As technology progresses and consumer preferences evolve, the toy industry is at a critical point of transformation. How can the toy industry innovate to meet new market demands and adapt to changes in development? What are the bases for transformation and innovation? Recently, at the CBME’s new toy channel conference, Xu Zifan, the chairman of LePlay Exhibition Co., Ltd. and the Secretary-General of the Zhejiang Province Toy and Maternity & Child Products Association, shared her insights. The following content is organized based on Xu Zifan’s shared insights from CBME Insight:
01. Characteristics of the Toy Market in China
The market is notably recovering
In the first quarter of this year, the main revenues of major domestic toy-listed companies all increased compared to the same period last year, among which Shifeng Culture achieved a 23% growth. By synthesizing the trading situation in wholesale markets across the country, the toy bestseller lists in malls in 12 major cities, and sales data on e-commerce platforms such as Tmall and JD.com, we can conclude that domestic toy consumption has noticeably warmed up.
Even though the market still lacks breakout hits with overwhelming demand, some popular products, including plush toys, trading cards, and puzzles, are performing well from physical stores to online platforms.
Traditional and affordable toys remain mainstream
Due to the post-pandemic consumption attitude of “buying what’s right, not what’s expensive,” traditional and cost-effective toys are more popular than electronic tech toys, and the market share of high-tech products, such as electronic remote-controlled toys, has significantly decreased.
Looking at major e-commerce platforms, the toys with high sales volume and turnover are mostly traditional ones such as plastic, plush, and building block toys, and most are priced at or below 50 yuan.
Polarization in product market pricing
After the outbreak of the pandemic, capital flowed into the toy industry, which revitalized the market but also led to changes in the market structure. Some trendy toy companies have maintained a position in the high-end consumer market through sales operations and collaboration with well-known animation IPs. Products like Jellycat plush toys and LEGO bricks have quietly risen to prices above a thousand yuan.
Due to a sluggish economy, many companies are reporting a downgrading of consumer spending and are launching lower-priced or mini products to meet consumer needs. Some are even competing on price in the mid-to-low-end markets. On e-commerce platforms such as Tmall and Pinduoduo, toys priced as low as 3 yuan are countless.
02. Toy Development Trends
Empowering products through IP licensing
In a fiercely competitive environment, many companies are shifting from domestic to international sales. Without distribution channels and looking to create their own brand, the quickest and most effective way to break through is to collaborate on IP co-branding.
Toys breaking through age barriers
Traditional views tend to see toys targeting children, but the rise of trendy toys and the development of toys for the elderly are offering excellent expansion opportunities.
In our association, there are such companies that have been focusing on developing educational toys but are now gradually breaking the age barrier and incorporating these into settings like community eldercare centers to create immersive on-site experiences. This is indeed a promising area of exploration.
Including during our visits, many community eldercare institutions are asking for educational toys for the elderly. The needs and desired features of the elderly differ from those of children’s educational toys; it isn’t just a matter of upsizing, and some toy brands should focus on this area.
Creating new immersive offline experience scenes
Building immersive offline consumption experiences is becoming increasingly worth our attention. Toys can not only be positioned for direct sales profitability but can also be considered as exchange gifts within commercial complexes, becoming a value-added service.
Exploring cross-industry collaborations, such as with bookstores, coffee shops, parent-child hotels, and educational bases, to create diverse consumption scenarios, is also a promising avenue.
Post-pandemic toy consumption has quickly expanded to adult demographics. MESH toys may take center stage in the market in the future. MESH stands for Mental, Emotional, and Social Health, examples of which, such as cotton dolls, board games, and role-play murder games, are already popular among young people, proving this point. Increasing cross-industry collaborations are forming new consumption scenarios.
Technology empowerment, AI-driven
In reality, many toy companies have been relatively stingy with their investment in AI and data. In the era of big data, using data for front-end judgment in the product development stage to predict demand and minimize the risk of inventory surplus is a direction worth exploring.
