Special Feature - Post-Christmas retail roundup

Special Feature Is the shopping bug back? Post-Christmas retail roundup

The run-up to Christmas 2022 was certainly a nail-biting one, thanks to several challenges that threatened quite the potential headache for toy shops – but when consumers finally turned up, they certainly didn’t hold back. Toy World caught up with a selection of retailers about how the festive trading period panned out.

Postal strikes, stock availability, spending pressures, you name it: if it was threatening to derail Christmas shopping plans, we saw it. Happily, despite many dire (yet somewhat understandable) predictions to the contrary, it appears that the old adage – that people will always buy toys at Christmas, no matter what – proved true again last year.

NPD data shows that Q4 2022 outperformed the first nine months of the year for the first time in a decade, with December up +2% in value and volume +3%. Though shoppers may have arrived late, perhaps because they were holding out for discounted lines or were waiting for payday to complete festive purchases, Melissa Symonds, executive director UK Toys, EuroToys, reveals in her article on pages 32-33 that Week 51, which ended on Christmas Eve, was the highest week of the year for sales with 5.3% of the annual total, an increase of +15% vs. 2021 (+49% vs. 2019).

Mark Buschhaus and Stephen Barnes at Toy Barnhaus told Toy World that 2022’s festive shopping period was one of their best ever, with figures ‘well ahead’ of those seen in 2021 (find out more on p. 37), while Rick Derr, manager and owner of Learning Express in Lake Zurich, Illinois, tells us in his Letter from America (p. 40) that the final 10 days before Christmas could be summed up with the word ‘wow’. Grocers, too, enjoyed strong results, with Sainsburys posting a total sales increase of +7.1% - Argos sales were up the same amount - and Tesco seeing its revenue jump +6.1%.

Dave Middleton, owner of Midco Toys, tells Toy World that Christmas 2022 was his best in 20 years, with basket spend the same as previous years and signs of a cost-of-living crisis nowhere to be seen. Those who follow Dave on LinkedIn will have seen his daily posts regarding record-breaking sales (often accompanied by paradoxically harried looking, yet happy, selfies), which appeared one day after another after another as the shopping period ramped up. While he puts some of his success down to store relocations he made last year, his selections also bore fruit: Funko, Lego, Pokémon and Squishmallows from Jazwares led the sales, with the Gabby’s Dollhouse licensed range from Spin Master, Hot Wheels from Mattel and all things anime also contributing heavily.

Gabby’s Dollhouse and Squishmallows were top lines for many other Toymaster members across the country, alongside Magic Mixies and Mama Surprise from Moose, Lego and Pokémon. Games, surprisingly, was a mildly disappointing category this year, at least according to Paul Reader, marketing director at the Toymaster, though that didn’t stop a number of members, not just Midco, pulling off their best Christmas ever.

The Gabby’s Dollhouse range, particularly hero line Gabby’s Purrfect Dollhouse play set, was tipped as a Christmas best-seller early on. Alan Simpson, executive chairman at SMF Toytown, confirms it was a major line for his business – as was Squishmallows. Alan explains: “We placed a huge order for Squishmallows before Christmas, which I will admit I questioned, but they all flew out in record time.”

Toytown enjoyed a very strong year overall, finishing up +35% versus 2021. The week before Christmas was Toytown’s best ever, coming in at an impressive 30% higher than the former record week, with the Friday before Christmas the best single day (not Christmas Eve, which this year fell on a Saturday), mirroring what Alan witnessed in 2021. The reason? The Royal Mail strikes, which helped drive shoppers back onto their local high streets and into toy stores. Now, Alan says, we just have to hope consumers have once again got the shopping bug: “Online shopping has been almost too easy for a while now.”

The Entertainer’s Gary Grant likewise highlights the postal strikes as the ‘biggest single factor’ in the retailer’s strong December performance. He told Toy World: “Consumers believed that if they ordered online, the product may not arrive in time, so they turned to the high street and physical stores in their droves. As a result, most of our individual stores beat their best ever day and best ever week performances in December. We were also delighted with our performance in Tesco, where we maintained stock levels right through to Christmas Eve.”

“It doesn’t get any better for a retailer than when Christmas falls on a Sunday,” adds Gary. “We all had the benefit of a full final week’s trading, which was stunning.”

Though undoubtedly a boon for bricks & mortar retailers, the action by Royal Mail workers created yet another unusual set of conditions which makes it hard to accurately compare years or anniversary the numbers. Indeed, we’ve lived through three very unusual Q4s in a row now, and many of us may be starting to forget what a ‘normal’ year looks like. Even with Christmas now out of the way, we still face strange times, with ongoing financial uncertainty causing considerable consternation among many consumers. As Gary says: “These are not purely intangible ‘confidence’ issues – these are real financial issues affecting the vast majority of consumers.”

That being said, post-Christmas trading has been very good by all accounts. The two weeks after Christmas were ‘exceptional’ for The Entertainer, according to Gary, while Dave at Midco tells us business has remained strong since Christmas with no signs of slowing down. Tesco CEO Ken Murphy has also revealed a ‘pretty good’ post-Christmas performance akin to that of a normal January.

Toyown’s Alan Simpson shares an interesting post-Christmas nugget of information. The week before Christmas, around 80% of transactions in Toytown were either credit or debit card transactions. The week after Cnails right up until the final moment before Christmas, tell Toy World the Q4 season overall was turbulent; September and October were flat, a surge in mid-November was scuppered by the snowy/icy weather, and December was then huge, with a ‘monster’ final two weeks breaking all B&M’s previous sales records. Pre-school hits CoComelon and Peppa Pig were big for the retailer this year, perhaps reflecting how parents were seeking trusted brands rather than gambling on something lesser-known – though as with all our other contributors, Squishmallows, Lego and Pokémon led from the front. MGA Entertainment’s L.O.L Surprise! also proved popular. Christmas that flipped on its head, with 80% of transactions made in cash, as kids who’d received ‘Queens Head gift vouchers’ for Christmas turned up to get spending (with such abandon that Alan’s sales goal for that week was effortlessly doubled).

B&M has also reported strong sales into Q1, which it says has always been the case – again, thanks to kids spending their Christmas money. Toy buyers Hayley White and Sarah Atta, who admit they were biting their nails right up until the final moment before Christmas, tell Toy World the Q4 season overall was turbulent; September and October were flat, a surge in mid-November was scuppered by the snowy/icy weather, and December was then huge, with a ‘monster’ final two weeks breaking all B&M’s previous sales records. Pre-school hits CoComelon and Peppa Pig were big for the retailer this year, perhaps reflecting how parents were seeking trusted brands rather than gambling on something lesser-known – though as with all our other contributors, Squishmallows, Lego and Pokémon led from the front. MGA Entertainment’s L.O.L Surprise! also proved popular.

“One thing we noticed this year was a slight shift away from ever-increasing master toy RRPs back to lower priced secondary product,” notes Hayley. “If a child loves a particular brand but the ‘main’ toys are becoming unaffordable, we’ve seen increased sales of licensed scribblers and art sets instead. On a related note, we’ve found that entry price point lines have been strong this year; we’ve had an especially strong season with our generic pocket money range.”

Sarah Atta and Hayley White of B&M

But how have online retailers fared over Christmas? If the postal strikes were a huge boost to physical toy retailers, it would stand to reason that they’d be a major blow to online specialists. For some, they were - Asos and N Brown Group both posted a fall in sales – but others fared rather better.

Very’s Toys, Gifts & Beauty category pulled off one of the online retailer’s biggest performances in 2022, with Toys on its own up a whopping +26% YoY. Anne-Marie Edwards, toy category manager at The Very Group which operates digital retailer Very, says the retailer worked hard to mitigate pre-Christmas challenges,

including investing in stock within the Toys, Gifts and Beauty category which, as expected, customers prioritised for their loved ones. The category’s strong performance was underpinned by Very’s trusted supplier and delivery partner relationships, as well as its highly automated fulfilment centre, Skygate - not to be confused with Skynet - where the fastest order of Christmas 2022 was processed in just 10 minutes and 30 seconds.

According to Anne-Marie, Very saw an increased focus on value during the festive period, affirming its decision to focus on curating an assortment of toys within its value price proposition, and making price the primary way to filter toys when browsing the site for the first time ever.

“Popular toys from our value ranges this Christmas included Character Options’ Jiggly Pets Pup, Hot Wheels Colour Reveal and Pokémon trading cards - but value isn’t only about price,” Anne-Maire explains. “Our customers were looking for great deals, like the special offer we had on the Barbie Dreamplane during Black Friday, which generated lots of demand.”

She adds: “Heritage brands such as Barbie and Lego are always popular at Christmas, and this year was no exception. The Barbie Dreamhouse from Mattel and Lego Express Passenger Train were among our bestsellers. L.O.L Surprise! also performed well as a brand, with the L.O.L Surprise! O.M.G House of Surprises one of our most popular toys this Christmas. Products offering a sense of innovation, newness and fun, such as Gabby’s Purrfect Dollhouse and Little Live Pets Mama Surprise, were also firm favourites with our customers this year, as were family games and arts & crafts for all ages.”

So: what comes next? As discussed earlier, postChristmas sales - at least up to the point of penning this piece - have been very healthy. NPD data shows Week 52 sales up +2%, but there is some discussion out there regarding whether or not this spending was simply using Christmas present money or something of a last hurrah before consumers tighten their belts and batten down the hatches (other metaphors are available). Dave Middleton, who was in the throes of opening his third store, Freak Treats, when we spoke to him in early January, is firmly in the ‘not’ camp – maybe customer demographics is a factor here? - while others remain slightly more on the fence. One such fence-sitter, Toymaster’s Paul Reader nonetheless expresses cautious optimism for the second half of the year, noting that exciting launches are coming up such as Lorcana Disney trading cards from Ravensburger and movielicensed lines for blockbusters like Seth Rogan’s Teenage Mutant Ninja Turtles: Mutant Mayhem.

“There are still a few potential hand grenades to go off this year, such as people coming off fixed rate mortgages and many intangibles that will affect business planning,” adds The Entertainer’s Gary Grant. “Where will container rates end up? Will they level off at a higher rate than pre-pandemic? What about the dollar - £1.22 is better than it was in the autumn, but still not back to £1.35, where it was previously. Can salaries keep pace with inflation? What will happen to retail volumes, especially when we are seeing some punchy price increases in certain areas? In a way, suppliers are rebalancing almost 10 years of not raising prices.”

SMF Toytown, meanwhile, is continuing with its aggressive expansion strategy with at least three store openings slated for this year and perhaps as many as five or six. That shows a level of confidence in how the year will pan out, surely?

“Toytown continues to enjoy a very strong performance year after year and there’s no need to change the business model,” Alan states when we put this to him. “After all - if it ain’t broke, don’t fix it.”