According to market research firm Euromonitor International estimates, global sales of action figure toys like Transformers and Spiderman are expected to decline by about 2 percent this year.
With expected weaker demand and excess inventory already in place, many retailers have ordered fewer products compared to prior years. This means strongly demanded toy items could sell out quickly, giving retailers an early read on demand over Black Friday.
"We're just starting to see some of the Black Friday sales initiatives kick in a little bit earlier," Mattel Inc Chief Executive and Chairman Steve Totzke said on Monday.
Mattel said last month it entered the holiday season with retailer inventories of its products down by double digits from a year earlier and weeks of supply down by high-single digits.
MGA Entertainment CEO Larian said the company ordered and produced fewer goods because it wanted to take a "prudent and conservative" stance, but still expects some of the more unique toy offerings to sell out from inventory this year.
U.S. toy imports dropped about 32% year-over-year in the three months through Aug. 31 in dollar terms, according to data from trade data firm Panjiva, part of S&P Global Market Intelligence. This is typically the key ordering period for holiday toy stock.
Ocean freight volume, measured in containers, declined roughly 8% in September. "The toy market has been shrinking almost all year round," said Florian Sieber, CEO of German toy maker Simba. He said demand from European consumers was lower than last year, which was already down from the prior year.
Some industry executives, however, expect a spike in demand to emerge later in the holiday season. "We expect Mattel to have a good holiday selling season," Totzke said. "We still expect our market share gains for the full holiday season to continue."
Year-to-date toy sales volumes across countries covered by data company Circana, formerly NPD, were down about 7% through September, but consumers will start buying toys in the three weeks leading up to Christmas, said Frédérique Tutt, Circana's global toy industry adviser. She said the categories that have performed best so far are games and puzzles, plush toys, building sets, and vehicles.
There's always money set aside by parents to buy toys for their kids, said Jerry Storch, CEO of consultancy Storch Advisors and former CEO of Toys-R-Us and Hudson's Bay Co. "The reality is (this year) the toy business is a little softer than last year's blockbuster."
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