State of the Industry: The Story So Far…

by JULI LENNETT, Vice President, Industry Advisor, U.S. Toys, Circana

The U.S. toy market remained relatively stable throughout the first half of 2024. As of June, total retail sales of toys in the U.S. amounted to $11.2 billion, marking a 0.4% decrease of $42 million compared to the same period in 2023. Declines have slowed this year, with unit sales falling by just 1%, while the average selling price (ASP) increased by 1% to $10.85.

The industry continues to demonstrate resilience, and despite a 0.4% drop in dollar sales in 2024, the overall picture remains positive. Over the past five years, the toy market has seen a 7% compound annual growth rate (CAGR) in dollar sales, driven by a 6% increase in the ASP and a 1% average yearly rise in unit sales. Compared to 2019, the industry is up by $3.1 billion, representing a 38% increase and highlighting the toy market’s capacity to flourish amid evolving challenges. While this year’s stable performance is an improvement over the steeper declines experienced in 2023, it’s important to remain cautiously optimistic, given that significant downturns preceded the current stability.

Challenges impacting the toy industry have remained largely consistent. While inflation has begun to cool, there has been a slight increase in the unemployment rate. Student loan repayments, fluctuating consumer confidence, and the upcoming election are important factors to monitor. The industry must remain vigilant of changing circumstances to navigate these dynamic times effectively. However, despite fewer jobs and rising household debt, the toy industry remains stable. Recent retailer announcements signaling lower prices on some goods have emerged as a notable tailwind, boosting store visits and toy purchases.

Thus far in 2024, consumer preferences shifted across various supercategories, with three out of the 11 tracked by Circana experiencing growth. Building Sets led the pack, with increases in dollars, units, and ASP. This supercategory contributed 72% of the total gains year-to-date, primarily driven by LEGO Icons. The Explorative and Other toys supercategory, bolstered by NBA Trading Cards, and the Vehicles supercategory, driven by Monster Jam, also contributed to the growth.

Conversely, the steepest decreases were seen in Action Figures and Accessories, Dolls, Games and Puzzles, and Infant, Toddler, and Preschool toys, which together accounted for 81% of the declines. The year’s standout toy properties, including Pokémon, Squishmallows, Star Wars, Marvel, Barbie, LEGO Icons, Hot Wheels, NFL, Fisher-Price, and NBA, highlight the key consumer preferences and trends of 2024.

As we look ahead, it’s clear that the toy industry is navigating a complex landscape marked by opportunities and challenges. Consumer sentiment remains mixed, fluctuating between optimism and concern. While economic growth has shown a promising upswing, rising household debt and the potential impact of student loan repayments introduce some uncertainties.

The increasing spending power of parents with annual household incomes of $100,000 and above is an important trend to consider. However, declining overall birth rates and demographic shifts in younger age groups pose ongoing challenges for the industry.

As we look ahead, the industry must remain vigilant. While the toy industry continues to demonstrate resiliency, the current stability should be viewed as a reprieve rather than a complete turnaround. With careful strategy and an adaptive approach, industry leaders can effectively navigate the tides and harness emerging opportunities in this evolving landscape.

Data Sources: Circana, Retail Tracking Service, January-June 2019-2024. Data is representative of retailers that participate in Circana’s Retail Tracking Service. Circana’s current estimate is that the Retail Tracking Service represents approximately 76% of the U.S. retail market for toys. *New = no sales volume January-November 2023

Declines have slowed YTD through June, compared to industry performance during the same period in 2023. Dollars declined 0.4% or $42 million. Units declined 1% and the ASP of $10.85 increased 1%. Compared to 2019, dollar sales have increased 38% or $3.1 billion (+7% CAGR)

Of the 11 supercategories, only Building Sets, Explorative & Other Toys, and Vehicles posted year-over-year dollar growth. LEGO Icons drove growth in Building Sets; NBA powered growth in Explorative & Other Toys; and Monster Jam fueled growth in Vehicles.

A version of this feature was originally published in The Toy Book’s 2024 LA Fall Toy Preview Issue. Click here to read the full issue! Want to receive The Toy Book in print? Click here for subscription options!