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U.S. Toy Industry Plays Off Growth Posted in First Quarter of 2016

It may literally seem like child’s play — but the U.S. toy industry involves billions of dollars.



U.S. Toy Industry Plays Off Growth Posted in First Quarter of 2016

In a statement released earlier this month, global information company The NPD Group revealed that the U.S. toy industry grew by 6 percent, or $206 million, in the first quarter of 2016. This was compared to the figures during the same period in 2015.

The NPD Group explained that eight out of the 11 super-categories within toys experienced growth. The 11 super-categories for toys are the following: Action Figures, Arts and Crafts, Baby and Infant Toys, Building Sets, Dolls, Games and Puzzles, Model Vehicles, Outdoor and Sports Toys, Plush Toys, Remote Control Toys, and Youth Electronics. Overall,  Action Figures and Dolls experienced the highest dollar growth in the first quarter of the year.

“Major holidays were among the top reasons for first quarter growth. Sales during the week of Valentine’s Day grew by 9 percent, outpacing the market as a whole, and Easter week by 6 percent, compared to the first quarter of 2015,” pointed out The NPD Group in its media release.

Easter Fun

It's worth noting that Valentine’s Day and Easter have grown in importance to toy retailers. Easter, in particular, has proven to be a very profitable holiday for toy retailers. The NPG Group observed, “While the toy industry experienced the fastest growth in January, its dollar growth was the highest in March, largely due to the Easter holiday.” Outdoor and Sports Toys are the most popular during the said period.

U.S. toy industry analyst Juli Lennett — who also serves as senior vice president of The NPD Group — explained, “Toys have become the new chocolate. Looking at the top 10 items that sold during Easter week, most are very small in size, likely so they may fit in an Easter basket.”

Big Numbers

It may literally seem like child's play — but the U.S. toy industry involves billions of dollars.

The Toy Industry Association (TIA) — the not-for-profit trade association representing all companies involved in creating toys for kids of all ages — revealed that the toy industry's annual total economic impact in the U.S. is calculated at $77.35 billion.

TIA further revealed: “The average price of a toy is around $10, but the estimated 3 billion units sold across the nation each year generates approximately $22 billion in direct toy sales.” Consequently, the industry generates nearly $10 billion in tax revenue each year from combined State taxes averaging $4.36 billion and combined Federal taxes averaging $5.63 billion.

Aside from that, as TIA added, “the toy industry supports an estimated 493,914 jobs (FTE) — from toy inventors to store clerks in every state from Alabama to Wyoming — generating more than $24 billion in wages for U.S. workers.”

Toy Trends

TIA expects the toy industry to register growth for the rest of the year — with robotics, drones, family inclusive games, as well as Science, Technology, Engineering, Arts, and Math (STEM) learning toys as the hottest purchases.

Collectibles — especially those tied to movies, TV shows, and other existing content that's already popular with kids — will also be big. Indeed, the licensing tie-ups with brands such as Star Wars, DC Comics, and Marvel have given a significant boost to companies such as Lego.

At TIA’s 113th North American International Toy Fair earlier this year, the group's trend expert, Adrienne Appell, stated, “This year, the toy box will be filled with products from both ends of the spectrum. From high-tech toys to classic and outdoor-based products, there’s something for each child’s interests. The best toys hitting the market are ones that challenge kids and foster their development, all while maintaining an element of fun.”

She added, “While the focus is on kids, what’s noteworthy is that many elements of these toys and games encourage parents to join the activities.”

ToyNews reported that toys-to-life items are expected to be big business in the market this year. Toys-to-Life is actually shaping up to be a new toy category.

A article provided an overview of toys-to-life items: “It's a simple concept really, you buy real world figures and then can scan them into your game.”

Usually, physical figurines or action figures are packaged with the game. These toys use a near field communication (NFC) or image recognition data protocol so it can interact with the game. Some figures also use QR Codes.

The category didn't even exist in 2010, but industry experts are saying it could be the Next Big Thing.

Their optimism is based on the case of the 2011 game Skylanders: Spyro’s Adventures, which gambled on toys-to-life and earned big. Since it debuted toys-to-life items, over $3 billion worth of Skylanders games and toys have been sold worldwide.

Growth Projections

Most industry pundits are expecting a good year overall for the industry.

In an interview with Reuters, Sean McGowan — an independent toy industry analyst — said, “I'm thinking the industry will see another up year, maybe not as strong as it was last year, but that was a positive surprise. So, I think, the low- to mid-single digit growth, and this is the first time in a long time that we've seen so many years of growth in a row.”

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