State of the Industry
Chart 1
U.S. Toy Space: Walmart and Target In running feet, same week each year
Dec. 29, 2007
4,000 3,500 3,000 2,500
Dec. 31, 2008 Jan. 1, 2011
2,000
Jan. 6, 2010
1,500 Dec. 12, 2010
1,000 500
Jan. 1, 2011
0 Walmart regular toy space
Target regular toy space
will take money away from other discretionary purchases, such as toys, movies, outings, and other things people can do without. How consumer interest levels were impacted by the advent of the iPhone and the iPad is best illustrated by the chart on page 46. There is one area where smartphones and tablets are going head-to-head with toys: board games. It is estimated that the board game category has lost about 1.5 percent of sales each year to video games over the past couple of years, and this trend is likely to continue. Yes, toy space is shrinking. Chart 1, above, shows the toy space Walmart and Target devoted to toys during the same week in the past seven years. What this chart does not show is Toys “R” Us’ overall toy shelf space because of the transformation of their regular stores into side-by-side stores, which devote much more space to the Babies “R” Us section at the expense of toys. The toy space goes from 60 percent of the regular store to 40 percent for the side-by-side model. The leading retailers do not cut toy space because they do not like toys; They do it because they sell less of them through their brick-and-mortar stores due to a shift to online transactions. In addition, toy stores are being hammered by
48 • THE TOY BOOK
Total
Jan. 11, 2012
competition such as Amazon and dollar stores. Chart 2, on page 49, shows the latest market share estimate for U.S. toy retailers.
Looking to the Future While the outlook today is probably better than it has been over the past few years, this does not mean that there will not be fundamental changes. There is the move from brick-andmortar store sales to the Internet, as best demonstrated by Amazon’s sharp increase in market share. This will have a major impact on both the retailers themselves, as well as the major companies making the toys. You will need less brickand-mortar space over time, and this, in turn, will lead to further reductions in the space allocated to toys. More importantly, as toy sales move from the shelves to online, the promotional and advertising strategies of the toy companies will have to change. The impact of a toy box on the shelf will be replaced by an image on the screen. The toy company will no longer be face-to-face with the consumer, but rather will talk to him or her via an intermediary—the Internet. Another major change that will undoubtedly gain steam
FEBRUARY 2014