22 March 2016
Bumper Year for New York Toy Fair as US Market Posts Record Growth
Star Wars continued its worldwide dominance of the toy sector at this year's New York Toy Fair, while the event, in its 100th year, posted record attendance of exhibitors and visitors, bolstered by a great 12 months for US toy sales.
The New York Toy Fair continues to build momentum. While the show's heyday was arguably back in the 1990's, it has been undergoing something of a resurgence over recent years.
Although still predominantly a domestic-facing event, international participation appears to be growing each year. This is partly down to the number of international companies wanting to crack the US market, and partly due to companies seeking North American products to distribute or retail across the globe.
The latter opportunity is one that the show organiser, the Toy Industry Association (TIA), is particularly keen to foster, acknowledging that the majority of its members can grow their businesses through international expansion. The former opportunity remains slightly more complicated.
Whilst the US market is the world's largest (with 350 million consumers to aim for) and therefore the holy grail for most international companies, it is undeniably a difficult market to enter. Its retail landscape is fragmented, with trends often differing by region.
Retailers can often be successful in some parts of the country and have limited presence in other areas. With toy retail profit margins across the board – from mass market to specialty – coming under pressure from the growth of online traders, it isn't always easy for overseas companies to deliver an economically viable proposition to American bricks and mortar retailers. This is especially true in light of the logistics challenges caused by the sheer size of the territory.
This year, the event posted two significant attendance increases – 9% for overall attendees and 16% for international visitors. In total, more than 1,200 exhibitors, importers, distributors and sales agents showcased their latest product lines and key drivers for the coming year in front of 10,040 mass and specialty retail buyers from the US – a 12% increase from a year ago. Included in this number were delegations from 24 of the nation's top 25 toy sellers – Amazon, Walgreens, Kohl's, Costco, CVS, Target, Toys R Us, Walmart and others besides.
In total, more than 5,200 unique retail outlets were represented, with increased participation from 61 countries and a total of 2,166 international attendees. In terms of buyers, the top five countries represented were Canada, the UK, Mexico, Japan and Australia. Toy Fair 2016 also saw a 7% increase in global press, with 1,110 print journalists, broadcast reporters and bloggers attending the show.
It was also encouraging to see the larger American toy companies returning to the show – Mattel, Hasbro, Lego, Jakks Pacific and MGA all had a presence this year. Many, though, suspected this had as much to do with a desire to showcase new ranges to the media and the financial community as to meet retail buyers.
This year, the show was buoyed by the announcement of strong sales figures for the previous 12 months. Overall, American toy sales grew by 6.7% in 2015, well ahead of the usual 1% or 2% annual increase or decrease. In total, this generated US$19.4 billion and marked one of the strongest performances the industry has seen in a long time.
Significantly, nine of the 11 super-categories posted gains in 2015. Games/Puzzles and Vehicles grew the fastest at 10.8% and 9.7% respectively, followed by Building Sets and Outdoor/Sports Toys. Perhaps unsurprisingly, Star Wars was the leading dollar growth contributor to three of the super-categories – Action Figures, Vehicles, and All Other Toys.
Content was a key driver behind the growth of the American toy industry in 2015. Whether it was a movie (Star Wars, Jurassic World, Minions, The Avengers), television show (Paw Patrol), app (Minecraft), or a strong YouTube following (Shopkins), all of these content-tied properties were among the top contributors to growth last year.
In total, movie-related merchandise outperformed the market, growing by 9.4%. Unsurprisingly, Star Wars was the number one property for the year, with more than $700 million in sales. It also brought in more sales – and contributed more to growth – than Jurassic World, Minions, and The Avengers combined.
According to a report from the TIA, the toy industry continues to have a major impact on the American economy with increased growth in revenue, jobs and tax dollars. The latest data indicates that the US toy industry supports more than 493,900 jobs, generates $24.67 billion in wages, and contributes nearly $10 billion in combined state and federal taxes. Overall, the US toy industry has a total annual national economic impact of $77.35 billion.
Interestingly, nearly 98% of US toy manufacturers, wholesalers, and distributors are all small businesses. Even though the majority of toys are manufactured outside the US, about 80 cents of every toy retail dollar continues to remain in the country, largely as a result of US domestic operations (production plus wholesale and retail). At the same time, about 61 cents of every toy production dollar also remains in the country (taking into account research and development, design and safety considerations).
Against such a background of success, then, it was no surprise that visiting journalists were told that this was the largest New York Toy Fair ever, with every inch of space available at the Javits Center being taken up by the 1,500 exhibitors – a figure that included 300 brand new companies. Indeed, a space freeze was in operation for existing exhibitors this year, a decision taken by the TIA in order to give smaller toy companies a chance to get in front of the retail community.
The good news for existing and potential new exhibitors is that a massive construction project will see one million square feet of space being added to the Javits Center over the coming years. The project is due to start next year, with an estimated completion date of 2020.
Quite how the TIA will choose to utilise the additional exhibition space will be interesting to monitor. This year, though, saw the debut of Play Fair, a completely separate event aimed at consumers that ran concurrently with the Toy Fair.
Capacity crowds of more than 20,000 attendees visited this public celebration of play, which was presented by Nickelodeon and Lego. Play Fair also served as an arena for families to try out new toys, interact with popular characters like PJ Masks and Teenage Mutant Ninja Turtles, play games, take photos and purchase new products.
Judging by the huge queues, it seems that there was a real appetite among consumers for such an event. Indeed, the TIA has openly stated that it wants to be more consumer-oriented in future, with initiatives such as the Genius of Play (based on the British Toy and Hobby Association's Time to Play campaign) proving another focus for the association. There is already talk of a further Play Fair event to be held at Javits in the run-up to Christmas, while taking the event to other American cities on the West Coast and in the South is also actively being discussed.
For now, in its 100th year, the TIA – and indeed the American toy market as a whole – is in good shape. The New York Toy Fair reflected that admirably.
The New York Toy Fair 2016 took place at the Javits Center from 13-16 February.
John Baulch, Special Correspondent, New York