NPD Insight

Woah, we're half way there…

This month, Melissa takes an in depth look at UK toy market sales at the half-way point of 2022, looking at what’s performing well and how price points are evolving.

The UK toy market reached the half-way mark of 2022 with value sales down -8% (-£63m) compared with the first six months of 2021. Volume sales were down even further at -15%. Part of this decline was driven by the stronger than normal sales in Q1 2021, when the UK was in a third national lockdown. It is worth noting that YTD Jun 2022 is up by +3% in value compared with the same period in 2019, the last ‘pre-Covid’ period, representing an additional £20m sales. As the UK toy market reacted positively to the lockdowns and enjoyed strong growth for these periods, it is always difficult to match those sales out of lockdown. However, Q2 2022 sales declined -6% vs. 21, without a lockdown in either period, although these sales are also up +3% vs same period in 2019. So, what are the current challenges facing the UK toy market?

The UK is facing a cost-of-living crisis with energy bills soaring, food prices increases and petrol at record highs. While the toy market is often said to be recession proof, it is still being impacted by the challenges facing consumers’ discretionary spend. In addition, the toy community is dealing with its own pricing challenges, from production to supply chain over the last year. The UK toy market has seen the average selling price increase in 2022, up +8% YTD June, roughly aligned with the Consumer Price Index which was up +8% in May. The average selling price for toys is now £9.15, up from £8.50. However, the average selling price includes a mixture of base price changes, promotional fluctuations and consumers product mix changes, so it doesn’t always tell the whole story.

Looking at the key price points, toys sold under £5 accounted for 46% of the volume sold in Q2 2022, yet accounted for just 12% of value sales. While this still represents nearly half the number of toys sold, there were actually fewer toys sold at this price point. In total, there was a decline of 6.4m units – either through consumers cutting out non-essential toy purchases, reducing the frequency of impulse purchases or some items moving up a price point. £5 - £9.99 also experienced a volume loss of 1.9m units. Looking at the average number of items sold per store at these price points, there is a decline within both price points under £10, suggesting that there are fewer items in these price ranges than there were a year ago. At the same time, the higher price points have seen more items sold, especially the £10 - £19.99 bracket, which has seen an average increase of 15 items per store at this price point since last year. This has led to this mid-price point selling an additional 550k units, contributing an additional +£5m in value sales. The higher price points (£20+) have also seen an increase in range, suggesting that there are many items that have increased their base prices in the last year.

The average selling price increase of +8% for toys is not consistent across all Supercategories, with some increases much lower. Games & Puzzles has seen average selling price decline, -1% in the first half of 2022, while both Outdoor & Sports Toys and Youth Electronics ASP remains flat. The categories with the highest price increases are Action Figures & Accessories and Vehicles. For the Action Figures supercategory the ASP is now £9.77, while for Vehicles it is £6.83. The highest ASP category is Building Sets at £18.15, although this represents an increase of just +4%. These price changes will include impact of both promotions and product mix, as consumers trade up or down between price points as well.

Despite these changes on price point, some of these categories continue to grow in value and have performed stronger than others so far this year, with Vehicles and Plush in particular standing out. Plush has seen strong growth with value sales up +35% YTD June 22 vs. 21, driven by the success of Squishmallows and Ty, while Vehicles value growth is up +8% with Hot Wheels, Monster Jam and HTI’s Teamsterz all in double-digit value growth. Elsewhere, Action Figures has seen strong value growth, up +7% with Marvel, DC and Star Wars all increasing, as well as strong performance from Jurassic World and Minecraft.

As the industry heads into the second half of the year - the most important period for sales - it is likely that consumers will continue to be discerning with their toy purchases. They won’t be driven solely by prices, but will continue to look for products with a mix of play value, inventiveness as well as demand from recipients.

Item Progression:

Following the success of the larger Magic Mixies over the peak festive season last year, Moose’s smaller, collectible extension, Magic Mixies Mixlings Tap and Reveal Cauldron, has shot up the rankings in June to reach the top 20 across total toys and the No.3 Playset Doll item. With weighted distribution in June of just 52% and an average selling price of £6.02, there is opportunity for this item to stay in the top sellers for the rest of the year. Other Playset Doll items that remain strong are L.O.L. Surprise Queens Dolls and Polly Pocket World Sweet Treat Compact Assortment, the No.1 and No.2 Playset Dolls for the month.

Entertainment Type Performance:

With the total UK Toy market struggling compared to 2021, one area of the market has increased its importance – Entertainment or Content.

The largest is TV/DVD/Digital which, while still down -4% in value, has increased share in the last six months, accounting for 16.7% of all value sales. The strongest property in this area is Barbie, followed by Paw Patrol. However there has been strong growth in the first half of the year from Bluey, Disney Encanto and Miraculous: Tales of Ladybug and Cat Noir, all adding to the entertainment type performance. Movies has seen the strongest growth, up +4% helped by the stronger performance of cinemas in 2022 compared to 2021. There are some stalwarts in this area such as Star Wars (+8%) and Marvel Universe (up +10%). More recent film releases are having a big impact with DC Universe up +61%, driven by The Batman release earlier in the year and Jurassic World +124%, following the June release of Jurassic World Dominion. Despicable Me/Minions and Godzilla vs Kong have also grown significantly this year, up +89% and +63% respectively.

Video Games continue to increase their share of toys, now accounting for 5.6% of the market, with Minecraft remaining the largest driver of growth, up +24% this year. However, growth from smaller properties such as Among Us and Five Nights at Freddies have also contributed to the strong performance of the category.

Melissa Symonds. Director UK Toys, EuroToys NPD