Letter from London: Toys will be Toys

February 14, 2019

Here we are again, nearing the end of another Toy Fair season. Hong Kong, London and Nuremberg are all behind us, and New York is now in play. It’s almost like Christmas never ended, which surely can’t be a bad thing.

As I write this, we don’t yet know how well the U.K. toy industry performed over the holidays, but we do know that, overall, sales in the U.K. were flat, with retail experiencing its worst Christmas trading period in a decade.

“Squeezed consumers chose not to splash out this Christmas, with retail sales growth stalling for the first time in 28 months,” says Helen Dickinson, chief executive officer, British Retail Consortium. “The worst December sales performance in 10 years means a challenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger.”

There’s no doubting the toy industry had a tough year in 2018. The closure of Toys ‘R’ Us was a huge blow, leaving a ton of questions in its wake.

Where will TRU’s customers disperse to in the U.K.? Will it be the big grocery chains like Tesco, or specialty toy stores like The Entertainer? Or will independent toy retailers be able to step in and take a chunk of the fortune? And who will take over TRU’s championing of smaller properties that it did so well?

Then there was the issue of fake and unsafe toys being sold online, which has the potential to be incredibly damaging to the credibility of the entire industry as well as the profits of designers, manufacturers and retailers of genuine product. The concern of counterfeit toys was a reason U.K. toy sales dipped by 2.8 percent in 2017 to £3.4 billion. According to The NPD Group and the British Toy & Hobby Association, £400 million of lost sales can be attributed to design theft.

The finger was also pointed at Brexit, which brings apprehension over future trading with the EU and beyond, as well as the stripping of power from the U.K. toy industry as the BTHA–among others–could lose its power to lobby the EU.

Shall we all take a moment to let out a group sigh? 2019 is going to be interesting, isn’t it?

The good news is it’s not all bad news.

The dip in U.K. sales last year came after three years of solid growth. In 2017, toys accounted for 13 percent and $36 billion of the global licensing industry, according to a survey by The International Licensing Industry Merchandisers’ Association, a rise of 3 percent year-on-year. By its very nature, toys is one of the most robust sectors around. After all, until humans stop procreating, there will always be children and they will want to play with toys.

But the industry is going through a shake-up, and that’s not necessarily a bad thing. Evolution is essential to stay relevant and profitable, and innovation is critical to stimulate consumer demand. Change is good, and I think we will continue to see a huge transition in what toys look like, how they will be marketed and where they will be sold thanks to an increasing interest from consumers in the circular economy and conscious purchasing, the continual rise of influencers and Generation Z consume media and the continued growth of online retailing.

Licensing has a huge, supportive role to play in the future fortunes of the toy industry and it’s one that we take very seriously, which is why Brand Licensing Europe is throwing its weight behind the sector this year and will be focusing on toys as one the show’s core segments, both in terms of content and exhibitors at the show and visiting retailers and manufacturers.

If you work in toys, and have an opinion on what we can do to support the toy industry please contact me, I can be reached at [email protected]