Toy retailers in Canada says that, they’ve been grappling with the same challenges that nearly killed the ailing company and some fear this holiday season will be difficult as customers adopt more budget-conscious behaviors.
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Customers’ dedication to seeking the lowest price is not new, but it is being worsened by high interest rates and inflation, which makes customers to think twice about some purchases and only purchasing others if the price is reasonable.
Though such patterns are being felt across most sectors, they’re an extra layer on top of the lengthily list of woes the toy industry faces such as, the rise of giants like Amazon, increase competition, shift towards digital and experiential gifts and shows more interest in second hand goods.
It’s been a difficult year for the entire toy market, said Jeff Bowes, toy industry analyst with market research firm Circana.
While the industry grew 30 per cent between 2019 and 2022, during the pandemic, when people were at home and seeking entertainment, this year has been marked with declines.
Three-quarters of the Canadians are saying that they’re planning on cutting back spending due to inflation and this figure is even higher among those under the age of 45.
When they are willing to buy, some don’t step foot in a toy store. Walmart, Canadian Tire Corporation Ltd., Indigo Books & Music Inc. and Costco all sell toys, as do online behemoths such as Amazon and Temu.
When we got our first Lego catalogue, I presumed that we had the options to order any Lego like any other store and then all of a sudden somebody asked us about a few sets and I said that it’s not in the catalogue, Salisbury recalled.
“I walked into Toys “R” Us to see what they were talking about and there were sets that we don’t even get to see.”
But big toy companies have a difficult time as well.
Since 2017, toys “R” Us has been working to restore the brand to its former glory and when it filed for Chapter 11 bankruptcy in the U.S. Presently it mostly functions through shops within Macy’s department stores.
Toys “R” Us Canada, a separate entity, sought creditor protection around the same time as the U.S. business. It was finally sold to Fairfax Financial Holdings Ltd. for $300 million and is presently owned by Putman Investments, which is behind Everest Toys, Sunrise Records and HMV.
Putman was in talks to buy Canadian toy chain Mastermind, but the parties abandoned the purchase earlier this year, when regulatory approvals were taking too long to get.
Citing increased competition and trouble recovering from the pandemic, in November Mastermind filed for creditor protection and announced plans to close 18 stores. Unity Acquisitions Inc. later went to buy the remaining business.
Lisa Hutcheson, a strategist from J.C Williams Group predicted that during this season, most of the consumer spending will be done at big box retailers.
People are going to shop at Costco’s and Walmart’s because of the convenience,” she said.
But she also added that there is still room for mom-and-pop shops, especially those offering screen-free toys.
That would be a good news for Toad Hall Toys in Winnipeg, where shelves are empty of Hasbro and Mattel but Canadian and European brands are plentiful.
