existential risk. When things eventually return to some degree of normal and the pandemic clears, those age old high performing categories will most likely be resurgent again. Collectables and movie toys will uplift once again, and maybe those less aspirational, less exciting toy categories like science kits or arts and crafts will drop down again, but the way you manage that process effectively is to be a player in both.

Currently we are all focused on the pandemic & the immediate harsh impact of that, but if this pandemic hadn’t happened, we would this year have been talking more about the risk of consumer plastic backlash. That was THE big theme coming out of toy fair season this year. The issue with this risk is that consumers won’t give you 5 years warning of their decision to drop plastic, they will just not buy it one year, and when enough of them do that in one selling season you get a major drop in sales of plastic toys. The way to mitigate this is twofold – 1. Jump on board the movement to create products which have plastic like materials based on plant-based materials.  2. If you haven’t already, launch into some categories with more sustainable materials e.g. cardboard and wood. That is how you manage risk across a company’s product portfolio.

If you are the classic ‘one trick pony’ with just one brand or product, hopefully you are getting through these tough times ok, but why wouldn’t you reduce the risk of getting smashed by the next trend, disaster or recession by broadening your product offering?


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: