No toying with Spain

Spanish toy manufacturers assessed, with moderate optimism, the results of the past year's Christmas campaign, comparing their sales with the prior year's, while retailers showed satisfaction at having adjusted their orders to meet the season's demand, thus reducing the stocks that were left in shops when January rolled around. However, despite relief for completing another holiday season, Spain's toy makers and sellers did not describe holiday sales as “good.”

Retailer optimism goes up a notch if we bear in mind the experience of large-scale distribution based on the data provided by Port Washington, N.Y.-based retail sales research firm The NPD Group. According to its figures, in the fourth quarter of 2005 and in the year as a whole, toy sales in Spain grew noticeably compared with 2004. This growth is reflected in the increase in the number of units sold (19 percent) and in the turnover (11.7 percent), despite the reduction of average prices, which was the case throughout 2005.

As well as highlighting this global growth, data collected at points of sale showed a slight decrease in the proportion of sales made during the traditional holiday period. This figure indicates a decrease in the seasonality that is one characteristic of the Spanish toy market.

The results in other periods of the year support this theory. Non-holiday merchandise campaigns, like those for summer or back-to-school products, showed major increases that indicate the de-seasonalisation of sales.

These results support the main toy manufacturers who have, since some time ago, been aware that in order to increase their turnover, they must boost their sales over the course of the year because it is outside the Christmas period that their growth margin is found. Little by little, Spanish retailers are also seeking this de-seasonalisation, although there is still quite a way to go in this respect.

Using NPD's analysis, another change that the Spanish toy market is undergoing can be identified: a shift among supercategory rankings. Until last year, dolls were the undisputed queens in terms of ranking by product category in Spain. However, during 2005, toys and games from the infant and preschool categories took the lead. Sports and outdoor toys, arts and crafts, and games are other examples of categories that experienced the most significant growth in 2005, while the small vehicles and radio control categories were the only ones to decrease.

Despite the slight symptoms of de-seasonalisation from last year's Christmas campaign, the traditional holiday season continues to be the most important period with regards to toy sales. Toy manufacturers cite several moves that are propelling their positive business results. Among these reasons are better efforts at matching supply and demand, which is showing clear progress, and as a result, there are some retailers who have extended their range of products by adding new categories such as video games and consoles, trading cards, gifts, videos, etc., which they hope will meet the demands of today's children.

The socio-demographic factors of the Spanish consumer offer another possible reason for the positive results registered by the toy industry. The decrease in unemployment and the notable increase in population due to immigration are the main reasons for the high per-capita spending of Spanish people, a factor that benefits retailers' sales.

Considering these tentative signs of growth and recovery, toy manufacturers face the present and the future of their businesses with optimism—although it is tempered with a certain prudence.

The next few months will decide whether this recovery in the toy market is genuine or not.