NPD: Toys “R” Us closures will not tank the industry

New data from The NPD Group shows that toys sales will not be as dramatically affected by TRU's US store closures as some may believe.
March 20, 2018

Last week, Toys “R” Us announced it had begun the process of shuttering its 700-plus remaining US stores, leaving a number of analysts and toymakers questioning the long-term fate of the industry. MGA Entertainment CEO Isaac Larian, for one, told Kidscreen last week that TRU’s closures could cause toymakers to see company revenue declines of up to 15% this year. But market research firm The NPD Group has released data that tells a different story.

NPD’s Consumer Tracking Service has found that Toys “R” Us represented approximately 12% of US toy industry sales in 2017. “Assuming that every single parent that would have purchased a toy from Toys “R” Us now decides their child isn’t getting a toy this year because Toys “R” Us isn’t there anymore, the worst-case scenario is that the toy industry will decline by 12%,” said NPD toy industry analyst Juli Lennett in a company statement.

In addition, NPD data shows that 70% of sales through Toys “R” Us were for an occasion like a birthday (23%) or Christmas (34%), and that nearly 70% of toys purchased at Toys “R” Us were chosen because kids asked for that specific product or brand. “Consumers will not put an end to buying toys because their local Toys “R” Us store closed its doors,” Lennett said. “That just defies logic.”

Operating under the assumption that the majority of parents will continue to buy toys for birthdays and holidays, Lennett estimates that the organic decline for the total US toy industry will be in the low single digits.

In fact, data from NPD shows that the global toy industry in 2017 was the largest it has ever been. In the US, the toy industry has grown by 4.5% on average over the last three years. Kids are still playing with toys, Lennett said, and parents will look to other retailers to purchase them.

Toys “R” Us (along with certain of its American and Canadian subsidiaries) filed for bankruptcy protection last September. Toys “R” Us Canada, however, announced that it will continue normal business operations as the retailer and its advisors are in active discussions regarding an acquisition of Toys “R” Us Canada’s entire business.

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