Circana - Insight

Acting on impulse

Rory looks at the changing fortunes of impulse and low price point purchases to see if this sector of the market is heralding a return in 2023.

With the cost of living still top of mind for British consumers, it has been reassuring to see the UK toy market holding up well in 2O23 so far. YTD February, the UK toy market is flat versus 2022, which is a solid performance considering the economic headwinds. There was a general view at the end of 2022 that the first quarter of 2023 would be very tough, so this is an encouraging start. Looking at where the growth is in the market, it is interesting to see the under £10 price point currently up +3%, compared to the rest of the market at -2%. With prices rising and families tightening their belts, it might seem intuitive that this area of the market should be performing better, but this is not actually the trend we have seen over the past few years. The pandemic changed the way that consumers perceive value, with items that had a high play value and educational content often performing better. This led to growth coming from higher price points, and impulse purchases suffered in comparison. Examining this important area of the market should reveal if there has been a shift in 2023; are impulse toys making a resurgence?

The impulse area of the market (under £10) had a tough time across the pandemic period as consumers moved online and changed their views on value for money. Impulse was worth nearly a third of all value in 2019, but that figure had dropped to 27% by the end of 2022. Last year, around three quarters of the market’s decline was due to the impulse price point. In a total market that was -3%, impulse was -10%, accounting for nearly £60m less sales than the year before. Indeed, impulse toy items accounted for over £100m less in 2022 than in 2019 (pre Covid), a drop of five percentage points in share.

The rise of online shopping during the period undoubtedly had an impact, with smaller low-cost items being much more likely to be purchased in store. We often think of December as a key time of year for the higher priced items, and that certainly remains the case. However, around a quarter of all December sales are actually under £10. Using 2019 as our benchmark again, impulse was worth 27% of all sales, while this figure had dropped to just over 21% in 2021. But then an interesting reversal of fortune happened in 2022 - impulse saw value growth of +4% vs. total market growth of +2%.

We must highlight that a Winter World Cup led to stronger sales in December for World Cup stickers, and this certainly had a positive impact on the overall numbers. However, we also saw strong growth for Hot Wheels, 5 Surprise, Pokémon and Squishmallows.

So far in 2023, impulse price points have returned to growth at +3% and returned to a share of the market not seen since 2019, being worth around 33% of overall value. Looking at the type of property that is contributing to the growth, there’s a continuation of the performance from December with World Soccer, Hot Wheels, Squishmallows and Pokémon the top performers. It is also encouraging that the impulse portions of other properties more commonly associated with higher price points are also adding value. For example, Barbie, Lego Friends, Bluey and CoComelon are all growing strongly with items under £10. The number of items available at this price point is cause for optimism too; in the last few years we have seen steep drops in the number of items in the market, such as a -22% decline for the period between 2022 and 2021. However, in 2023, this number has only declined by -5%, so the category feels much more stable than in previous years, and with the items in the market performing well, this has contributed to the +3% growth referenced earlier.

The pandemic undoubtedly drove some major changes in the toy market, and it does seem that the impulse price points were one of the areas that were hit hardest. The return to more normal trading conditions and the impact from cost-of-living issues suggest that lower priced toy items could enjoy a return to form in 2023. With around a third of all toys sales concentrated in the impulse area, its’ fortunes could have significant impact on the overall market performance, so let’s hope the positive trend we’ve seen in the early part of 2023 continues for the rest of the year.

Licence Progression:

The European Soccer Club licence has moved up 18 places in February 2023 vs. its position in January. This licence incorporates Match Attax items from Topps, which have driven the strong showing in February. The Match Attax Extra 2023 Mega Multipack is the item that has added more value than any other and is one of three new releases from Topps in February in the Strategic Trading Card Games area. This subclass makes up nearly 90% of all value for the European Soccer Club licence in February 2023.

Fastest Growing Properties

World Soccer adds over £2m in the first two months of 2023 driven by strong sales of Premier League stickers.

World Soccer is the No.1 fastest growing property so far in 2023, driven by Premier League items from Panini, which had three spots in the top 10 items for the entire toy market for the month of February. In fact, the top 5 items for the World Soccer property in 2023 are all Premier League Sticker items. The property at No.2 is also in the collectible area, with Pokémon adding over £2m in the first two months of the year so far. It is also the No.1 property in value size. Pokémon just keeps growing, and we have seen good growth for the property outside Trading Cards, with Action Figure Collectibles up +87% and Traditional Plush up +33%. Lego Speed Champions is No.3 for growth; top item, the Speed Champions Aston Martin 007 DB5, has led to the Aston Martin property coming in at No.10 for growth.

Squishmallows is at No.4, continuing the strong performance we have seen in 2022. With the brand now moving more into licences for 2023, we should see Squishmallows feature amongst the top properties in the UK once again. Another notable success story is Gabby’s Dollhouse, which is the No.8 top gaining property so far in 2023, after being the No.1 new property for 2022. Preschool Figure/Playsets & Accessories is the largest subclass, accounting for around two thirds of all sales, with Large Dolls the next largest, worth around 13%.

Rory Partis - Director UK Toys & EuroToys Circana