Analysis: Santa's sleigh to be lighter as people buy fewer toys

Bandai Namco Holdings

15/11/2023 06:00

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      Hasbro, Mattel warned of weak holiday season
    

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      Shoppers prioritizing food over toys -executives
    

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      Larian anticipates 10-12% holiday sales decline
    

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      Action figure sales down 2% -Euromonitor
    

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      Toy sales down 3% in Europe from last year -Circana
    

  
    By Richa Naidu and Aishwarya Venugopal
       LONDON, Nov 15 (Reuters) - Santa Claus may not have as
much to give this year because hard up shoppers in Europe and
the United States are prioritizing food and household staples,
global toy makers and industry experts said.
    Consumers worldwide have struggled to cope with high
inflation and sluggish economic growth. The holiday season,
which begins with Black Friday at the end of November and lasts
roughly until the end of December, is expected to be especially
tough for retailers selling discretionary items, executives say.
    Favourites such as Barbie dolls, Transformers action figures
and Hot Wheels cars will still be at the top of children's wish
list, said Loo Wee Teck, consumer electronics industry manager
at Euromonitor International. 
        But many parents can't afford them this year, according
to executives. The top selling Barbie doll on Amazon, "Barbie
Pop Reveal", currently costs parents 19.99 pounds ($24.89).
Meanwhile, Hot Wheels' Scorpion play set was 35 pounds in 2020,
according to parent blogs, but the same toy is about 60 pounds
on Amazon.co.uk this year.
    "The most important thing for people this holiday is to have
food on the table for their families," Isaac Larian, CEO of
Bratz doll maker MGA Entertainment, said in an interview.
    Toymakers Hasbro  HAS.O  and Mattel have already warned of
weaker industry sales. But trading could prove even tougher than
expected, executives at four toymakers and experts told Reuters.
    Larian is expecting holiday sales at his company, which also
makes Little Tikes toys and sells products across Europe and the
United States, to decline by 10-12% worldwide versus last year.
    Demand in the lead up to Christmas will be "smaller" than
last year, said Nic Aldridge, managing director at Bandai
 7832.T , the maker of Tamagotchi virtual pets.
    Aldridge anticipates more price cuts as retailers look to
shift older products.
    "The was an abundance of supply from previous years so there
is a lot of clearance stock and a lot of deep discounting," he
said. 
    
    BLACK FRIDAY OFFERS CLUES
    Global sales of action figures like Transformers and
Spiderman are projected to decline by 2% this year, Euromonitor
forecasts.
    Anticipating the lower demand and already holding surplus
inventory, many retailers ordered in less product than usual
this year. That means products that are in demand may sell out
quickly. Black Friday will give retailers an early indication.
    "We are seeing some early Black Friday sales start just
now," Barbie maker Mattel's  MAT.O  president and chief
commercial officer, Steve Totzke, told Reuters on Monday.
    Mattel's inventory levels at the end of the third quarter
declined by double-digit percentage versus the prior year, with
weeks of supply down high single digits, it said last month.
    MGA Entertainment ordered and made less product, Larian
said, because it wanted to be "cautious and conservative" but
now expects to run out of some new toys as a result.
    U.S. imports of toys fell by 32% year over year in the three
months to Aug. 31, 2023 in dollar terms, according to S&P Global
Market Intelligence's trade data firm Panjiva. That's usually a
key ordering period for holiday stock.
    Shipments by sea - measured by number of containers - fell
by 8% in September.
    "The market for toys has been declining for the whole year,"
said Florian Sieber, CEO of German toy maker Simba. Demand from
consumers in Europe is lower than last year and last year was
already down from the previous year, Sieber added.
    Still, some anticipate a late surge in demand.
        "We are expecting a good holiday season for Mattel,"
Totzke said. "We expect to continue to gain share throughout the
holiday season."
  
    Frédérique Tutt, Global Toys Advisor at data firm Circana,
formerly NPD, said toy sales were down about 7% year-on-year in
countries it tracks in the first nine months of the year, but
that she expects shoppers to come through in the three weeks
before Christmas. The categories with the best performance to
date are games and puzzles, plush, building sets and vehicles,
she said. 
    "There'll be some money set aside for toys," said Jerry
Storch, chief executive officer of consultancy Storch Advisors
and former CEO of Toys-R-Us and Hudson's Bay Co  HBC.TO . "But
it's a reality that there won't be as many toys sold this year
as last year."
    

($1 = 0.8032 pounds)

 (Reporting by Richa Naidu; Editing by Matt Scuffham)
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