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By: Rob Walker

There is a famous epiphany at the end of Dr Seuss’ children’s classic How the Grinch Stole Christmas, when the Grinch, rather like Ebenezer Scrooge, feels compelled to see Christmas from an entirely new perspective. “Maybe Christmas, he thought, doesn’t come from a store. Maybe Christmas, perhaps, means a little bit more!”

It’s heart-warming stuff. And yes, it is that wonderful time of the year.

Like it or not, though, for millions of children around the world Christmas does come from a store. And toymakers and toy retailers must be thanking their lucky stars that it does. The festive season fuels a huge chunk of their annual sales (as much as half in key Western markets). Put simply, it makes or breaks the year.

So, who and what do we think will steal the show this Christmas time? Here are some products and trends to watch.

Christmas comes early

To some extent, the die is already cast because toy retailers have had to buy in their Christmas stock months in advance. We know there will be Disney Frozen dolls galore, a bevy of new internet-connected and interactive toys, as well as the more traditional Christmas offerings like board games and construction toys.

Anticipating consumer demand months ahead of Christmas is an increasingly risky business, though. Children are, after all, a notoriously fickle consumer group.

Consider the case of loom bands. They were a huge hit across Western Europe in the spring and summer and few would have bet against the craze fizzling out by Christmas. Small wonder, then, that UK retailer Argos selected the Cra-Z-Loom Bracelet Maker as one of its top toys to sell out this Christmas.

There is mounting evidence, however, that the loom craze is indeed losing some of its momentum. Yet, loom band stock is piled high in retailers. There might be a resurgence of demand in the next few weeks, but loom bands are a measure of why the Christmas season is so unpredictable. For every one toy that sells out, there are a dozen others that gather dust on shelves. And this year, the cross-category competition is especially strong.

Interactive friends

For young girls, digital dolls could steal the show. We live in a world of virtual friends on social media, so it makes sense to muscle in on the concept with children who are still too young to have a Facebook page. In the UK for example, My Friend Cayla has been rather popular. This is a digital doll that uses speech-to-text technology to chat about hobbies and homework. How? The doll is Wi-Fi enabled and surfs the web to answer questions (using Google’s SafeSearch).

It is not hard to see how this type of state-of-the-art digital technology could become the norm in the dolls and accessories category over the next five years. Mattel recently launched Barbie Colour Change Bag, for example, which can be held against any item of clothing and will change colour at the press of a button, matching more than 100 different shades.

Smart choices

Smart watches for children could be another potential winner this Christmas. With the recent launch of fancy Apple Watch for the adult audience, wearable technology for kids has been one of the dynamic areas in terms of new launches in 2014. Vtech’s Kidizoom Smart Watch boasts a colour touch screen and motion sensor which can take photos, edit them, record videos and play games. And like My Friend Cayla, it is positioned at a comparatively affordable price point.

It is an obvious point, perhaps, but affordability is key at this time of year. Yes, Christmas is a period when parents and grandparents splash out on young children, but only in so far as disposable spending power allows. For Christmas 2014, there are plenty of toys on the market that have a “wow factor” but will not necessarily break the bank. This bodes well for strong seasonal sales even in Western Europe’s most cash-strapped markets.

Spin offs

Licensed toys are widely tipped to do much better this year than in 2013, at least in Western Europe. The Disney film Frozen is hardly new, but it has built an enduring presence amongst children and its latest spin-off toys are on the Christmas wishlists of armies of young girls, particularly the Snow Glow Elsa and the Frozen Sparkle Dolls.

Benny’s Spaceship from The Lego Movie is another licensed brand that is tipped to do well. It goes to show that a blockbuster movie is still hard to beat as a marketing engine for the toys and games industry.

Winning over the parents

The marketing of toys and games is getting tougher by the year, though. For one thing, the current generation of new parents have largely grown up using the internet and social media. They are consumers who, in their majority, do not respond well to pushy marketers. Rather, they listen to what their friends are saying or blogging about on myriad internet platforms.

Over the crucial Christmas period, Nerf blasters, robots, interactive dinosaurs, Playmobil, toys for sharing, toys for learning, toys for creating – they are all projected to be up for grabs. There is a clear sense, however, that the brands that have the strongest engagement on social media sites will also be the ones that sell the best.

A bumper year?

Of course, no one – not even industry insiders – knows for sure what products will fly and which ones will sink. This is why the build-up to Christmas is such a nail-biting time for the industry. What we can say is that the overall signs are looking good for a strong year.

In Western Europe, traditional toys and games sales are forecast to record 3% growth in current value terms in 2014, fuelled partly by dynamic sales over the holiday season. Global sales are forecast to climb over 6% (at fixed US dollar prices, current terms) – the market’s best performance in six years – with Christmas shopping the key variable in Western markets in 2014.

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