Continued Responsiveness and High Annualized Growth from Toy
05 Feb 2015
Why is it that some wholesale markets experience a steady flow of demand from retailers while others experience seasonal upticks (or downturns) in demand? The answer lies in factors like trade policy, consumer demand and labor contracts.
Responsiveness of Toy Wholesalers
The wholesale toy industry, for instance, predictably experiences an uptick in sales to retailers around the holidays. Buoyed by an additional shopping day this Christmas season and Cyber Monday sales, toy retailers reported annual revenues nearly five percent higher in 2014 than the previous year. Toy retailers netted $18 billion over the previous year thanks to a steady supply of in-vogue products from toy wholesalers around the country. In particular, wholesalers received extra demand for youth electronics, licensed toys and action figures this holiday season.
Manufacturers have actually done a great job of staying abreast of tech trends and quick turnover - today's kids are opting for more tech-savvy video games and electronics-based puzzles. This requires wholesalers to link up with cutting-edge research and development in order to stay current with, and even ahead of, contemporary trends.
Changes in the Industry
Interestingly, though, the wholesale toys market is increasingly steering its sales as well as research and development efforts towards older adolescents and young adults. These age groups have become the target demographic of choice by toy wholesalers, manufacturers and retailers alike since these age groups show an increasing interest in tech-heavy and cognitively challenging games as a form of recreation. In other words, wholesalers are fulfilling fewer orders from retailers in conventional toys to very young consumers, although licensed toys and action figures continue to sell well around Christmas.
Wholesale Bypass? Hardly...
Hobby stores and toy retailers purchase their inventory both from toy manufactures and toy wholesalers, although wholesale bypass from toy retailers is hardly an issue. Since toy retailers require large yet efficient supply chains to meet sudden surges in demand for popular toys, wholesalers are still (and should remain) more able than manufacturers to fulfill orders from retailers. Some manufactures have taken to vertical integration practices to combat the rise of toy wholesalers, yet these same toy manufactures have been unable to compete with wholesalers due to quickly shifting trends and complex supply chains. Perhaps this is why toy and craft wholesalers experienced a three-percent increase in total sales over the previous five years while manufactures struggled to keep up with varied demand from consumers.
Expected Trends for Toy Wholesalers
Even though some manufacturers have taken to vertical integration and diversifying their services to include research and development, many toy manufactures have been unable to juggle intricate supply chains, changing consumer demand and research on the latest tech developments as well as toy wholesalers. Over the next five years, in fact, the continued growth in toy wholesales is expected to contribute three percent annually to the overarching US economy. The industry value added percentage - or the contribution by an individual industry to a country's gross domestic product - is expected to rise for toy wholesalers at least until 2019.
The steady annualized growth indicated by toy wholesaler's robust industry value added percentage is indicative of an extremely mature industry that stays abreast of market trends. In other words, toy wholesalers have shown themselves responsive to quick changes in consumer demand, complex supply chains and a spike in orders from retailers around the holiday season. Toy wholesalers will continue to make strong contributions to the overarching US economy, and provide a reliably high industry value added percentage to GDP, by staying one step ahead of wholesale bypass, tech trends and quick changes in consumer demand.