Toy sales

Why are we talking about this now?

Argos, the UK’s biggest toy retailer, has begun its Christmas ad campaign and launched a microsite dedicated to toys called Bigplay.co.uk, which includes a Christmas toy wishlist for children. About 50% of all toys sold annually in the UK are sold in the three months before Christmas.

What is the state of the UK toy market?

During 2009, British retailers sold £2.7bn worth of toys (excluding video games), a figure up by 8.4% on the previous year. Market research specialist NPD is forecasting growth across the toy market of 5% for 2010. In 2009, toy specialists retained the biggest share of the market, at 36.4%, but only had sales growth of 6%. By contrast, grocers, including Tesco and Asda, had sales growth of 9% for the year, with a 19% share of the market. Department stores, mail order and catalogue showrooms, including Argos, accounted for 25.1% of the market, 4.2% was sold by etailers, including Amazon, and the remaining 7.4% was sold by chemists, variety stores and video game stores.

What has happened since Woolworths collapsed?

Toy specialists reported strong sales figures in 2009 as they mopped up share left by the demise of Woolworths, which was the third biggest player in 2008 with 11% of the market, according to NPD. Toys R Us UK experienced a pre-tax profit surge from £9.4m to £30.4m, while pre-tax profits at The Entertainer grew from £39,000 to £1.4m.

How have grocers successfully grown their share?

NPD analyst Frédérique Tutt says the average toy sold in the UK in 2009 was priced at £8.17 but that the average price of each toy sold by grocers was half this (compared with £10.16 at toyshops).

“Grocers focus on toys that mum can throw in the trolley while she’s doing her weekly shop, which is both their strength and their weakness,” says Tutt.

She says another successful retailing technique for supermarkets is focusing on big movie launches, explaining that Asda or Tesco might focus on the new Harry Potter or Shrek films with a dedicated aisle selling the DVD and related licensed toys and products for a short while before moving on to something else.

Should toy specialists be worried at the growth of competitors?

Tutt thinks not, saying: “Toy specialists are showing respectable growth. They are tapping into the collectability side of the market.”