Innovating in a downturn…

Posted on 5th February 2024 By Lee Allentuck

The Circana report for 2023 painted a sober picture: an 8% decline in toy industry sales compared to the previous year. This downturn, while significant, should be viewed in context.

Since 2019, the industry has grown by $5.7 billion, despite economic challenges like inflation and shifts in consumer spending habits. These challenges have led to a decrease in discretionary spending, affecting our industry.

But even in this challenging environment, building sets, vehicles and plush toys bucked the trend by showing growth, driven by popular brands like LEGO, Hot Wheels, Barbie and Pokémon.

Why Innovate Now?
I know that it’s counterintuitive thinking, but downturns are often the best times to invest in new ideas. This isn’t just theory; history backs it up. Take, for instance, the Great Recession of 2008. During this period, the toy industry faced similar challenges, yet it was also the time when some of the most innovative products were developed and launched.

Some other great historical examples include:

• LEGO’s Remarkable Comeback: Post-2003, LEGO faced near-bankruptcy. However, the economic challenges of 2008 became a catalyst for their resurgence. They embraced innovation and collaboration, leading to exciting product lines and partnerships with Star Wars and Harry Potter. This bold move helped LEGO rise like a phoenix from the ashes.

• The Mobile Gaming Revolution: The late 2000s also birthed the mobile gaming era. The launch of the iPhone and the App Store opened a new frontier. Gaming companies, seizing this opportunity, innovated with titles like Angry Birds, broadening
gaming’s appeal and transforming the industry.

• The Surge of Educational Toys: During the same period, there was a significant push towards educational toys, driven by parents’ increasing desire to combine play with learning – especially during the economic downturn when home-based, value-added activities were in demand. Brands that capitalised on this trend, like LeapFrog and VTech, saw sustained growth.

These examples demonstrate that challenging times can serve as a catalyst for significant innovation. Today, with the overall sales decline in 2023, our industry needs a similar spark of creativity to revive interest and excitement among consumers. While it’s a tough situation, history shows us that it’s also ripe with opportunity.

Finding the Next Big Thing
With the overall sales decline, our industry needs a spark of creativity to revive interest and excitement among consumers. This is not just about survival; it’s about thriving in the long run. Remember, even during these tough times, toys are still a priority for many consumers. Here are a few ways our industry players can find that spark:

• Scout Broadly: Look beyond your usual sources for new ideas. Talented inventors, designers, and engineers are out there with fresh perspectives.

• Embrace Risk: The safe path won’t lead to breakthroughs. Encourage ideas that might seem outlandish at first.

• Test and Learn: Use small-scale launches or test markets to gauge consumer interest before going all in.

• Stay Consumer-Centric: Keep a close eye on changing consumer behaviors and preferences. What do they need or want that they don’t even know yet?

• Collaborate: Sometimes, two heads (or companies) are better than one. Partnerships can lead to innovative synergies.

As we reflect on 2023, let’s not just see it as a year of stress and challenges. It’s a clarion call for us to innovate and adapt. Let’s seize this opportunity to reimagine and reshape our industry. After all, if we can’t find fun in problem-solving, who can?

Your Turn: What’s your vision for the future of our industry? Share your ideas, join the conversation, and let’s innovate together!

Lee Allentuck is the Founder of The Plan A Group. To find out more about the consultancy, head to: http://www.innovationinplay.com/

–

To stay in the loop with the latest news, interviews and features from the world of toy and game design, sign up to our weekly newsletter here