Circana - Insight

Shopping smarter

The way shoppers purchase toys has changed significantly in the last few years, impacted by the pandemic and ongoing economic challenges, with increased utilities and food pricing affecting disposable income. Emilie looks at how changing consumer purchasing habits are reflected in channel shift.

One of the biggest changes in the toy market over the past five years has been the rise of online shopping. In 2019, 38% of UK toy market sales were generated online (including click and collect). This peaked above 55% in 2020 at the height of the Covid restrictions, when many physical stores were unable to open. Online share has now stabilised at around 47% for the last two years, and remains an impressive +23% higher than four years ago, now accounting for nearly £1 in every £2 spent on toys. In the last quarter of the year, online share jumped even higher – it hit 53% in Q4 2023, with sales growing slightly while total toy market sales were down -7% for the same quarter.

Circana asked UK shoppers in January about the main reasons they bought toys in the online pure players channel for Christmas. 39% of shoppers cited convenience as the main reason, but pricing was also a key factor, accounting for 30% of buyers’ decisions. With the cost of living crisis impacting consumers’ budgets, price was on everyone’s mind and shoppers have been cautious about spending on non-essentials. 34% of those surveyed said that they cut back their spending on toys last Christmas versus the year before, and used different strategies to save money: 31% said they looked for cheaper alternatives and 41% purchased across different stores or websites to benefit from the best promotions. It is easier for shoppers to compare prices online, and to stick to only buying the item they need; this has reduced impulse purchases.

Reviewing all channels, in 2019 online pure players and toys specialists were already the largest channels, accounting for half of toy market sales combined. They have also been the key winners, reaching a combined share of 58% in 2023: both channels have grown double digits since 2019. In the specialist channel, expertise and large toy selection are the main factors that drove consumer purchases. However, in Q4, despite a sales increase, they lost share to online pure players, as price and convenience became an important factor of choice for Christmas purchases. 35% of shoppers said in January that they compared in-store/ online prices before making their purchases, and 30% waited for a promotion before buying the item they wanted. Toys specialists regained share in February 2024, and both online pure players and specialists returned to growth for the month.

The grocery channel has experienced the strongest decline in 2023 versus 2022, down -9% in value, while the total toy market was -5%. Some shoppers impacted by the cost of living crisis in 2023 shifted to discounters for their grocery shopping, and a reduction in non-essential or impulse purchases impacted the grocers' toys performance. Grocers' performance has improved slightly since the beginning of 2024: YTD March 2024, the channel was declining less quickly than specialist and mixed retailers in value sales. Building Sets was the largest supercategory in both channels in Q1 and was in growth. Grocers performed better than the market in Plush, Explorative & Other Toys, Vehicles and Youth Electronics in Q1. The grocers top three supercategories in Q1 were Building Sets, Plush and Explorative & Other toys, accounting for 45% of overall value sales, whilst Building Sets, Infant/Toddler/Pre-school toys and Games/Puzzles are the top three supercategories in Specialist & Mixed for this time period.

As inflation is gradually slowing this year, energy bills are reducing and interest rates are holding, consumers may start to feel more confident about their finances. In Circana’s post-Christmas survey, 33% of consumers said they expect their personal financial situation to improve in the next six months versus only 28% for Europe, bringing a touch of hope.

After a tough start to the year, March toys value sales were up +1%. This is partly due to the shift of Easter from April 2023 to March 2024, but it is promising to see both grocery’s and specialist & mixed channels’ performance improving in March. While consumers are less retailer loyal and more value-driven than pre-Covid, there are still opportunities across all channels to attract consumers this year, which will give a more than welcome boost to toy sales.

Item Progression:

The TonieBox Starter Assortment is the fastest progressing item in March 2024, as the Pre-school Talking and Sound subclass, where the item is categorised, becomes the fastest growing category in Pre-school Toys and the fifth fastest growing category across total toys. The Toniebox Starter Assortment is the number two item in Total Pre-school Toys, while Toniebox is the number one property in the subclass with an impressive 79% share. Licences which are growing in the category include Disney Princess, Peppa Pig and Roald Dahl.

Fastest Growing Subclasses

Standard Building Sets is the fastest growing subclass YTD March 2024, with growth of +15% in value, representing an additional £7.9m of sales compared to the same period a year ago. Lego Icons has been a big driver of this, with the botanicals range performing strongly over Valentines Day and Mother’s Day. There are now four botanical items in the top ten best sellers so far this year, with the Bouquet of Roses the number three best-seller across the total toy market. Licences are also performing will within the category, with Star Wars, Harry Potter and vehicle licences such as Maclaren and Mercedes-Benz all growing.

Traditional Plush continues to grow in 2024, with Zuru’s Snackles performing particularly strongly, as well as Jazwares’ Adopt Me! There has also been growth from Rainbocorns and Sonic the Hedgehog this year. Non-Strategic Trading Cards and Collectibles Stickers has grown thanks to Euro 2024 ranges released ahead of the tournament in the summer. Skates/ Skateboards/Scooters has grown +17% YTD March, with HTI’s Evo brand growing double digits so far this year.

Miscellaneous Toys also continues to grow, with MGA’s Miniverse continuing to help drive growth of this category, as well a strong performance from LankyBox. The Robotic and Interactive Playmates subclass has grown +22% YTD with new launches from 2023 continuing to add value to the category, including Bitzee, Fingerlings and L.O.L. Surprise! Robo Alive remains the top property and is still growing. Pets Alive and Furby are both helping to drive the continued growth of the Special Feature/Interactive Plush subclass in 2024. Family Board/ Action Games has had a strong start to the year, growing +10% with Monopoly the top property and growing double-digits, along with growth from Jenga, the Traitors Board Game from Vivid Goliath and The Sock Game from Asmodee.