I attended a fascinating NPD presentation in London earlier this week. Like all attendees, I am bound by confidentiality not to reveal the key stats that were quoted, and I want to be invited back to future events, so I have to be careful what I share. Nevertheless, I felt it would be good to reflect on some of the general observations that were discussed on the day.
First up, let’s get the elephant in the room out of the way – September trade. It wasn’t good. No, really not good. It started fairly poorly, then went downhill rapidly in the second half of the month, with the Queen’s death and subsequent mourning period, followed by the disastrous mini budget, applying a nasty double whammy to sales in the final two weeks of September. The only thing you can say is that both events were complete one-offs and totally out of anyone’s control– other than the imposters who are squatting at 10 & 11 Downing Street (hopefully not for much longer). If you have ever been at a football match when both sets of supporters start singing “You don’t know what you’re doing” to the referee, I would imagine that is how the Prime Minister and the Chancellor must be feeling at the moment.
However, it’s also worth remembering that things can change very quickly out at retail; what happened two or three weeks ago may not necessarily be replicated over the coming months. This week has seen the launch of a huge toy sale at Sainsbury’s, which featured a very strong selection of products at extremely competitive prices (in amongst the usual deluge of Chad Valley lines). I suspect the timing of the promotion – coinciding with the second Amazon Prime day of 2022 – wasn’t entirely coincidental. Smyths also released its predictions for the top 15 toys for Christmas, which felt representative to me – in contrast with some of the more eclectic lists we’ve seen in recent weeks. But in a way, it doesn’t matter what’s on each individual retailer’s top toy list; what’s important is to get consumers thinking about festive purchases and building up the anticipation that, no matter how rubbish the past few months have been, we’re all going to do our best to make sure we have a good Christmas.
I suspect we are going to see quite a few more retail promotions over the coming weeks – I even hear that some toy companies are switching money from media budgets to fund retail promotions, possibly aided and abetted by steep declines in kids’ linear TV viewing, which has resulted in some campaigns struggling to be delivered. High inventory levels at retail will also be a key factor in the frequency and depth of promotional activity; apparently, over in the US, analysts are suggesting that toy inventory levels are at record highs. That may not necessarily be the case here in the UK, but I think we can all agree that stock shortages are unlikely to be a major issue this year (except perhaps on a few red-hot lines).
Historically, one third of UK toy sales in Q4 are on promotion – will that figure rise even higher this year? Will consumers wait for promotions to purchase, with many household budgets likely to be squeezed? In fairness, NPD presented compelling statistical evidence which suggested that traditionally, toy sales are largely unrelated to economic pressures: the biggest sales dips in the past two decades coincided with the demise of Woolworths and Toys R Us, not when the UK economy went to hell in a handcart. But will that still be the case this year? Will shoppers want to spend at the same level as before – and even if they have the desire, will they physically be able to afford to do so?
The truth is that we don’t know. Each consumer will have to make that decision for themselves. Some will be relatively unaffected, others more so. US toy sales have held up remarkably well this year, predominantly because of the massive stimulus grant given to families by the government – that generous giveaway hasn’t happened here, although a modest contribution has been made by the UK government to partially offset the rise in energy costs. That payment may yet be sufficient to enable many families to avoid cutting back on festive spending. For others, it won’t be nearly enough. The old adage says that ‘hope is not a strategy’ – but I think we have to hold on to the hope that families will continue to do all they can to give their kids the best Christmas possible.
And once the nights draw in, Christmas ads start popping up on TV and retailers start making their stores look festive, it may provide a warm glow and welcome relief that – after a tough year – something nice is just around the corner. Whether that feelgood factor is enough to overcome the very real financial pressure that many families will be facing remains to be seen – but never underestimate the determination of parents to provide a memorable Christmas for their children. According to NPD, we can also take hope from early reads on lines like Spin Master’s Gaby’s Dollhouse, Moose’s Little Live Pets Mamma Surprise and even Mattel’s Barbie Dreamhouse – at £80, £65 and £190 respectively, they’ve all been selling extremely well in September, long before the main season kicks into gear.
And, of course, we also have the first-ever winter World Cup coming up in the run-up to Christmas – could a strong performance by England in Qatar lift the spirits of the nation, as well as boost sales of football-related merchandise? We can all dream. Mind you, having sat through England’s last few abject performances, pinning our hopes of a good festive season on Gareth Southgate may just be taking the ‘hope strategy’ a little too far… that really would be a Christmas miracle.