Traditional Toys and Games Are Set to Fully Recover in 2019

by MATTHEW HUDAK, senior analyst, Euromonitor International

The global toy market is taking a significant hit from the loss of Toys “R” Us, largely within the U.S. market. The headwinds from Toys “R” Us are further compounded by the impact of the Nintendo Switch, which will likely siphon more sales from traditional toys and games in 2018 than it did last year. However, these difficulties should begin to subside in 2019, and the traditional toy market will start to return to a more stable level of annual growth, especially as more millennials become parents.

The shift to new retailers

The loss of Toys “R” Us eliminates a unique area for kids to experiment with, which is going to have an overall negative impact on the traditional toys and games market. Parents that shopped at Toys “R” Us frequently will find a new avenue for purchasing toys. There are many options for this, including hypermarkets like Walmart or variety stores like Dollar Tree, which are typically located in the same geographic areas that Toys “R” Us serviced. However, the online channel will likely benefit with traditional toys and games through internet retailing expected to grow by 8 percent globally in constant retail value sales in 2019.

The Switch will peak but its impact will linger

The Nintendo Switch was sold out for most of last year, immediately getting bought out in most retail outlets. As such, the Switch was likely purchased by older gaming enthusiasts, not making it into the hands of many children. This is expected to change this year with the Switch restocked and child-oriented games, such as Pokémon: Let’s Go, Pikachu! and Let’s Go, Eevee!, being released in September. This means that 2018 will see the Switch siphon a great deal of sales from traditional toys and games, particularly during the holiday season when the purchase of higher priced static console items is expected. Competition between traditional toys and the Switch will likely be less intense in 2019, although the pressure from the Switch will remain for years to come as Nintendo continues to release lighter, kid-friendly titles. In addition, even as console sales for the Switch begin to fade, Microsoft and Sony could release new consoles and further push kids to move from traditional toys into gaming.

The next generation of parents

Millennials are forming their own families, which will also help build momentum for traditional toys and games next year. Many of these families will have their first child at a much later age than previous generations, and will likely have fewer children per household overall. This will create parents that are likely more hands-on in their child’s education and more willing to invest in STEM toys or toys that have an interactive or social element to make up for having fewer siblings per household.

 

Matthew Hudak is a toys and games analyst for Euromonitor International. In his role, he researches and writes on the global market for toys and video games, and drives analysis on the ever-evolving ways children and adults play.