Technology and Value for Money Play Major Role in Parent Purchasing Decisions
25 January 2013
With the global toy buying circuit now well under way, buyers are moving through toy shows scattered around the globe – from Hong Kong, to London, to Nuremburg, and finally to New York. Utku Tansel, head of toys and games research at Euromonitor International is currently on the show circuit; as he looks ahead to the 110th American International Toy Fair, he sends a report of his observations from the London Toy Fair (Jan. 22-24, 2013).
On the first day of the show, Toy Fair organiser the British Toy & Hobby Association (BTHA) unveiled the fifth annual Toy Fair Best New Toy Awards winners, predicting some of the top new toys for 2013. The 12 categories include action figures, construction toys, creative, pre-school, games and puzzles, boys’ and girls’ toys, pocket money and outdoor toys. These categories included 34 winning toys from 24 different toy companies. Flair and Lego snapped up three Best New Toy Awards, while UK manufacturers Hornby and Golden Bear both received two awards apiece in this year’s ceremony.
In terms of pricing, the average toy price of the 34 winning products was £28. This is almost three times more than the average toy price in the UK. This stands out as an even more striking figure given that one of the categories within the winning table is pocket money.
BTHA’s winners range confirms Euromonitor International’s previous industry analysis published back in October. Toy manufacturers ultimately worry that declining numbers of children in core countries will constrain their growth prospects. However, as was rightly pointed out, where fewer toys are bought their value tends to be higher. One consequence of the overall downturn in birth rates in so many countries has been smaller household sizes and higher consumer expenditure per child. This in turn led to more discretionary spending on non-essential products, especially toys and games.
One interesting feature of the recession has been a tendency to push prices outwards in both directions. There was a noticeable increase in sales for higher-priced products and also an increase in sales for pocket money items. In the UK, sales of toys priced at above £50 expanded at 2.5% CAGR, higher than the 1.5% CAGR seen for sales as a whole between 2004 and 2011.
Growth in higher-priced product sales is being driven partly by the number of new electronic product developments. These vary from interactive soft/plush toys and talking action figures to fairly high-tech electronic learning devices, with the latter being pioneered by VTech and Leapfrog in particular. There were plenty of new launches supporting this trend at the London Toy Fair. VTech unveiled InnoTab 2 Baby, the first tablet for babies. This features a baby proof design and tailored apps and content aimed at children (or more rightly babies) over 12 months and is priced at £90. The best toys for 2013 award winners included Playmobil’s Police Headquarters with Alarm System priced at £70, Character Options’ TEKSTA (the robotic puppy) with a price tag of £60, and Flair’s Doc McStuffins Time for your Check Up Interactive Doll at £40.
However, growing demand for high-priced toys could not simply be explained by the increasing penetration of electronic toys. As also indicated by BTHA’s winners range, there are and have always been classics that consumers are willing to pay extra for due to their high quality and play value. Perhaps LEGO could be one of the best examples in this regard. The world’s fastest growing toy company managed to win three awards at the event with its new LEGO Chima, LEGO Friends and classic LEGO City product lines, with price tags going up to £90.
This indicates once again that as long as the product is right, parents are prepared to pay more and there is power in pricing. There will continue to be strong support for the top end of products, despite the current global anaemic economy. The next generation of parents are much more tech-savvy and are more likely to be interested in and invest in technological toys. As “value for money” becomes one of the key parameters of making a purchase decision, traditional toy and game makers that do not embrace technology to the full extent could however also benefit. In terms of pocket money toys, children will still come back for more thanks to these products’ collectability. In addition, these products’ low pricing ensures that each individual purchase does not feel like an extravagant expense.
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