Utku Tansel is the Head of Toys and Games Research at Euromonitor International. After completing his MBA in London, Utku joined Euromonitor initially as a Research Analyst in 2004. Over the past nine years, he has been responsible for strategic development and managing of diverse research projects in various industries including toys and games, consumer electronics, clothing and footwear, housewares and household furnishings, DIY and gardening, personal goods and eyewear. In May 2010, he was appointed to his current role developing specialist in-depth toys and games industry knowledge and global expertise in the process.
Having completed his Law Degree (LLB) and trainee contract, Utku is also a fully qualified lawyer in Turkey.
The number of over 65-year-olds rose by an annual average of 2.5% over 2000-2010 to account for 7.9% of the total population globally. By 2020, this group is forecast to account for just less than 10% of the global population. As underlying demographics points to adults, is it time for toys manufacturers to look at this segment more closely?
In Japan, to counteract the declining child population, Japanese toymakers have successfully expanded the age range of their target consumer. A large number of collectible action figures, candy toys and capsule (vending) toys are now aimed at adults, in particular targeting the impulse purchase market. In 2011, toys targeting over 20-year-olds accounted for more than 23% of all traditional toy sales in Japan. With more cash to spend, older generations are better able to indulge in hobbies and activities, such as collecting, which are on the rise in the country. Toy collecting hobbies have also been bolstered by the fact that the majority of the population in Japan lives in cities and therefore does not have much space to take part. With the current population trends in Japan, it is likely that more toys will emerge targeting adults. The 45-54-year old and over 65-year-old segments are forecast to be the only age groups to register increases during the next 10 years, and toymakers will scramble to draw them to their brands early.
Less than 10% of traditional toys target adults in most countries
In the majority of markets, the percentage share of traditional toys and games that target adults (population aged 20 and over) remains below 10%. Why so low? Perhaps the general view that toys are for children plays a role here. Euromonitor International believes that it is time for toy manufacturers to target older consumers with their products and marketing activities. As adults enjoy considerably higher purchasing power than children, they represent a great untapped consumer base.
There may be further opportunities beyond the toy categories that first come to mind when adults are involved, such as collectibles, model sets or puzzles. Outdoor and sports toys as well as construction could be the ideal categories to focus on. If manufacturers could allocate just a little more of their overall R&D budgets to products targeted at adults, the returns could be surprising.
When David Beckham, the world famous British footballer, told the press that he ordered and built the LEGO Taj Mahal set when he was in Italy a few years ago, the building set started to fly off the shelves immediately and still remains a highly collectible item to this day. At the time of writing, the set was on offer for a whopping £1,399.99 (US$2,165) on Amazon.co.uk and was still not available via the “hard to find products” section on LEGO’s international website.
This can be seen as an extreme example of toys targeting adults. Toys targeting adults do not have to carry astronomical prices. LEGO’s Emporium (which the author of this article admits to owning), Fire Brigade and Pet Shop sets all target those aged 16 and above with a price tag of between US$150-200.
Sample LEGO product lines targeting primarily adults
Companies should adapt their strategic direction to changing demographics
By 2020, 0-14-year-olds are forecast to comprise almost 24% of the total world population. This will be down from 26% in 2011, but nonetheless will include an additional 52 million children. Toys and games manufacturers’ biggest concern is the shrinking children numbers in key markets as the forecast global children population growth will be generated almost exclusively by Middle East and Africa. As this region will still be very far from becoming a major toys and games market in the foreseeable future, the best strategy is to target the growing children population in other developing regions. Many developing countries will continue to see increasing birth rates (and rising disposable income) changing the make-up of their populations in coming years. Regarding developed markets, fewer toys purchases will mean higher value per transaction. So, cornerstones of the global toys and games industry will continue to pull considerable weight and by no means should be neglected.
As world’s population age, adults emerge as a demographic worth taking seriously and it is important to recognise that toys are not just for children. Toy manufacturers need to acknowledge this by expanding and tailoring product offerings and marketing activities accordingly, if they want to grow their businesses. There are now an increasing number of products which appeal to a wider demographic and which are also selling well.
The future looks bright for toys manufacturers so long as they play their cards right. Presence in the right market with the right products and thinking outside of the box when it comes to target demographics on toys will be more important than ever determining the success.