How Toys R Us Closing Affects The Toy Industry

When news broke that Toys R Us was closing all its U.S. stores, the toy industry collectively worried about the fallout. Some analysts have reported that the toy industry will decline by 15-20 percent in 2018.

But Juli Lennett, senior vice president and industry advisor for The NPD Group, isn’t endorsing such concern. “Parents that would go to Toys R Us for a birthday or Christmas gift will not stop buying that gift; they will likely go somewhere else for it,” Lennett says. “Consumers will not put an end to buying toys because their local Toys R Us store closed its doors.”

Toys R Us represented only about 12 percent of U.S. toy industry sales in 2017, according to NPD’s Consumer Tracking Service. And, of the toys bought last year at the retailer, 70 percent of them were purchased for an occasion like a birthday or Christmas. “We can safely assume that parents will continue to buy for occasions like a birthday and Christmas, and we can assume that some parents will still buy presents for no special reason,” Lennett says, adding that the organic decline for the whole industry will be nominal.

Another worry of those in the toy industry is technology’s impact on sales with the perception of kids not playing with toys anymore. While technology has impacted sales, Lennett says the industry has a history of responding and recuperating, citing the tablet boom several years ago.

Children are not myopic in their play, so toys have a place in the range of things they enjoy doing. “They have the innate ability to enjoy playing with toys, games and video games as well as watching television, playing sports, sending snaps and getting good grades,” Lennett says. “It’s amazing they can do all these things, and it’s important to not lose sight of the fact that each activity holds its own role in their development.”