Toy retailers are looking for a late-season sales lift to save them after a shaky year. However, all hope isn’t lost. The fourth quarter typically accounts for about 70% of U.S. toy sales, according to retail research firm Coresight Research. That puts retailers and manufacturers in crunch time as the end of the year looms.

Toy sales so far in 2023

2023 has been a difficult year for toy sales. In the first nine months of the year, U.S. toy sales declined 9% over the same period in 2022, with unit sales down 9% and average selling price up 1%, according to a report from retail analysis firm Circana. Hasbro and Mattel previously warned of a potentially slow holiday season, Reuters reported.

“After record-high sales during the pandemic, 2023 is a period of rebalance for the toy industry,” Juli Lennett, U.S. toys industry advisor at Circana, said in a statement. “This situation is further amplified by the fact that consumers’ budgets are facing more headwinds than tailwinds this year. For manufacturers and retailers, a well-thought-out pricing strategy can mean the difference between success and failure closing out the year.” 

Toy sales spiked on Cyber Monday, increasing 140% over a typical day in October, according to Adobe Analytics. However, discounts on toys were weaker than last year, going against the trend of other big holiday categories including electronics, apparel and furniture. Toy discounts averaged 27%, down from 34% in 2022, per Adobe.

Bigger discounts are coming, says Stever Pasierb, president and CEO of The Toy Association, a toy industry trade association. He points to toy retailers in the U.K. and Europe, who have been much more aggressive with discounts than in the U.S. so far. That’s because toy sales in those regions have been weaker than in the U.S., he says. Pasierb predicts further toy discounts coming for U.S. consumers as Christmas nears.

Toy sales target audience

Consumers looking to purchase toys generally fall into one of three categories, according to retail analysis firm Numerator. 

1. Parents buy toys for their children on holidays and gifting occasions but also “just because.” They tend to be price-driven in purchasing decisions.
2. Gifters don’t have children under 18 but buy for other children in their lives. They tend to fall into the Boomer age cohort and are more likely to shop online than other groups.
3. “Kidults” buy toys and collectibles for themselves. They skew younger and are typically less price-driven than other groups. 

About half of respondents in each category told Numerator that they plan to shop online for toys. The in-person shopping experience remains important for toys, though, according to Pasierb.

“Consumers want to see it, touch it, look at the packaging,” he says of toy shopping.

That may not necessarily be reflected in sales figures as consumers are likely to browse online and then make a purchase in a physical store when they can feel the toy themselves, or decide on a toy in a store and then make the actual purchase online.

Plush toys like Squishmallows are popular for both children and “kidults,” this year, says Pasierb, who dubbed 2023 “the year of plush.” Licensed toys related to TV or movie properties are also trending this year, he says, pointing to the success of the Barbie movie.

Retailers have been preparing for the toy sales season

Although many retailers held off on discounting toys until late in the season, they started working to build up anticipation for holiday toy sales months earlier. 

Amazon, Walmart and Target are the largest toy retailers in the U.S., Pasierb says. Amazon released its “Toys We Love” list on Sept. 12 with 250 entries, the retailer’s longest holiday toy list to date. More than 80 of the toys are exclusive to Amazon. Macy’s also released “Geoffrey’s Hot Toy List” of 100 toys in September. (Macy’s has added Toys R Us-branded sections in its stores.) Then, in October, the retailer held giveaways and events in Macy’s stores across the country. Target’s list, “Bullseye’s 58 Top Toys of 2023,” came out in October, later than its competitors but one month earlier than in 2022, per Coresight. Like Amazon, Target touted exclusive items through its partnership — in Target’s case, with FAO Schwarz. 

Amazon ranks No. 1 in the 2023 Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales. Walmart (No. 2), Target (No. 5)  and Macy’s (No. 17) all also rank among the top 20.

Walmart released a list of toys “Top Rated by Kids” in August, earlier than the other big retailers. Instead of focusing on exclusivity, the retailer highlighted affordable prices. More than half the toys on the list were priced under $25. 

Pasierb says these tactics exemplify the two strategies toy retailers are taking this holiday season as consumers are careful about how they spend. Retailers can either emphasize the recognizable brands they carry to court larger tickets with toys from Mattel, Hasbro and others, or they can focus on lower-priced toys in hopes that consumers fill their carts with more products at lower costs. 

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