Dive Brief:
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After four straight years of growth, toy sales in the U.S. generated $21.6 billion in 2018, a 2% decline from the $22 billion in the year prior, according to a new report published Monday by The NPD Group.
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Sales rose in four out of 11 "super-categories," particularly in action figures and accessories, followed by dolls, youth electronics, and arts and crafts, according to the report. Sales fell the most in plush and vehicles categories.
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The L.O.L. Surprise! franchise dominated toy sales, landing eight of the 10 top selling toy items ranked by absolute dollar growth, according to the report. Mattel also landed on the list with Hot Wheels and Barbie Dreamhouse.
Dive Insight:
Much of the decline in the toy category can be traced back to the fading of Toys R Us from the retail landscape. The iconic toy seller filed for bankruptcy in 2017 and liquidated in March 2018.
"Overall, a 2% decline is a solid performance after such a significant shift in the retail landscape," Juli Lennett, vice president and industry advisor of toys at The NPD Group, said in a statement, noting Toys R Us' impact. "It’s also worth noting that annual 2018 sales are slightly higher than 2016, which experienced mid-single digit growth.”
In the wake of Toys R Us' demise, mass merchandisers and specialty players alike have moved in quickly to fill the void. Walmart, Target, J.C. Penney and Kohl's all said they were increasing their toy assortment ahead of the critical holiday shopping season. Kroger got the closest to replicating Toys R Us, featuring the toy seller's famous Geoffrey the Giraffe among toy boxes displaying merchandise.
Toys R Us isn't the only reason sales in the category are declining, though. The retailer was one of the last specialty players in the category for a reason. The growth of toy revenue has turned negative over the last several years as kids turn to smartphones for entertainment. Market research firm IBISWorld estimates that revenue from toy retail declined 0.8% between 2013 and 2018, and predicts that it will decline 1.1% over the next five years.
