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How to create a marketing plan for your small business - build a brand, target customers and set prices that will maximise sales.

The internet has transformed business marketing. No matter what you do, the internet is likely to be at the heart of your marketing strategy.

Social media is firmly established as a marketing tool. Having a presence opens up new lines of communication with existing and potential customers.

Good advertising puts the right marketing message in front of the right people at the right time, raising awareness of your business.

Customer care is at the heart of all successful companies. It can help you develop customer loyalty and improve relationships with your customers.

Sales bring in the money that enables your business to survive and grow. Your sales strategy will be driven by your sales objectives.

Market research exists to guide your business decisions by giving you insight into your market, competitors, products, marketing and your customers.

Exhibitions and events are valuable for businesses because they allow face-to-face communication and offer opportunities for networking.

Toy shop sector trends

(last updated July 2019)

What has been happening in the toy retailing sector

The number of traditional toy shops has been falling for some years now. The main reason for this is the increasing dominance of the multiple chains and strong competition from non-specialist outlets such as Argos and many other mixed retailers including the major supermarkets. There has also been increasing competition from businesses selling online, which include specialist online toy shops, general retailing giants like Amazon and the online side of High Street businesses such as Smyths. Added to this there has been a growing tendency for children to lose interest in traditional toys at an ever earlier age. This is in part due to the growing popularity of toy alternatives such as tablets and smartphones and children's fashion items.

The general decline in the traditional toy market was initially countered by a huge increase in the popularity of electronic and computer games, although demand for these - at least in physical form rather than 'apps' - has since fallen. Most toy shops were unable to benefit from the booming market for computer games as these products are usually sold through specialist outlets or by dominant non-specialists like Amazon. The economic downturn of the late 2000s/early 2010s saw something of a resurgence in demand for traditional toys, due to their lower cost and perceived value for money, although they continued to face strong competition from electronic toys, notably children's tablets.

Toy shops may gain from the popularity of licensed merchandise (ie spin-off products from television series like Doctor Who figures, films like Disney's Frozen or computer games), which has soared in recent years. Such items are often hugely popular until the next new craze comes along. These and other fads may represent good opportunities for small toy shops to gain extra sales. It is important that you keep up with these trends so as not to miss out!

In recent years there has been:

  • a decline in the number of independent toy shops
  • an economic downturn in the UK, which resulted in the demise of mixed retailer Woolworths (which was an important presence in the toy retailing sector) in the late 2000s. However, compared with other retail sectors, the toy sector is fairly recession-proof and surviving independent traditional toy retailers fared comparatively well. Indeed, many have benefited from the demise of Woolworths as the £300 million that consumers spent each year on toys at the chain was transferred to other toy retailers
  • increasing competition from large chain stores, non specialist outlets and online retailers
  • a long term fall in demand for traditional toys
  • lots of interest in licensed merchandise and other short lived fads
  • increasing demand for electronic games
  • an increase in the amount of toys stocked by supermarkets, particularly in the weeks before Christmas

Toy sales enjoyed a very good year in 2016, increasing over 2015 by 6.3% and reaching £3.5bn. This continued a trend of sales growth from 2011 to 2015 (apart from 2012). The growth in sales in 2016 was driven largely by sales of collectibles. Other successful lines included:

  • movie inspired toys
  • construction toys
  • games, puzzles, arts and crafts (which sold very well)

Although the majority of independent toy shops did well in 2016, a downturn in the economy and rising inflation during 2017 resulted in a fall in toy industry sales and an increase in competitive pressures. As a result, total sales fell by 2.8% to £3.4bn. Collectables had another good year in 2017 and doll playsets and pre-school action figures sold well. Licences performed less well than expected, however. In February 2018 Toys R Us, which had been struggling for a while, collapsed into administration, with the main beneficiary expected to be Smyths. The forecast is for toy sector sales to grow to £4.40bn by 2022.

The challenges for the future are seen by independent toy shops as:

  • competition from large retailers and supermarkets, who can buy more cheaply direct from the manufacturer and operate on lower margins
  • the increasing proportion of purchases made online
  • business rates and expensive parking
  • the weak pound making imported goods more expensive
  • sales of bootleg toys
  • the popularity of computer games (for those who don't sell them)

Despite parental concerns that children are having too much screen-time, research carried out in 2017 showed that 84% of children chose using a screen as their favourite way of playing, with watching TV as their second choice. Playing with toys came fourth, after drawing and colouring. Given the ongoing concerns of parents, stocking toys that are likely to appeal to children and which will encourage them to be physically active and sociable could be a good choice for your shop. Consider, too, stocking some popular board games as these are proving popular as a way for family and friends to socialise.

You will have to decide whether:

  • there is sufficient demand in your area to support your proposed business
  • you will be able to compete against the other shops selling toys in your area
  • there is a need for you to specialise in order to compete more effectively
  • you can identify a particular niche in the market in which your shop can specialise
  • you will offer unusual or exclusive toys to attract customers away from your competitors
  • you could offer toy alternatives such as clothing and other children's leisure products
  • you would benefit from joining a buying group like Toymaster
  • you'll be able to survive in what is a very seasonal business - according to the Toy Retailers Association, half of all toy sales are made in the two months before Christmas

Keeping up to date with the toy retailing sector

Joining a trade association is an excellent way of keeping up with developments in your industry.

The Toy Retailers Association represents toy retailers in the UK. They administer the Approved Lion Mark Retailer Scheme and offer a variety of services to their members. Visit their website for more information.

Subscribing to a trade journal is another good way of staying up to date. Toy News and Toys N Playthings are published for the toy trade and include regular coverage of the latest industry issues.

Trade shows

You will be able to obtain a lot of useful information if you go to a trade fair. You will be able to meet manufacturers, suppliers and importers and plan your future stock buying. Information about forthcoming trade shows that may be of interest to you can be found on the Exhibitions UK website.

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