Babes In Toyland

American Demographics, Oct 1, 2002

Byline: JOHN FETTO

Weeks away from the start of the busy holiday shopping season, toy manufacturers are preparing to take in half the year's revenue in just three months. But in an industry in which sales have remained relatively flat in recent years, finding a way to boost business is not just fun and games. A report released in June by London-based market research firm Mintel shows that shifting child demographics and advancements in technology are factors that can make or break a toy's success.

According to Mintel, Americans will spend an estimated $25.7 billion on toys and games this year - half of which will be spent during the fourth quarter. It is a seemingly impressive figure, but consider it in context: Since 1999 - a record year for the toy industry - sales have risen a mere 2.1 percent annually, slower than the rate of inflation. The Mintel report shows that annual sales, adjusted for inflation, have actually declined for the toy industry by almost 3 percent since 1999.

Retailers and manufacturers looking to outpace inflation should look to a few key trends. For starters, demographic shifts are under way in the prime toy market (typically, kids ages 2 to 11). As the latest decennial Census revealed, American youngsters are far more diverse racially and ethnically than the adult population. Some 2 in 5 children (39 percent) under the age of 18 are part of a minority group, according to Census 2000.

Mattel responded to the news from the Census Bureau by launching a Spanish-language Barbie Web site in 2000 and introduced several other ethnic-oriented products. And late last year, Fisher-Price (also owned by Mattel) announced that the company would make many of its toys bilingual. Its Cookie Shape Surprise, First Words Phone and other products now include a switch that enables parents to toggle the language between English and Spanish.

But in a world where kids know how to operate a computer mouse before they can spell m-o-u-s-e, language is often secondary. Mintel reports that while sales for the toy and game industry were stagnant in 2001, the video game industry (not included in Mintel's toy and game figures) saw sales reach a record $9.4 billion, an increase of 43 percent over the prior year. And teen boys are not the only ones contributing to the gaming industry's bottom line. Market research firm NPD reports that 44 percent of the video game market was geared toward children ages 12 and under in 2000.

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TOY STORY

Sales of toys in the "play sports" category have grown the fastest in the past few years, whereas sales of "plush" toy have declined 43 percent.

SALES OF TRADITIONAL TOYS AND GAMES (IN MILLIONS):