When Woolworths went, the supermarkets took advantage by broadening their range of pocket-money toys. Now they’re looking to raise their games again, says Vince Bamford
Parents must feel like supermarkets have got it in for them.
On every shopping trip, mums and dads face demands for crisps, sweets and fizzy drinks but at least these can be dealt with relatively cheaply. The arrival of dedicated toy aisles has changed the game.
Just a few years ago, only the largest stores offered a small selection of toys. These days, some boast ranges that would rival a specialist retailer's. So what's prompted the multiples to up their game?
One of the biggest factors was the 2008 demise of Woolworths. The multiples spied an opportunity to open up shelf room and promotional space to more toys as well as computer games, DVDs and CDs.
Not that the toy market was child's play at the time as the loss of Woolies demonstrated. In fact, sales fell 5% between 2008 and 2009. But figures for 2010 show the market is returning to growth. Value is up 8% year-on-year to £2.9bn [NPD consumer panel 52w/e 31 December 2010], supporting observations that this industry is, overall, resilient in downturns.
Specialist toy retailers including Toys R Us, Early Learning Centre and The Entertainer boast the lion's share of the market at 34%, but their sales have risen just 1% over the past year. The supermarkets, on the other hand, have seen their toy sales leap 14%. This has given them a 20% market share and enabled them to edge ahead of catalogue retailers such as Argos with their combined 19% share [NPD].
"For years, toys were under-represented in supermarkets and ranges were too narrow," says John Hutt, chief executive officer of HTI Group, which manufactures own-label and licensed toys including vehicles and dolls' prams. "The category is just coming of age. We expect more supermarkets to dedicate more attention to toys in the coming years, both in-store and online."
Although supermarkets cannot compete with specialists when it comes to expertise or depth of range, convenience is a huge factor in their favour, he adds. "For busy parents who know what they want, or want the convenience of combining gift and grocery shopping, supermarkets can be the perfect destination."
And they could be doing even better than they already are, argues NPD industry analyst Frédérique Tutt. She points out that in France, for example, supermarkets hold a 40% share of the market.
To grow value sales, supermarkets must increase the variety of products they sell. Currently by far the biggest supermarket sellers are pocket-money toys such as Hot Wheels cars and the £1.99 Lego Minifigures range. "These are the sort of things that mums and dads are happy to throw in the trolley when shopping with their children," says Tutt.
During 2010, 88% of toys sold in the supermarkets were priced £5 or less across all toy retailers the proportion was just 17.2%. Over the same period, the average price paid for a toy at a supermarket was £3.79, compared to £10.20 for all other channels. In the market as a whole, 32.4% of value sales were of toys priced £20 or more in supermarkets it was just 12.2%.
The key reason for this is the supermarkets' understandable reluctance to stock large, slow-moving items that take up a lot of valuable shelf space.
"The supermarket model is a 'fast stock turn' business it makes no commercial sense to stock large boxed toys with high retail prices that take forever to sell," says Kerri Palmer, marketing manager at Wow Toys, which has just secured a deal with Waitrose. "It can work nearer the Christmas trading period but is not a sure-fire thing, particularly with the current trading conditions. No buyer wants to get caught out."
This has started to change, however, believes HTI's Hutt. "In part, this is due to the greater number of larger-format stores and other grocers dedicating more space to non-food," he says. "But also, 'big' toys have shown that they can perform consistently in sales when well-supported by point of sale and promotion."
Promotion being the key, with many supermarkets running aggressive promotions on even recently-released toys to drive footfall, agrees NPD's Tutt.
Meanwhile, online and catalogue channels such as Asda Direct have allowed supermarkets to stock larger products without wasting store space. In 2010, 7% of supermarket toy sales were online a whopping 73% increase on 2009 [NPD].
This is already impacting average prices, with the proportion of toys in the £10-£19.99 bracket sold by supermarkets growing from 13.2% by value in 2009 to 18.9% in 2010 although sales in the £5-£9.99 and £20+ brackets remained similar to 2009.
Whatever the price tag, licensing is hugely important, with Toy Story, Ben 10 and Star Wars taking the first three places in the table of supermarket toys. "Licensed properties remain the major footfall driver of the category, given the sheer amount of media exposure they receive," says Hutt.
Retailers will be expecting a sales boost this year from movie sequel licences including Transformers 3, Cars 2 and the final Harry Potter film. Licensed Lego has already helped the building sets category grow 28% to £248.1m. Plush toys have also done well, up by 23% to £247m thanks in part to the continued success of ZhuZhu Pets, the electronic animals that became an overnight sensation in the run-up to Christmas 2009.
Their unexpected success showed how hard it can be for buyers to anticipate the next big thing. "The market is changing all the time every year it is a new story," says Tutt.
Christmas 2011's story, according to Tesco, will be the Fijit. The Mattel-produced robot is a foot tall, comes in pastel colours and has soft plastic skin. It dances, can respond to 100 set phrases and can even tell basic 'knock, knock' jokes just what you need over the holiday season.
The Fijit will hit Tesco, Sainsbury's and Asda shelves in August, with an rsp of £54.99. It'll be a good test of whether parents really are prepared to buy higher ticket items from the supermarkets but either way, there's clearly plenty more to play for in the toy market.
Focus On Toys
Parents must feel like supermarkets have got it in for them.
On every shopping trip, mums and dads face demands for crisps, sweets and fizzy drinks but at least these can be dealt with relatively cheaply. The arrival of dedicated toy aisles has changed the game.
Just a few years ago, only the largest stores offered a small selection of toys. These days, some boast ranges that would rival a specialist retailer's. So what's prompted the multiples to up their game?
One of the biggest factors was the 2008 demise of Woolworths. The multiples spied an opportunity to open up shelf room and promotional space to more toys as well as computer games, DVDs and CDs.
Not that the toy market was child's play at the time as the loss of Woolies demonstrated. In fact, sales fell 5% between 2008 and 2009. But figures for 2010 show the market is returning to growth. Value is up 8% year-on-year to £2.9bn [NPD consumer panel 52w/e 31 December 2010], supporting observations that this industry is, overall, resilient in downturns.
Specialist toy retailers including Toys R Us, Early Learning Centre and The Entertainer boast the lion's share of the market at 34%, but their sales have risen just 1% over the past year. The supermarkets, on the other hand, have seen their toy sales leap 14%. This has given them a 20% market share and enabled them to edge ahead of catalogue retailers such as Argos with their combined 19% share [NPD].
"For years, toys were under-represented in supermarkets and ranges were too narrow," says John Hutt, chief executive officer of HTI Group, which manufactures own-label and licensed toys including vehicles and dolls' prams. "The category is just coming of age. We expect more supermarkets to dedicate more attention to toys in the coming years, both in-store and online."
Although supermarkets cannot compete with specialists when it comes to expertise or depth of range, convenience is a huge factor in their favour, he adds. "For busy parents who know what they want, or want the convenience of combining gift and grocery shopping, supermarkets can be the perfect destination."
And they could be doing even better than they already are, argues NPD industry analyst Frédérique Tutt. She points out that in France, for example, supermarkets hold a 40% share of the market.
To grow value sales, supermarkets must increase the variety of products they sell. Currently by far the biggest supermarket sellers are pocket-money toys such as Hot Wheels cars and the £1.99 Lego Minifigures range. "These are the sort of things that mums and dads are happy to throw in the trolley when shopping with their children," says Tutt.
During 2010, 88% of toys sold in the supermarkets were priced £5 or less across all toy retailers the proportion was just 17.2%. Over the same period, the average price paid for a toy at a supermarket was £3.79, compared to £10.20 for all other channels. In the market as a whole, 32.4% of value sales were of toys priced £20 or more in supermarkets it was just 12.2%.
The key reason for this is the supermarkets' understandable reluctance to stock large, slow-moving items that take up a lot of valuable shelf space.
"The supermarket model is a 'fast stock turn' business it makes no commercial sense to stock large boxed toys with high retail prices that take forever to sell," says Kerri Palmer, marketing manager at Wow Toys, which has just secured a deal with Waitrose. "It can work nearer the Christmas trading period but is not a sure-fire thing, particularly with the current trading conditions. No buyer wants to get caught out."
This has started to change, however, believes HTI's Hutt. "In part, this is due to the greater number of larger-format stores and other grocers dedicating more space to non-food," he says. "But also, 'big' toys have shown that they can perform consistently in sales when well-supported by point of sale and promotion."
Promotion being the key, with many supermarkets running aggressive promotions on even recently-released toys to drive footfall, agrees NPD's Tutt.
Meanwhile, online and catalogue channels such as Asda Direct have allowed supermarkets to stock larger products without wasting store space. In 2010, 7% of supermarket toy sales were online a whopping 73% increase on 2009 [NPD].
This is already impacting average prices, with the proportion of toys in the £10-£19.99 bracket sold by supermarkets growing from 13.2% by value in 2009 to 18.9% in 2010 although sales in the £5-£9.99 and £20+ brackets remained similar to 2009.
Whatever the price tag, licensing is hugely important, with Toy Story, Ben 10 and Star Wars taking the first three places in the table of supermarket toys. "Licensed properties remain the major footfall driver of the category, given the sheer amount of media exposure they receive," says Hutt.
Retailers will be expecting a sales boost this year from movie sequel licences including Transformers 3, Cars 2 and the final Harry Potter film. Licensed Lego has already helped the building sets category grow 28% to £248.1m. Plush toys have also done well, up by 23% to £247m thanks in part to the continued success of ZhuZhu Pets, the electronic animals that became an overnight sensation in the run-up to Christmas 2009.
Their unexpected success showed how hard it can be for buyers to anticipate the next big thing. "The market is changing all the time every year it is a new story," says Tutt.
Christmas 2011's story, according to Tesco, will be the Fijit. The Mattel-produced robot is a foot tall, comes in pastel colours and has soft plastic skin. It dances, can respond to 100 set phrases and can even tell basic 'knock, knock' jokes just what you need over the holiday season.
The Fijit will hit Tesco, Sainsbury's and Asda shelves in August, with an rsp of £54.99. It'll be a good test of whether parents really are prepared to buy higher ticket items from the supermarkets but either way, there's clearly plenty more to play for in the toy market.
Focus On Toys
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