Don’t Worry; Its Going to be a Good Year for Toys

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78% of Millennials would prefer to
spend money on an experience than on material things.

Eventbrite Survey – "Millennials Fueling the Experience Economy"

In my last posting I wrote about this week's 3rd quarter sales reports and the resulting worries about retail sales.  Macy's reported a 5.2% drop in 3rd quarter sales as did Nordstrom.  Wal-Mart is also anticipated to report a drop in same store sales.  

We have been told until now to expect a very strong year for toys by those who do quantitative as well as anecdotal analysis.  So, should the toy industry now be worried?

I don't think so.  Here is why:

  • One major reason cited for the poor sales has been an unseasonably warm Fall that has had a negative impact on the sales of coats, hats and other outdoor soft goods.  The weather, other than not putting people in a holiday mood, has little impact on toy sales.
  • Macy's also reported that the increased strength of the U.S. dollar caused a drop in purchases by tourists. This is more an issue for Macy's and other upscale retailers and again has little impact on toy sales.

I see four other reasons toy sales will do well:

  • It's a bricks and mortar problem.  The sales will still take place via ecommerce; just not at Macy's and Nordstrom.  
  • According to a survey done by Eventbrite Millennials (now beginning to move into their 30's)  prefer purchasing experiences over things.  The survey reports that 78% of Millennials would prefer to spend money on an experiences than on material things.   As Millennials move more into the 30's this will have a growing impact on stores like Macy's.  This is the one area that I believe could eventually have an impact on toys but not this year. (See: "Theme Parks; Major Competitors in the World of Play."

  • Christmas is still coming and we should have learned by now that we have taught consumers to buy late in the season in order to get what they want at sale prices.  
  • Star Wars.

 

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