NPD Insight

Will Q2 boost the toy market?

As we move into Q2, Emilie looks at how the fortunes of the Outdoor and Sport Toys category can massively affect overall UK toy sales for the year.

Following a flat performance in Q4, the toy market is beating expectations for the early part of 2023 after it grew +1% in January 2023 for value sales, with unit sales also up +1%. This demonstrates resilience for the market, despite the prevailing economic conditions. After Christmas, NPD conducted a survey asking UK consumers if they felt their financial situation is going to change in the next six months; 44% said they expected it to get somewhat or significantly worse.

The growth continues to be driven by categories that performed well in 2022 - namely Building Sets and Plush, with performance of The Lego Group and Squishmallows particularly strong. Games sales were up in January too, driven by Strategic Trading Cards from Pokémon and World Soccer, as well as Non-Strategic Trading Cards/Stickers, which was also boosted by footballrelated items, with the release of the 2023 Premier League products. Overall, Collectibles accounted for 1 in 5 toys sold in 2022, and value sales were up +20% - this trend was even stronger in January with a +26% growth.

As we approach Q2, what factors could impact the UK Toy market over the next quarter? As we all know, seasonality and the weather can heavily influence the fortunes of the UK toy market. Seasonal products account for only a small amount of total Toy sales, generating £22m in 2022 and growing +15% year-onyear. However, both Easter and Halloween related Toys sales were up +63% last year, and this might be an opportunity for manufacturers and retailers to offer limited time products to boost sales.

In Q2, Outdoor and Sport Toys traditionally becomes the largest supercategory, generating more than 20% of the total toy market value sales and 25% of unit sales. It means that 1 in 4 toy unit sales is potentially an Outdoor and Sports item across these three months, although of course the supercategory performance is strongly impacted by the weather, which no-one can predict. In Q2 2022, Outdoor and Sport Toys value sales were down -18% in value versus 2021, and it was largely responsible for the total toy market decline (-5%), as industry sales excluding Outdoor would have been flat.

Perennially successful Outdoor items such as Swingball and Bunch O Balloons regularly appear in the top five bestselling items list across Q2. Almost 10m units of Bubble Toys/Solutions were sold in 2022, generating £15m: half of those items were sold between April & June, along with 1.5m units of Water Blasters. At the other end of the price spectrum, Playground Equipment like trampolines, pools, scooters or rideons are considered a more long-term investment that consumers keep and reuse over multiple years. Such products were very successful during the first lockdown in 2020, as the weather was particularly good that year and children were effectively confined to the back garden. Playground Equipment is the largest subclass in value sales, followed by Sport Activities & Games, and Skates/Skateboards/Scooters. Those three subclasses accounted for more than half of the Outdoor category sales in 2022. After an inclement Q2 in 2022, let’s hope that the weather in Q2 2023 is better and will drive early sales of Outdoor in April and May this year.

Expanding the number of licensed items continues to represent a potential opportunity in Outdoor; only 8% of the supercategory’s sales comes from licensed products, versus 31% across Total Toys. That represents a gap worth £52m a year. Pre-school favourites Paw Patrol and Peppa Pig are among the top three Outdoor licences, while newer pre-school shows such as Bluey or Gabby’s Dollhouse clearly have room to expand. Video game licences are another popular theme, with Roblox sales more than doubling year-on year and the Minecraft licence reaching almost £1m in 2022 in Outdoor & Sport Toys. Based on what we saw at the various toy fairs, there will undoubtedly be plenty of innovation in the Outdoor category this year: for example, Gel Blasters launches in the UK after a successful performance in the US market last year, potentially attracting an older demographic and adding value to the category.

The toy industry ideally needs good weather to boost growth in Q2, but new launches, innovations and licences should also help drive the Outdoor and Sport Toys category back to growth this year.