Retail trading conditions will remain slow due to weak growth across the domestic economy.
London, United Kingdom (PRWEB) October 27, 2011
The toy market will provide little joy for UK retailers in the five years through 2016-17. Rising by just 0.4% per annum, sales will be hindered by continued competition from department stores, variety stores and online retailers, according to latest report from IBISWorld, the nation’s largest publisher of industry research. While these external players will focus on product prices and promotional deals, toy retailers will place greater attention on differentiating themselves from their competitors. Annual fluctuations in sales will also be driven by trends in real household disposable income, consumer confidence and the relative share of the UK population aged between 0 to 14 years old.
According to IBISWorld analyst, Claudia Burgio-Ficca, the UK Toy retailing industry has been a crowded industry over the past five years. “Increasing levels of competition both within and external to the industry have created a challenging marketplace for retailers,” says Burgio-Ficca. “As a result, industry sales have posted modest growth of 1.1% per annum over the five years through 2011-12.” Along with mounting competition, the trading landscape for toy retailers has also been affected by fluctuations in the level of real household disposable income, consumer confidence and trends in the overall share of the UK population aged 0 to 14 years, which is regarded as the key consumer market for toys.
The Toy retailing industry in the United Kingdom has undergone considerable change since its early days. Once dominated by specialist retailers, toy retailing has become a crowded market. Along with pure toy retailers, the industry faces competition from a range of external players including department stores, variety stores and more recently, online retailers. As a result, toy retailing has experienced a notable decline in the number of independent stores and a fall in the market share held by specialist toy retailers. The industry has also contended with a shift in consumer preferences for more adult-like toys, a phenomenon often referred to as 'kids getting older younger'. This shift has led to children outgrowing toys at a younger age than the target market. Added to this, the growing popularity of electronic and interactive toys has affected the traditional toy market and product margins across a range of goods.
Industry sales are set to decline by 1.0% to £1.32 billion over 2011-12. Retail trading conditions will remain slow due to weak growth across the domestic economy. Added to this, consumer demand will be negatively affected by a drop in disposable income levels, which will limit the spending power of consumers. Furthermore, the introduction of austerity measures will reduce consumer confidence and limit retail purchases. Retail demand will also continue to suffer due to mounting external competition from other avenues, such as online operators, department stores, multiple shops and variety stores.
Toy retailers will experience tough trading conditions over the next five years, with industry sales forecast to rise from £1.31 billion in 2012-13 to £1.34 billion in 2016-17, or at the average annualised rate of 0.4% per annum. Trading conditions across the UK economy will remain weak due to the implementation of a five-year austerity program by the British government. Fuelled by rising taxes, cuts to social benefits and budget cuts across a range of government departments, the austerity measures are expected to bring the country's debt burden under control. Industry sales over this period will also be affected by continued strong competition from external players, which will seek a larger share of the market.
For more information, download the full report from IBISWorld on the Toy retailing industry in the UK
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