BERLIN — The last place people try to cut their spending is on their children, even in uncertain times. This has always been a boon for the toy industry, as shops and manufacturers can count on parents buying their children toys. But now it has been called into question.
Because 2023 was anything but a good year for toy sales. Sales around Christmas time, which usually account for more than a quarter of the industry’s annual income, were especially disappointing.
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“The tail-off in consumption and consumers’ need to make savings affected us too,” said Matthias Kienzle, Head of Sales and Marketing at Kosmos, the market leader for family board games and children’s science kits in Germany. He is now reflecting on what the future of the industry might look like.
January was also a weak month for sales, in fact one of the worst in years, Kienzle said, “The crisis has affected us where we didn’t really expect it to.”
A downward spiral
Revenue is down 5% in 2023, according to statistics from Circana, a market research group specializing in the toy industry. That figure has already been inflated by price hikes.
Over the past year, Germans spent around 4.5 billion euros on toys; that is the lowest expenditure since 2019. Of course, that time period includes the pandemic – which ushered in an unusual economic trend.
“Our main competitor is time. And during the COVID-19 pandemic, there was a lot of time to fill." That is how Kosmos manager Kienzle explains the boom over the past few years. During the lockdowns and travel bans, consumers bought lots of board games and puzzles, craft sets and building kits, as well as trampolines and garden toys.
The theme "kidults” was a main talking point at a toy fair in Nuremberg.
Many in the industry hoped that this boom would simply continue. But the situation now looks very different, including for well-known brands. Hasbro, for example, has reported dwindling sales and revenue, and is now responding with massive job cuts. For the first time in the company’s history, Playmobil is in the red, while action figure manufacturer Schleich has seen its turnover drop by 15%. Germany’s largest toy company Simba Dickie-Group, which owns brands such as Märklin and Big (Bobbycar), has reported a 4% drop in revenue, while the wooden toy manufacturer Haba was forced to file for insolvency.
At the same time, retailers are caught in a downward spiral caused by decreasing demand and the rising cost of rent, energy and staff. One after another, small shops are disappearing from Germany’s city centres, the chain Spiele Max had to take special measures and pare back its operations to avoid insolvency, and large-scale businesses and grocery stores have also lost out due to lower sales of toys. The numbers are also down online, and mail-order company Otto even took its toy subsidiary Mytoys off the market.
The industry has identified a possible way out of the crisis, in the form of new target markets. They are starting to shift their focus to adults. That is clear from the toy fair in Nuremberg, which presents the products and trends of tomorrow. One of the main talking points there was the theme “kidults”.
LEGO, a trailblazer
“For a long time, there have been fans who like to play or collect,” say the fair’s organizers. “But their numbers have been growing fast in recent years. They have gone from a niche to a major target market.” Market researchers are already speaking about a market that could bring in billions, especially in Germany. Because the population is ageing, after all.
LEGO is a trailblazer in this area. The Danish industry giant has long been very open to the idea: The question “Are LEGO sets for adults?” appears on its website.
Directly underneath this, you can click on a variety of different product categories that lead to LEGO sets that are “carefully curated and especially recommended for adults” – on themes such as wonders of the world, the magic of film, outer space, icons of pop culture, luxury cars and architectural masterpieces. The background to this change is the fact that the time frame in which children play with LEGO is becoming ever shorter, given the competition from consoles, tablets, smartphones and streaming services.
The same is true for Playmobil. The iconic plastic figures, which are celebrating their 50th anniversary this year, were originally meant for children between the ages of 4 and 10. Now, according to new Playmobil CEO Bahri Kurter, they are used by children between the ages of 4 and 8.
Playmobil's special edition figure of Martin Luther sold more than 1 million units.
Therefore the family business from Zirndorf, near Nuremberg, is embracing a new strategy, “Into the Future”, which targets younger children. They are launching a new line for 1- to 4-year-olds, called Playmobil Junior. But mostly Playmobil is shifting its focus to adults. “We believe that there is enormous potential in this market,” Kurter said.
He wants to work with famous faces from the worlds of sport and entertainment, basing figures on them, which would then become collectors’ items. And he is looking for names from the top drawer. Top of Kurter’s wish list is pop star Taylor Swift, as he revealed at the toy fair. And we have seen that this concept can work, from the example of Martin Luther: a special edition figure released in 2017 to mark the 500th anniversary of the Reformation sold more than a million units.
Alongside board games and puzzles, collectors’ items are an important component of the growing kidult market. That is what industry giant Mattel, which makes collectible products for many of its brands, including Barbie, Hot Wheels, Matchbox and action figures Masters of the Universe, is counting on. “We are never too old to play,” said Managing Director of Mattel Germany Sebastian Trischler. Games are for everyone.
Together with Jung von Matt Nerd, a marketing consultancy for digital pop culture, Mattel carried out a study on the theme of kidults at the fair, surveying 1,000 German consumers in January. The spark was the success of the Barbie movie, which was mainly seen by adults, but saw sales of the dolls shoot up.
The study’s results showed that toys have an impact on adults’ sense of well-being. “We see this escape into the inner child,” said study leader Toan Nguyen, founder of Jung von Matt Nerd.
Toys have great sentimental value for adults
Three in four of those surveyed said that buying toys gave them a sense of comfort and distracted them from the worries of everyday life, and just as many buy toys to remind them of their childhood, so they have strong sentimental value. Others are fulfilling wishes for toys they couldn’t afford as children.
Nguyen said he recently bought himself the pizza van from the 1980s comic series Teenage Mutant Ninja Turtles, when he was actually shopping for toys for his daughter. He had always wanted it, but couldn’t afford it before. “Now I have made up for it.” This tendency is confirmed by a study by the Rheingold Institute, which found that adults often buy items for their children that they remember owning or wanting when they were children themselves.
When buying toys for themselves, childhood memories also play an important role for kidults, the Mattel study found. “Often we buy things for the younger version of ourselves,” said Nguyen.
The “fandom” phenomenon is estimated to have a market potential of around $250 billion globally.
And nowadays we no longer hide these toys away, but openly display them, in our homes or in photos and videos posted on social media. According to the consultants, the main focus is on areas such as superheroes, science fiction and fantasy, but also manga, anime and video games.
Nguyen called the phenomenon “fandom” and estimates it has a market potential of around $250 billion globally. Although a large proportion of this comes from gaming.
However, there is still a lot left over for the classic toy world. Mattel wants to secure itself a considerable share with a multi-generational offering, as Trischler said. The company has launched Mattel Creations, its own platform selling limited-edition collectors’ items.
It features, among others, special Barbie dolls, Hot Wheels cars and sets of Mattel’s LEGO competitor Mega Bloks. The latest novelties for adults include the stage from an iconic Beatles concert and a reproduction of an X-Box, which comes with insertable CDs.
But Mattel is also counting on the popularity of board games for the older generations – and is competing with, among others, Ravensburger subsidiary Alea and Kosmos. “Adults are an important target market, especially for board games,” says Kosmos’s Kienzle. He mentions a new version of the classic Settlers of Catan due to be released in autumn 2024, which is based on the theme of new energies, featuring nuclear energy, coal and solar. And, of course, we should not forget that for many years, items such as laboratory kits and robot building sets have targeted adults as well as children.
