The Death of Toys R Us Didn't Kill the Toy Business After All

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The collapse of the nation's largest retailer devoted to toys did not dampen American kids' actual desire for toys, nor adults' willingness to buy them. Overall, toy sales through the first half of 2018 grew by 7% year over year to $7.9 billion, according to data from NPD Group.

Some of those sales came from the liquidation of Toys R Us, but that's not the main reason the segment put up strong numbers. The now-shuttered retailer, however, does get some of the credit, according to NPD Group Senior Vice President Juli Lennett.

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"It is likely that the Toys R Us news has kept toys top-of-mind for parents and grandparents when shopping for kids in general, benefiting both consumers and the industry," she said in a press release. "I am also convinced that the strong toy industry growth so far this year has been at least partially supported by the empathy that people felt toward losing a store like Toy R Us. I think it brought about an emotional response that resulted in parents buying more toys overall."

While Toys R Us may have been an emotional loss for many, part of the reason it died was that it was no longer needed. When Baby Boomers and Gen Xers were kids, going to a toy store was an event. That changed as retailers including Walmart and Target began stocking larger selections of toys -- sometimes as loss leaders. Add in the rise of Amazon, and the entries of a host of other national retailers including J.C. Penney, Barnes & Noble, and Party City into the toy business, and it becomes obvious why Toys R Us lost much of its relevance long before it closed.

Where was the growth?

The strongest sales growth in the first half came from toys in $5 to $19.99 price range, according to NPD. Youth electronics grew by 43%, making it the fastest growing category, led by Fingerlings, Star Wars, and Tamagotchi.

Doll sales rose by 17%, with the big gains coming from the L.O.L. Surprise!, Hatchimals, and Barbie lines. Those three, according to the NPD report, accounted for two-thirds of the growth in the doll category.

Action figure sales were up by 16%, just under dolls. NPD attributed that to strong box office performance from Black Panther, Avengers Infinity War, and Jurassic World: Fallen Kingdom.

"From my point of view, the toy retail space has been bustling with activity, and this will continue through the end of 2018," said Lennett. "Existing toy retailers have announced they will be dedicating more space and will carry more toys this holiday season both in-store and online. We're also seeing new store formats emerge that are more experiential, and we will have new toy retailers entering the space."

Toys will be fine

There are some items people will be less likely to purchase at all if they don't walk by them in a store. That's simply not the case with toys. Kids will let their parents know which toys they want, and there are plenty of places to buy them.

So even if a special trip to Toys R Us is no longer an option, children and parents will be able to get similar results by browsing the toy section in a department or big-box store, or looking online. The industry may have lost its most visible retailer, but the kids play on.

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