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Toy Retailing - UK - December 2010

The toys and games market experienced a tough couple of years in 2008 and 2009, with value sales depressed by fierce retail price inflation among leading players in the market. With the UK economy heading into recession in late 2008, there was already widespread discounting taking place and the collapse of high street giant Woolworths only made matters worse in the lead up to Christmas, the toy sector’s most crucial trading period. By Q4 2009, prices were showing signs of recovery and the sector was able to report a much-improved Christmas performance, laying the foundations for growth during 2010.

  • Communicating wish lists using electronic media would help people to find out more easily what children are interested in or would like for Christmas or birthday presents. Four in ten toy buyers (39%) find out what the child wants before buying toys and games.
  • Retailers need to use the information they have on their customers purchasing patterns more effectively, and let them know about special offers on products they are most likely to be interested in buying. Some 28% of toy buyers make the most of special offers.
  • The convergence of internet and TV technology will open up big opportunities for promoting toys and games. Currently three in ten toy buyers (29%) browse the internet to compare products and prices and a quarter (24%) look through catalogues before buying.
  • Bringing toys and games to life in-store can inspire shoppers to purchase items they might not otherwise have considered buying. Just under a quarter (24%) of toy buyers would be encouraged to shop more at a particular store if they were able to test/play with the toys before buying.
  • The more a toy retailer can do to guide consumer choice in its stores the better. A quarter of toy buyers (26%) would be encouraged to shop more at a particular store by a list of best sellers by age group, one in five (21%) by an area of gift ideas by price and 17% by a pocket money area.
  • The educational element needs to be simply explained to shops for toys and games and this could be clearly demonstrated by showing small video clips in stores and on websites. Some 56% of toy buyers try to buy educational toys.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
          • Financial definitions
            • Abbreviations
            • Future Opportunities

                • Opportunity One
                  • Guaranteed to please
                  • Market in Brief

                    • Toys and games recovery after two tough years
                      • Big focus on price in the market
                        • Collapse of Woolworths causes shake-up in sector
                          • Plenty of winners in the wake of Woolworths’ exit
                            • Multichannel retailing increases range of options
                              • Capturing both the planned and impulse element
                                • Pester power a big influence
                                  • Bringing stores alive and guiding consumer choice
                                    • Educational element also a big factor
                                      • Strong support from manufacturers to retailers
                                        • More children will help market growth
                                        • Internal Market Environment

                                          • Key points
                                            • Strong competition keeps prices down
                                              • Figure 1: Consumer price indices (not seasonally adjusted), January 2008-September 2010
                                            • Market dominated by imports
                                              • Figure 2: International trade of toys and games, 2005-09
                                              • Figure 3: Sources of imports of toys and games, 2005-09
                                            • Pester power an important influence
                                              • Figure 4: ‘I find it difficult to say no to my kids’, by gender, socio-economic group and age of children, 2010
                                            • High dependence on Christmas
                                              • Collapse of Woolworths shakes up sector
                                              • Broader Market Environment

                                                • Key points
                                                  • Younger children a boost to market
                                                    • Figure 5: Child/youth population, by gender and age, 2005-15
                                                  • Increase in one-child families
                                                    • Figure 6: Dependent children in Great Britain, by family type, 2004-10
                                                  • Older mothers have more to spend
                                                    • Figure 7: Fertility rates in UK, by age of mother at childbirth, 2000-09
                                                  • Negative impact of exchange rates
                                                    • Figure 8: Quarterly average spot exchange rates, 2007-10
                                                  • Internet increasing in importance
                                                    • Figure 9: Broadband penetration, by age group, 2004-10
                                                • Strengths and Weaknesses in the Market

                                                  • Strengths
                                                    • Weaknesses
                                                    • Who’s Innovating?

                                                      • Key points
                                                        • Increasing industry links
                                                          • Toys ‘R’ Us Dora campaign
                                                            • Dressing up at Hamleys
                                                              • Mighty Beanz promotion at Entertainer
                                                                • Retail meets leisure
                                                                  • Legoland Discovery Centre
                                                                    • New design for Disney Store
                                                                      • Celebrating the launch of Toy Story 3
                                                                        • New product ranges
                                                                          • ELC seeks to broaden its audience
                                                                            • Charity begins at Christmas
                                                                              • Buzz Lightyear auction at Argos
                                                                                • Sponsor a soft toy at Disney
                                                                                  • Toy Scrappage Scheme
                                                                                    • Looking for new ideas
                                                                                    • Competitive Context

                                                                                      • Key points
                                                                                        • Video games and consoles hit traditional toys and games
                                                                                          • Figure 10: Consumer expenditure on toys and games compared to other areas, 2005-09
                                                                                        • 7-10s make toys and games top choice
                                                                                          • Figure 11: Trends for how 7-10s spend their money, 2004-10
                                                                                        • Purchasing declines among 11-14s
                                                                                          • Figure 12: Trends for how 11-14s spend their money, 2004-10
                                                                                        • Children becoming less active during leisure time
                                                                                          • Figure 13: Children’s lifestyle attitudes, 2006-10
                                                                                      • Market Size and Forecast

                                                                                        • Key points
                                                                                          • Toy sales show recovery after two difficult years
                                                                                            • Figure 14: UK retail value sales of toys and games, at current and constant prices, 2005-15
                                                                                          • The future
                                                                                              • Figure 15: Forecast of UK retail value sales of toys and games, at current prices, 2005-15
                                                                                            • Research methodology
                                                                                            • The Consumer – Where They Buy Toys and Games

                                                                                              • Key points
                                                                                                • Argos the top choice for toys and games
                                                                                                    • Figure 16: Outlets used for buying toys and games in the last 12 months, September 2010
                                                                                                    • Figure 17: Outlets used for buying toys and games, 2006 and 2010
                                                                                                  • Wide choice and ease of shopping at Argos
                                                                                                    • Toy chains limited in numbers
                                                                                                      • Half of pre-school parents shop at ELC
                                                                                                        • A magical experience from Disney
                                                                                                            • Figure 18: Purchasing of toys and games from Toys ‘R’ Us, Early Learning Centre and Disney Store, by presence of children and Mintel’s Special Groups, September 2010
                                                                                                          • Independent toyshops dwindling in numbers
                                                                                                            • Supermarkets offer value and convenience
                                                                                                                • Figure 19: Purchasing of toys and games from Tesco and Asda, by main supermarket used, September 2010
                                                                                                              • Internet important source for toys
                                                                                                                • Not ignoring the grandparents
                                                                                                                    • Figure 20: Outlets used for buying toys and games in the last 12 months, by adults with no children in the household, September 2010
                                                                                                                  • Number of outlets used
                                                                                                                      • Figure 21: Number of outlets used for buying toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                  • Consumer Buying Behaviour

                                                                                                                    • Key points
                                                                                                                      • Mixture of planned and impulse buying
                                                                                                                          • Figure 22: Agreement with statements on shopping behaviour when shopping for toys and games, September 2010
                                                                                                                        • Older buyers need more help with ideas
                                                                                                                            • Figure 23: Finding out what the child wants and impulse buying when shopping for toys and games, by age and socio-economic group, September 2010
                                                                                                                          • Younger women the biggest impulse buyers
                                                                                                                            • Special offers can clinch the decision
                                                                                                                                • Figure 24: ‘I tend to make the most of special offers (eg 3 for 2)’, by gender, age and socio-economic group, September 2010
                                                                                                                              • Pester power in the shops
                                                                                                                                • Internet versus catalogues for browsing
                                                                                                                                    • Figure 25: Browsing the internet and catalogues for toys and games, by outlets used for buying toys and games, September 2010
                                                                                                                                  • More occasions for toys and games
                                                                                                                                  • Factors That Would Encourage More Shopping

                                                                                                                                    • Key points
                                                                                                                                      • Catalogues a top consumer preference
                                                                                                                                        • Figure 26: Factors that would encourage more shopping at a particular store, September 2010
                                                                                                                                      • Trying before buying aids consumer choice
                                                                                                                                        • Figure 27: Testing/playing with toys before buying and demonstrations of new toys, by age, September 2010
                                                                                                                                      • Home delivery not a major factor
                                                                                                                                        • Children’s activities have more limited appeal
                                                                                                                                          • Giving shoppers more ideas
                                                                                                                                            • Figure 28: Lists of bestsellers, by age group, area of gift ideas, by price and pocket money area, by age, September 2010
                                                                                                                                        • Attitudes Towards Buying Toys and Games

                                                                                                                                          • Key points
                                                                                                                                            • Educational element seen as important
                                                                                                                                              • Figure 29: Attitudes towards buying toys and games, September 2010
                                                                                                                                              • Figure 30: ‘I try to buy educational toys’, by outlets used for buying toys and games, September 2010
                                                                                                                                            • Traditional games have lost some of their appeal
                                                                                                                                              • Figure 31: ‘I look for games the whole family can play together’ and ‘I prefer buying more traditional games’, by age and socio-economic group, September 2010
                                                                                                                                            • Big and noisy toys not for everyone
                                                                                                                                              • Quality and safety important factors
                                                                                                                                                • Big challenge to get adults interested
                                                                                                                                                  • Figure 32: ‘Games make good presents for adults as well as children’ and ‘I like to buy toys and games I played as a child’, by outlets used for buying toys and games, September 2010
                                                                                                                                                • TV adverts and peer pressure drive sales
                                                                                                                                                • Channels of Distribution

                                                                                                                                                  • Key points
                                                                                                                                                    • Big three becomes big two
                                                                                                                                                      • Figure 33: Distribution of toys and games, by major channels, 2007 and 2009
                                                                                                                                                    • Argos the dominant mass merchandiser
                                                                                                                                                      • Selected ranges at most other stores
                                                                                                                                                      • Retail Competitor Analysis

                                                                                                                                                        • Key points
                                                                                                                                                          • Exit of Woolworths helps other toy retailers
                                                                                                                                                            • Figure 34: Estimated market shares of major players, 2005-09
                                                                                                                                                          • Combining online growth with store development
                                                                                                                                                            • Figure 35: Review of major players, 2010
                                                                                                                                                        • Retailer Profiles

                                                                                                                                                          • The Disney Store
                                                                                                                                                              • Figure 36: The Disney Store Ltd, financial performance, 2008 and 2009
                                                                                                                                                            • Early Learning Centre
                                                                                                                                                                • Figure 37: Early Learning Centre Ltd, financial performance, 2008 and 2009
                                                                                                                                                              • The Entertainer
                                                                                                                                                                  • Figure 38: The Entertainer (Amersham) Ltd, financial performance, 2009 and 2010
                                                                                                                                                                • Hamleys
                                                                                                                                                                    • Figure 39: Hamleys of London Ltd, financial performance, 2009 and 2010
                                                                                                                                                                  • Toys ‘R’ Us
                                                                                                                                                                      • Figure 40: Toys ‘R’ Us Ltd, financial performance, 2009 and 2010
                                                                                                                                                                    • Smyths Toys
                                                                                                                                                                        • Figure 41: Smyths Toys UK Ltd, financial performance, 2008 and 2009
                                                                                                                                                                      • Games Workshop
                                                                                                                                                                          • Figure 42: Games Workshop Ltd, financial performance, 2008 and 2009
                                                                                                                                                                        • Build-A-Bear Workshop
                                                                                                                                                                          • Argos
                                                                                                                                                                            • Supermarkets
                                                                                                                                                                              • Department stores
                                                                                                                                                                                • Other retailers
                                                                                                                                                                                  • Home shopping
                                                                                                                                                                                  • Retail Advertising and Promotion

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Decline in advertising by toy stores
                                                                                                                                                                                        • Figure 43: Main media advertising expenditure by toy stores, 2006-10
                                                                                                                                                                                      • Toys ‘R’ Us the leading advertiser
                                                                                                                                                                                        • Figure 44: Main media advertising expenditure by toy stores, by retailer, 2006-10
                                                                                                                                                                                      • Press and TV dominate spending
                                                                                                                                                                                        • Figure 45: Main media advertising expenditure by toy stores, by media type, 2006-10
                                                                                                                                                                                      • Advertising peaks in run-up to Christmas
                                                                                                                                                                                        • Figure 46: Main media advertising expenditure by toy stores, by month, 2006-10
                                                                                                                                                                                      • Strong support from toy manufacturers
                                                                                                                                                                                        • Figure 47: Main media advertising expenditure on toys and games, by manufacturer, 2006-09
                                                                                                                                                                                    • Appendix – Broader Market Environment

                                                                                                                                                                                        • Figure 48: Broadband penetration, by demographics, 2004-10
                                                                                                                                                                                    • Appendix – Where They Buy Toys and Games

                                                                                                                                                                                        • Figure 49: Most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, by demographics, September 2010
                                                                                                                                                                                        • Figure 50: Next most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, by demographics, September 2010
                                                                                                                                                                                        • Figure 51: Repertoire of source of purchase for toys and games for a child aged under 16 in the last 12 months, by demographics, September 2010
                                                                                                                                                                                        • Figure 52: Repertoire of source of purchase for toys and games for a child aged under 16 in the last 12 months, by source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                    • Appendix – Consumer Buying Behaviour

                                                                                                                                                                                        • Figure 53: Most popular attitudes towards shopping for toys and games, by demographics, September 2010
                                                                                                                                                                                        • Figure 54: Next most popular attitudes towards shopping for toys and games, by demographics, September 2010
                                                                                                                                                                                        • Figure 55: Attitudes towards shopping for toys and games, by most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 56: Attitudes towards shopping for toys and games, by next most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 57: Attitudes towards shopping for toys and games, by other source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                    • Appendix – Factors That Would Encourage More Shopping

                                                                                                                                                                                        • Figure 58: Most popular factors simplifying and influencing to purchase more at the particular store, by demographics, September 2010
                                                                                                                                                                                        • Figure 59: Next most popular factors simplifying and influencing to purchase more at the particular store, by demographics, September 2010
                                                                                                                                                                                        • Figure 60: Factors simplifying and influencing to purchase more at the particular store, by most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 61: Factors simplifying and influencing to purchase more at the particular store, by next most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 62: Factors simplifying and influencing to purchase more at the particular store, by other source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 63: Factors simplifying and influencing to purchase more at the particular store, by number of outlets used for buying toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                    • Appendix – Attitudes Towards Buying Toys and Games

                                                                                                                                                                                        • Figure 64: Most popular attitudes towards buying toys and games, by demographics, September 2010
                                                                                                                                                                                        • Figure 65: Next most popular attitudes towards buying toys and games, by demographics, September 2010
                                                                                                                                                                                        • Figure 66: Factors simplifying and influencing to purchase more at the particular store, by most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 67: Factors simplifying and influencing to purchase more at the particular store, by next most popular source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010
                                                                                                                                                                                        • Figure 68: Factors simplifying and influencing to purchase more at the particular store, by other source of purchase for toys and games for a child aged under 16 in the last 12 months, September 2010

                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                    • Argos
                                                                                                                                                                                    • Asda Group Ltd
                                                                                                                                                                                    • Bentalls Plc
                                                                                                                                                                                    • Claire's Accessories
                                                                                                                                                                                    • Early Learning Centre Ltd
                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                    • Games Workshop Group
                                                                                                                                                                                    • Government Actuary's Department (GAD)
                                                                                                                                                                                    • Hamleys of London Ltd
                                                                                                                                                                                    • Home Retail Group
                                                                                                                                                                                    • Hornby plc
                                                                                                                                                                                    • House of Fraser Plc
                                                                                                                                                                                    • John Lewis Plc (department store)
                                                                                                                                                                                    • Kantar Media
                                                                                                                                                                                    • LEGOLAND Windsor Park Ltd
                                                                                                                                                                                    • Mothercare Plc
                                                                                                                                                                                    • Nickelodeon Networks
                                                                                                                                                                                    • Selfridges Retail Ltd
                                                                                                                                                                                    • Tesco Plc
                                                                                                                                                                                    • The Disney Store Ltd
                                                                                                                                                                                    • The Entertainer (Amersham) Ltd
                                                                                                                                                                                    • Trafford Centre
                                                                                                                                                                                    • Warner Bros. Entertainment Inc.
                                                                                                                                                                                    • WH Smith PLC
                                                                                                                                                                                    • Wilkinson Hardware Stores Ltd

                                                                                                                                                                                    Toy Retailing - UK - December 2010

                                                                                                                                                                                    US $2,478.79 (Excl.Tax)