The Toy Industry: Past, Present and Future
Stevanne Auerbach, PhD/Dr. Toy
2004
We can retreat into our memories to recall how things were back when we first started in toys. Depending on what decade we can think about all of the ways the toy industry has changed; even if you’ve been working in the industry for just a few years many drastic changes that the ‘old-timers’ complain about can be seen. The shifts have been greatly exaggerated even in just these past few short years. The highlighted issues represent changes that reflect how the industry has and will be seen in the future. These trends seem to be the focus and concerns for now and for the years ahead
For those of us who have been involved in the business over several decades, the changes are enormous. There are many factors that have contributed to each of these changes. Whether you view the toy business from any position you can see dramatic shifts in perceptions and reality. Toys are after all a reflection of our society. How the toy industry is dramatically changing can be viewed through this ‘kaleidoscope’ of issues that reflect major changes, including:
1) Diversity and types of products—licenses, technology and ‘joysticks’
2) Free playtime of children- reduction in the availability of free time to experience play plus the increase in working parents with less family play time.
3) Shift in toy manufacturing- Made in the USA is past as global manufacturing has taken over
4) Drastic changes in venues of retail settings – where people find toys and buy them
5) Various legal, ethical, trade imbalances, and other business matters-your lawyer can talk to my lawyer and so on
6) Impact of technology– chips, computers and beyond.
Over the past few months these important issues have been discussed with a variety of people who have been in the industry for a long period of time. The perspectives of the past and present may match your own experiences and may also color your view of the future and the pros and cons of the directions the toy business is headed.
1) Diversity and types of products
Free trade has kept prices down. Hopefully what will continue. One international toy expert said there is a demand that has been driven so much by television that it precludes many products from ever coming to the market. The consumer gets a lesser diverse and amount of toys, but gets cheaper toys. If there is a great reduction of diversity of the marketplace, and an increase of pressure on the manufacturer for going with what’s ‘safe’ there will also be a reduction in available product distribution to a diverse number of specialty stores.
2)Free playtime of children with regards to the availability of free time to experience play. Certainly one of the critical issues is the availability of play. As we look toward the future, we must see that trends start now. We can then see how these things may impact in the future. We are aware that children do not go out and play free-form play outdoors as was prevalent in the past. There is no more ‘impromptu’ play time for children and there is reduced opportunity for role-play. Children spend more and more time with video, electronic game consoles, and computers. As a result, many children have lost the ability to build and create from start to finish products that are available for them to experiences, whether it is a craft model kit or art project. This can impact on the future as many of these excellent products will either become less readily available, and it may be less likely for children to learn to do these things, or these projects will be drastically simplified with directions, or these projects will transform is such a way as to be more accessible to children only through the Internet. The compression of playtime is a phenomenon of children not playing with many of the toys that were available years ago and that has had a negative affect. Too many children spend too much time with hand- held games and television games. But, this may also turn around as more efforts are being made to get children engaged again in play. Certainly there will continue to be a need for more quality family time due to the increased time working parents spend away from home. New forms of family play time may be created and become more accessible. Certainly retail spaces and malls can sponsor more family play times for more support of play.
3) Shift of toy manufacturing Leading manufacturers have been consolidating and incorporating smaller companies. As a result, there are fewer large companies manufacturing products. The reduction of the influx of new ideas and activities with the reduction of smaller companies and their creativity operating independently and precariously will probably continue on for time to come. Finding sufficient capital to operate a new product and get it to market will remain challenging. However, again, through the use of the Internet there are more opportunities to do this. The shifting of manufacturing from Europe and the United States to China has affected not only the price, but quality, flexibility and diversity. These issues (and losses) are going to become even more critical in the future as more products continue to be made in countries outside of the USA. There have already been issues that have emerged where there is reduced copyright protection. The future of this area requires on going discussion, scrutiny, close exchange and monitoring for a balance of integrity, and agreements for ethical behavior.
4) Drastic changes in venues of retail settings
There has been a drastic reduction in the number of diversified independents and retailing chains. The pressure that comes to bear on what was once a very solid network is observed when we see the transformation of retailing within the last few years. Many of the specialty chains have disappeared, consolidated and disappeared again. There probably will be more opportunity for new stores and new companies to emerge and many new and creative ways of distributing products such as through more cross-merchandising. The impact of mass marketing, such as Target, Wal-Mart and the impact of television, will continue to be felt in the industry. International distribution is also going to continue to expand as many companies have operations in Europe and in other parts of the world. The challenges that lay ahead are for the individual specialty stores to maintain their foothold on the industry and that shopping in malls does not replace the diversity of community-based stores that offer the wide variety of products and service. While the use of the Internet will continue to grow and provide on-going support to manufacturers, inventors and stores new programs emerge like “Shopatron” that is now offering an innovative way of linking retailers, consumers and manufacturers in an approach that may very well be the positive sign of the future. This approach brings reconnection, and it does not exclude the retailer. Now, instead of the competition of programs like e-toys, Amazon and others that reduced customers going to stores with the result of further reduction of the strength and diversity of individual stores there is a potential of an exciting new model that brings the best of each component and strengthens the playing field.
5) Legal, ethical, sales, trade imbalance and other business matters
The issue of ethics in the industry has drastically changed over the years. At one time, people in the toy business made agreements on a hand shake. Today to do business one needs a team of lawyers. In the past, entrepreneurs were the standard of the industry. Now brand managers have M.B.A. degrees and have worked for other companies that are not toy related. They may know ‘numbers’ but they do not always know about selling products in the toy business. Sales reps (and jobbers) in the past were a very essential part of the industry. They had a limited number of lines they sold well. Today many reps may have anywhere from 50-60 lines and cannot maintain the same standard of quality. Now, the specialty market has changed. Years ago, anything in mass market was never told in specialty. But now, distributors in specialty are selling products that are more widely sold in mass retail. This has affected the cachet of the specialty business. Buyers have changed in their role. Buyers now look at the computers first to obtain figures for projected sales before they make selections. Standards for safety have increased with much more awareness of potential dangers in products. Products are being designed better. Products are more child appropriate with more thought going into developing of the product. This trend will continue.
6) Impact of Technology-
Establishing brands have been seeing new ways to capitalize on their name and nostalgia value and will probably continue for a long time to come. Certainly extended licensed items that have trademark television or movie images are going to continue to proliferate. Innovation of new products will continue to flourish as the imagination and creativity of designers continues. Looking back over the changes that have taken place over the past 25 years, we can see that television marketing and licensing, which began in the 1950’s impacted greatly on those existing markets. There has been a great increase in types of catalogs, and on-line resources, and on-line sales. By the 1980’s, products were very much successes only if advertised on television. In the future this will continue to be the case, but there will be more opportunities for use of the Internet and other forms of distribution like magazines, supplements in newspapers, and diversified catalogs. There is greater interest and will continue to be interest in products that are educational and developmentally appropriate. There is an expanded awareness of the value of play. Parents are buying more learning products for year-round use. There is more pressure for accountability regarding environmental and social improvement driving the movement of toys into new channels. Technology will continue to be used, especially if focusing on the play value for children.
The future of the toy industry will be a challenging one as the industry shifts into the new role of “facilitators of play”. Looking toward the future, we can consider some excellent new directions.
We can be optimistic that children will continue to seek playthings of value. Diverse and worthwhile playthings will continue to be readily available and be accessible to influence the play patterns for the children of tomorrow. There will be continued support for play as an essential experience for children and families. ##
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Stevanne Auerbach, Ph.D. is a consultant in toys, author, Dr Toy’s Smart Play/Smart Toys and Dr. Toy’s Guide (www.drtoy.com). Thanks to all contributors who shared their views.
