Circana - Insight

Down to the wire…

This month, Rory looks for signs for optimism in the UK toy market and examines how current trends are expected to pan out in the run up to Christmas.

The UK toy market value trend is currently down -4.6% up to November 2nd, but for the first five weeks of peak season, the overall trend has been -10.9% in value and -6.1% in volume. Q4 didn’t quite get off to the start everyone would have liked, and a disappointing performance in October only saw one week that grew - and even then, it was only +1% overall. Looking ahead to what will happen in the weeks to come, are there signs for optimism or will the current negative trends continue up until Christmas?

Looking at the first five weeks of Q4, all but one week has had a negative trend and two of those weeks have been double digit negative. There has been some impact from promotional events not happening or moving dates, but that doesn’t account for all of the decline. Every supercategory has declined for the start of Q4 this year, albeit some more than others; Building Sets, Games & Puzzles, Action Figures and Youth Electronic are ahead of the market. However, the categories showing the largest

decline are two of the largest - Dolls and Infant/Toddler/ Pre-School Toys make up over a quarter of all value in this period, but account for nearly half of the overall decline. Price points give a hint as to how consumers are feeling, with £0-10 the top performer. This price point has a flat trend and a share of nearly 26% of the market versus 22.6% for the same five weeks in 2023. The largest decline is coming from the £20-30 and £30-50 price points, s with a combined loss of £16m compared to last year.

Yet there have been some success stories in Q4 so far. Within the £0-10 price point which is holding its own, the £3-6 and £6-10 brackets are performing best. Within these lower price points, the top performing subclasses are Miscellaneous Toys, Strategic Trading Card Games and Action Figure Collectibles; the share of collectibles has risen for the first five weeks of Q4, moving up nearly a whole percentage point compared to last year, now 14.3% of all toys. In the collectibles space, the top performers include Funko Pop, Panini’s Adrenalyn and two Zuru lines:

5 Surprise and Snackles. The top performing subclass for Q4 so far is Pre-School Talking & Sound, which is being driven by Tonies’ strong performance. Tonies is growing at +72% for this period, which is in line with its YTD growth, and it now accounts for around three quarters of value of the entire subclass. Tonies has seven of the top 10 items in the subclass and looks well placed to be a popular Christmas gift this year. There has been growth in the Games category, with Adult Games, Travel Games and Family/Word Games leading the way. As the Games category usually has a surge in December, these subclasses could be looking to have a strong end to the year.

With YTD September data, the overall trend for the market in the UK was -3% and there was some optimism that with a strong Q4 we could move the market as close to flat as possible. This would have meant an overall trend for the year of -1.9%. After five weeks of Q4, we can see that is now unlikely to happen. If we had a flat trend for November and December then the full year would finish at -3%, and I think most people would happily take that! The last time Christmas fell on a Wednesday, as it does this year, was 2019. In that year, the last two weeks accounted for 20% of Q4 sales (for comparison these weeks accounted for 15% in 2023). With most people finishing work on the Friday before Christmas – when they are likely to get paid - and then having a good few shopping days before Christmas day, we should hopefully see a similar trend this year. In 2019, this late surge in sales led to December being positive, with a strong first week. Maybe trends are pointing to a late Q4 this year in terms of sales. But will it be enough to give December a positive trend? Time will tell.

Property Progression:

The Melissa & Doug brand saw a significant uplift in sales in October v September, where it was over £400k larger. Melissa & Doug was acquired by Spin Master at the start of 2024, with sales predominately being in Pre-school and Arts & Crafts, and is also the No.1 wooden toy company in the UK. The Scoop and Serve Ice Cream Counter is the top Melissa & Doug item this year and the top item within the Pre-School Kitchen & Food subclass too, where Melissa & Doug have three of the top five items so far this year.

Fastest Growing Licences:

The top-gaining licence in 2024 so far is UEFA National, boosted by the Euro 2024 football tournament in summer this year. The largest month for the licence was June 2024, which had £3.2m in sales. Although sales have dropped since the tournament ended, Topps’ Match Attax trading card sales have remained strong, with around £1m in sales spread over September and October 2024.

Lilo & Stitch is the second-best performing licence in 2024 and has seen a gain of over £5m so far this year, making it the No.13 licence overall. With 38 different subclasses that contain Lilo & Stitch, around 60% of value comes from three of them - Traditional Building Sets, Action Figure Collectibles and Traditional Plush. In October, the Disney Classic Lilo & Stitch from The Lego Group was the No.4 item in the total toy market.

Mercedes Benz and McLaren just over are the next best performing properties, adding just over £9m in value combined. Lego makes up over 90% of the value and is responsible for pretty much all the growth. Both licences are helped by a strong performance from high price point items, with Technic Mercedes-Benz AMG F1 W14 E Performance being the top item at £152. We have also seen lower priced items adding value this year too, with the Speed Champions McLaren F1 Race Car coming in at No.2 at an average price of £18.39.

Multiple Food Licences appears at No.5; an assortment of food-based licences that have added just under £3m so far this year. The key driver behind this growth is Snackles from Zuru, collectible plush items that come with various branded food items such as Haribo, Krispy Kreme and Pringles.