NPD Insight

Finished your Christmas shopping yet?

Christmas sales can make or break a year in the toy market and Melissa looks at how the early shopping message is likely to affect sales this year.

The last three months of the year traditionally account for the largest share of annual toy sales, with 46% of all toy value in 2020 and 38% of toy volume. So, it’s no surprise that the whole UK toy market focuses on Q4 performance and the lead up to Christmas each year. Historically, each week in December is worth 6-7% of annual toy sales, the equivalent of a whole month of sales in the rest of the year, from January to September. The first three quarters of this year have seen a mixed performance.

We’ve seen more volume purchased but flat value, driven by consumers returning to stores. However, they are purchasing lower priced categories and items compared with their purchases in lockdown last year. As ongoing supply and delivery issues continue to make headlines in the UK (impacting not just the toy market), there is a strong message to consumers this year to shop early for Christmas to ensure the most wanted gifts are purchased. It will be interesting to see how this will impact sales over this critical period.

Last year, due to the uncertainties of a second lockdown and social distancing needed in stores, the toy industry also put out a shop early for Christmas message to consumers. Fortunately, consumers heeded the call to purchase early, and NPD’s annual Christmas Study showed that 35% of parents started their Christmas shopping in September or October, up from 31% in 2019. However, the biggest evidence for early shopping was that 30% of parents said they had finished their Christmas shopping by the end of November, up from just 18% in 2019. This behavioural change was reflected in sales: we saw strong monthly growth from September through to November, with sales up +9% to +13% for these months.

Unfortunately, December, which usually represents a quarter of annual toys sales, was down -8% in value. This was in part due to the second lockdown and tier systems which limited in-store purchasing at this time, which was reflected in the types of items purchased. While higher priced toys continued to perform well in December, toys under £15 saw a sharp drop of -£33m for the month. This accounted for 75% of the decline, as many stocking filler toys or additional gift purchases were missed. Hopefully, this year we will see stores remain open throughout December and those lastminute impulse sales for Christmas will come back.

Given the strength of the early shopping message in 2020, its difficult to see just yet how the similar message - although this time round for very different reasons - is playing out this year. While September 2021 was down -6% compared to 2020, it was still up +2% compared to 2019, a typical pre-Covid early Christmas shopping period. The value decline in September this year can be explained by different promotional calendars in 2021. However, the strength of Advent Calendar sales in September (over £1.5m sales compared to £848k in September 2020) and the increase of purchases over the £20+ price point suggests that consumers are already starting to think about Christmas. Purchases over £20 accounted for 36% of sales in September compared to 32% in August, and there were two items priced at over £200 in the top ten best-selling items for the month – Mattel’s Barbie Dreamhouse and The Lego Group’s Technic Bugatti Chiron.

Another sign of early shopping in September was the strength of the Games & Puzzle supercategory. Pre- Covid, Games & Puzzles was more reliant on December sales, with 39% of annual sales in the last month of the year. September 2021 saw this supercategory grow +13% on 2020 performance and an impressive +30% on 2019, with Strategic Trading Cards like Pokémon, Card Games, Family Strategy Games and Brainteasers all showing double-digit growth versus last year.

Christmas sales can make or break a year in the toy market, and there is some early indication that the early shopping message is being heeded again this year. Last year we saw that parents spent an average of £244 on Christmas gifts for their children, up from £229 in 2019. With 2021 continuing to be a challenging and different year, parents may decide to continue with the high spend at Christmas to treat their kids after another tough year. Hopefully the continued growth of higher priced items over the next few weeks, combined with the return of the ‘lost’ impulse purchases for stocking fillers in December will see the UK toy market finish the year strongly.

Item Progession

Starting the seasonal shopping early, Toy Advent Calendars had a very strong September performance selling over £1.5m, nearly doubling sales compared to September 2020. The Lego Star Wars Calendar was not just the top seller in the category, but the fourth best-selling toy in the total market for the month. Last year Advent Calendars sold over £8m between September and December, with Harry Potter the No.1 property for Advent Calendars, followed by Star Wars and Lego City. However, Pokémon, Playmobil, Funko Pop Pocket and Barbie all also enjoyed high sales. Heeding the shop early for Christmas message, consumers started with their advent calendar purchases in September.

Fastest Growing Licences in Toys

Year-To-Date, licensed toys has grown +7% in value and reached its highest monthly share of the year in September, with 29.9% of all toy sales spent on a licensed product. While the largest growth licence is still European Soccer International, driven by Panini Euro Stickers over the summer, the last few weeks have also seen the National Soccer Club licence growing. The start of the new Premier League season has seen Panini Premier League Football Stickers and Adrenalyn Cards performing extremely well in the last quarter.

A year on from the second season release on Disney+, The Mandalorian continues to perform well with Building Sets, Action Figures and Plush all continuing to show strong growth. Marvel Other has also seen nearly £3m growth this year, driven by the strong performance of the Heroes of Goo Jit Zu and Playskool ranges, as well as Funko collectibles returning to growth. Minecraft continues to grow, with its Building Sets still accounting for two thirds of toy sales. However there has also been strong growth from the Action Figures Collectibles and Stickers ranges this year.

CoComelon remains a strong performer this year, with Toddler Figures and Plush accounting for three quarters of all sales. The Looney Tunes licence has done well too, with the new minifigures from Lego, as well as the release of the new Space Jam movie, adding to a revival for these traditional characters.

Outside of the top ten growth licences, Bluey has enjoyed one of the strongest pre-school launches for the last three years, selling over £1.4m in the last three months alone. It is comfortably on track to become the biggest new property this year in the UK. Sales are particularly strong in Pre-school Figures and Plush.