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The traditional toys and games market in Western Europe currently faces many challenges with a changing retailing landscape, competition from video games and declining birth rates the most significant. With a compound annual growth rate (CAGR) of 1% over 2012-2017, Western Europe saw slower growth than the global CAGR of 2%.
Despite these difficulties, the region continues to hold potential, as suggested by a per capita value sales comparison with other regions in the world. Per capita value sales in Western Europe of USD41 in 2017 are indeed significantly below those in North America at USD71 and Australasia at USD48, indicating untapped potential.
If there is room for further value growth in the region, it seems interesting to focus on its most likely drivers. We discuss here the main factors set to positively influence sales over the forecast period.
If construction remains the biggest traditional toys and games category in Western Europe, the most promising categories are scientific/educational toys and games and puzzles.
Scientific/educational toys are predicted to grow at a 3% CAGR over the forecast period. As there is still little awareness around STEM (science/technology/engineering/maths) toys, there is room for further growth over the forecast period. Players are expected to develop an increasing number of games enabling children to express their creativity and develop new skills. By way of example, Pai Technology recently launched Augie Augmented Reality Robot, a tiny robot introducing preschool kids to coding concepts in a fun way. Parents are set to increasingly see the value of such toys in educating their children and preparing them for competitive collegiate and professional environments.
In addition, games and puzzles are projected to become increasingly popular thanks to their non-digital characteristic, as well as their social and learning dimensions. Far from being restricted to children, adults are also fond of games and puzzles, and represent a significant target audience. In this way, the French publisher of board games Asmodée is set to gain share in the forecast period thanks to the quality of its games – which target a wide target market in terms of age – but also to the dynamism of its acquisition strategy.
The collectibles market was a major factor in traditional toys and games growth in 2017. This was driven by the popularity of smaller dolls and collectibles specifically targeting girls. LOL Surprise! collectibles by MGA Entertainment and Hatchimals Colleggtibles by Spin Master were particularly successful during the year as they were able to keep up with current social media trends. They indeed benefited from the success of YouTube unboxing videos featuring children opening their own toys and showing the figurine received. As additional players are currently introducing new lines of collectibles (WooWee, Alpha Group, etc.), we can expect this trend to remain a major growth driver for the next few years.
Declining birth rates in Western Europe and delayed family formation are increasingly putting pressure on sales of traditional toys and games. There is however a growing opportunity in targeting adults due to the nostalgia factor. As adults in Western Europe generally live fast-paced and stressful lives, they are increasingly interested in buying toys that remind them of their childhood. Traditionally less fad driven, this target group is also more likely to collect a given range of toys over time, particularly in categories such as actions figures and accessories, construction, model vehicles or games and puzzles.
The retailing landscape is quickly evolving in Western Europe. The share of traditional toys and games stores is indeed declining while online players are gaining ground. This trend is expected to continue over the forecast period, particularly as Toys ‘R’ Us and La Grande Récré are facing financial difficulties and closing some of their stores in the region. Internet players will benefit from this development and will fill the vacuum left by these closures. There are also opportunities for hypermarkets and discounters, as well as the remaining traditional toys and games stores willing to develop an effective multichannel strategy and focus on delivering a qualitative, original and personalised customer experience.