Just in time for Christmas, here is a nice analysis of the toy industry, and the problems faced by the major players.
Yet, per-capita spending on toys in the U.S. is more than $300 — nearly three times the level in Europe and more than 10 times that in Asia and Latin America, according to a November research report on the toy industry from brokerage Harris Nesbitt Gerard. "Now, to set Christmas apart as a holiday associated with giving gifts, people feel they need to provide a really huge quantity of toys," observes Richard Hastings, chief economist at retail research firm Bernard Sands.
The result is kids numbed to the barrage and parents primed for a backlash against rampant consumerism, he says. "Children today are living in a world of tons of toys," says Hastings (see "Old Toy Favorites Lead the Way").
As the U.S. gears up for its annual holiday toy-shopping frenzy, the surprising truth is that the $21 billion U.S. toy business is hurting. Competition at both the retail and manufacturing level has become far more intense over the past decade. As prices have fallen, dollar sales have been roughly flat for the past five years and are slipping so far this year, according to NPD. As manufacturers and sellers get squeezed, profits are harder to come by.
Interesting problems here because the recipients aren't the purchasers, so demand is different than for a "normal" product. A shrinking target demographic isn't going to help much either. This is why I don't own stock in any toy companies.