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What is in Santa’s Sack this Christmas? – Euromonitor International’s Top 10 Toys, Holiday 2013

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With the vital Christmas period rapidly approaching, Euromonitor International takes a look at which toys and games could take pride of place under the tree this year. 2012 saw the construction toys and pre-school categories achieve the strongest growth, followed by dolls and accessories in third place. Will LEGO’s range manage to maintain its momentum or will LeapFrog and V-Tech products come out on top in 2013? Mattel’s popular Monster High range may also be in the running, not forgetting the hotly anticipated console releases of the Xbox One and PlayStation 4 (PS4), just in time for the festive season.

Mattel Net Sales vs Net Profit, 2009-2012

Source: Euromonitor International

Looking at Mattel’s quarterly results over 2009-2012, the company’s sales pattern shows a steep climb before Christmas, with the majority of sales captured in Q3 and Q4. This is because toy retailers purchase toys from manufacturers in anticipation of the Christmas season. As a result, a large share of sales takes place in Q4, but this may vary from country to country. The risk for toymakers is overproducing an unpopular toy and/or under-producing a popular toy, so they have to anticipate demand for toys accurately. In addition, toymakers need to innovate each year so as to maintain children’s attention, and cannot rely on proven past concepts. This leads to extensive advertising to influence consumers. Retailers have been attempting to manage their inventories more tightly in recent years, requiring toymakers to ship products closer to the time the retailers expect to sell them to consumers, increasing the seasonality risk further.

Will LEGO be Victorious Over Mattel and Hasbro?

Mattel’s strong position in the dolls and accessories category, with nearly a 33% share, looks set to continue this Christmas with its Monster High range, which enjoyed 46% growth in 2012. Mattel has also released its Happy Ever After range in 2013, which is also heading for success this Christmas. However, the company’s main competitor, Hasbro, has focused on outdoor and sports toys with both Nerf N-Strike Elite and Nerf Rebelle, targeting boys and girls. These products have benefited from substantial marketing initiatives and so they are also expected to do well this Christmas, along with the new Furby Boom, which is seeking to capitalise on the tablet/toy integration trend. Lego is also expected to continue to do exceptionally well this Christmas with its Super Heroes, Galaxy Squad and City ranges, especially Lego City Coast Guard Patrol.

Blurring of Boundaries in Toys

Activision Blizzard’s Skylanders range has been successful year-on-year, with 2012 sales beating those of 2011, partly due to the increasing popularity of collectible figurines interacting with video games, and partly due to the introduction of Skylanders: Giants. This could potentially happen again in 2013 with Skyanders: Swap Force, which allows you to swap the body parts of the figurines in order to create new characters with new powers. However, this Christmas will also see competition from Disney Infinity, which has taken the same concept but reinforced it with a plethora of well-established characters from Disney films over the years. For this reason, the battle between more established and new competitors in this space is more or less even.

Pre-School Tablets

With new launches in 2013 from V-Tech with the InnoTab 3S and LeapFrog with the LeapPad Ultra, there is clearly still demand for children’s tablets. However, there does not seem to be much differentiation between the two. The LeapPad Ultra is marginally more expensive but comes with a larger screen and more built-in apps, while the InnoTab 3S boasts a swivel two megapixel camera and 4GB of storage space. Needless to say, with pre-school being the second fastest growing category in traditional toys and games in 2012, we can expect both these products to be in Santa’s sack this Christmas.

War of the Consoles

Lastly, we cannot ignore the hugely anticipated releases of Microsoft’s Xbox One and Sony’s PS4. Both have been in the press with various launch faux pas, with the PS4 perhaps coming out a little ahead of the Xbox One. Both have a different positioning, with Microsoft seeing its console as becoming an integral part of a home entertainment system. Although these products will initially fly off the shelves, the elephant in the room which has not been addressed is digital gaming, which will eventually challenge the longevity of these consoles.

Euromonitor International’s Christmas List

  • Disney Infinity
  • Nerf N-Strike Elite and Nerf Rebelle
  • Skylanders: Swap Force
  • Monster High
  • LEGO City range
  • InnoTab 3S and LeapPad Ultra PS4
  • Happy Ever After
  • PS4
  • Furby Boom
  • Xbox One
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