What kind of industry outlook is reflected in the two major European toy shows in 2023?

At the beginning of 2023, the long-established London Toy Fair in the UK and the Nuremberg Toy Fair in Germany were held one after another. In the two exhibitions, the nostalgic and evergreen IPs in the licensing section are attracting much attention, and the big kids' toys are leading the industry trend, but in the face of the future market, what "good" and "bad" messages do the exhibitions send to the industry?

After a single-digit decline in toy sales the previous year, the recent toy shows in London and Nuremberg offer hope for a rebound in 2023.

Price cuts and inflation continue to make the toy market a mixed bag

The good news for toy companies is that logistics costs have fallen. According to industry officials, freight costs for a 40-foot container have now dropped from more than 10 times that of a year ago to the current $1,500, and are expected to pick up slightly thereafter but stay in the $2,500-3,000 range.

However, continued inflation has dampened optimism that the market will rebound. According to industry consultancy NPD Group, the average selling price of toys in the UK rose by 3% to £10.54 in 2022.

Melissa Symonds, executive director of the NPD Group responsible for toys in the U.K. (Melissa Symonds) said, "We do not expect the U.K. toy market to see significant growth this year because there is still a lot of uncertainty about the economy. Consumers are still price sensitive, but the demand for fun and leisure for children and adults remains."

Industry executives said that people's demand for entertainment could become a new business opportunity for some toy companies. major mainstream retailers such as Sainsbury, Argos, the Entertainer, Morrisons, and Tesco all participated in this year's London Toy Fair. B&M、The Range. Home Bargains such non-traditional Retailers of toys are also seeing a rise in interest in the show.

Evergreen IP and big kid-licensed toys are in high demand

Although toy sales overall have declined over the past year, licensed toys still account for 31% of total toy sales in the UK.

According to the NPD Group, during this year's Toy Fair, buyers continued to be attracted to nostalgic, evergreen IPs such as Sesame Street, Peter Rabbit, Paddington Bear and Wallace And Gromit. Meanwhile, new IPs are actively using the show to develop business.

The NPD Group reports that demographic changes are also creating business opportunities, with sales of so-called big kids (12 and over) toys accounting for 28 percent of total UK toy sales in the past 12 months.

U.S. toy company Jazwares highlighted its Squishmallow plush toy product at the London Toy Fair, which doubled as a licensed IP promotion.

Vivid Goliath and Wind Designs both launched themed game toys licensed from the popular BBC TV show The Traitors.

To capitalize on the fast-growing action figure market, Funko will launch Bitty Pops, one-inch mini action figures containing licensed Harry Potter, Disney and other characters, this summer.

Many of the trend at the Nuremberg Toy Fair were similar to those at the London show.

Hasbro introduced the new movie "Transformers: Rise of the Beast" at the Nuremberg show, which is scheduled to be released on June 9. Related licensed products were: YuMe Toys introduced DZNR branded boxed Transformers plush products.

LEGO launched helmet block sets for the characters Captain Rex and Clone Commander Cody from The Clone Wars, and also showcased the first wheelchair-bound miniature LEGO figures.

Excess inventory still poses a major concern for the industry

Industry officials said that although there were many new products at the show, there are still concerns about excess inventory, with the U.S. experiencing more inventory pressure than the U.K., and even Europe as a whole.

European retailers slowed their orders in mid-2022 out of concerns about inflation and the war in Ukraine, while orders from U.S. retailers continued through the fall.

To clear inventory, U.S. retailers are expected to make massive price cuts in the first half of 2023, said Jay Foreman, CEO of Basic Fun. Despite the strong performance of the U.S. market in the first eight months of 2022, sales fell sharply in the very important fourth quarter, building up inventory and increasing pressure on dealers.

Foreman said bluntly, "Sales are expected to be flat or down this year, obviously because channel players are under pressure to clear their inventories. Both big-name manufacturers and retailers have serious inventory backlogs. Goods will depreciate in value over time, and retailers need to cut prices to clear out. The question is what about manufacturers? How long can their cash flow withstand the pressure on inventory? It's hard to say."

In general, opportunities and pressures coexist, and new opportunities and markets emerge at any time, and in general, the toy industry is a market with large opportunities for survival in the long run. As long as we plow deep into it and find niche markets to play our expertise, there are still great opportunities.