New York, NY (PRWEB) April 25, 2014
The Retail Market for Toys includes a wide variety of toy and hobby goods sold across retail industries as diverse as department stores, warehouse clubs, specialty retailers, drug stores and online retailers. According to IBISWorld Industry Analyst Jocelyn Phillips, “The broad spectrum of products and retail outlets active in the industry shelters toy retailing from industry-specific fluctuation to some degree, but toys and hobby goods are still discretionary and demand is therefore influenced by disposable income levels.” As disposable income levels have recovered from the recession during the five years to 2014, total industry revenue has increased at an annual average rate of 1.1% to $45.5 billion.
E-commerce retailers are increasingly accounting for a larger share of the total toy market as consumers become more comfortable with online shopping and have begun to expect the low prices, wide selection and convenient delivery that companies such as Amazon.com can offer. The presence of these companies in the industry, alongside massive brick-and-mortar retailers such as Wal-Mart, has driven up the average industry profit margin in recent years, as e-commerce companies benefit from economies of scale and are better able to negotiate favorable supply and distribution contracts. However, the dominance of large companies has also led to heightened consolidation activity as smaller independent and specialty retailers scramble for market share in the increasingly competitive market environment.
Online retailers are expected to account for an even larger portion of the toy retailing market during the five years to 2019, encouraging further competition and consolidation activity within The Retail Market for Toys. “Although revenue is expected to fall 1.8% in 2014 due to expected increases in toy manufacturing input costs (such as the price of oil and plastic), industry growth is expected to remain steady over the five years to 2019,” says Phillips. However, this growth will come at a price as consolidated businesses will likely need to lay off redundant workers, yet will continue to experience increasing wage costs due to the necessity of hiring higher wage tech workers to operate in the online space. Shifting demographic trends may also change the market landscape in coming years as an increase in the number of children, an expected growing preference for nonelectronic play and a decrease in adult leisure time potentially soften demand for electronic toys and video games.
The Retail Market for Toys is characterized by a medium level of market share concentration. Sales are dominated by a small number of supercenters (such as Wal-Mart), department stores (such as Target) and specialty retailers (such as Toys”R”Us and GameStop). The remainder of the market consists of numerous small to mid-size businesses operating between one and two facilities and servicing local consumers. As competition in the toy retail market intensifies, the largest (and most successful) operators will likely increase their merger and acquisition activity, while less profitable operators will be induced to either exit or be bought out. As a result, concentration is expected to considerably increase during the five years to 2019.
For more information, visit IBISWorld’s Retail Market for Toys in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Retail Market for Toys industry sell new and used toys, games and hobby goods. This reflects the size of the retail market for this product and includes sales from all major retail channels, including specialty stores, general merchandisers and internet retailers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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