The worldwide toy industry is growing at a CAGR of 4% for the period of 2017–2023. The fastest-growing segment is that of connected toys, which experienced annual growth of 19.3% during this period. Traditional toy companies need to adapt and find ways to incorporate technology into their products to stay relevant.
Retail and E-commerce Dynamics
E-commerce has mostly replaced physical toy stores, and large online retailers like Amazon have disrupted the market. This shift to online shopping has caused losses and struggles for traditional companies to compete in the digital era. The toy market is evolving, but it is far from dying.
Market Leaders and Trends
In 2021, LEGO had the highest annual revenue of selected toy companies, generating nearly eight and a half billion dollars. North America is projected to dominate the toys market share because of increased spending on entertainment and play kits.
Toys "R" Us: An Avenue for Innovation
Toys "R" Us is still the place where new products get discovered. The retailer devotes space to toys rather than the few aisles at Walmart. If Toys "R" Us disappears in the U.S., innovation will be hurt. Toymakers will have less opportunity to promote wares all year, rather than just the holiday rush.
Mattel’s Struggles
Mattel’s sales are declining and the company has lost its Disney Princess line to Hasbro. Today’s kids outgrow toys younger and prefer video games and electronics. The competitive market changes as more companies enter international markets. Mattel’s CEO has a challenge to turn around downward revenues.