I have, since October 15, 2012 been investigating a troubling report by Goldman Sachs that toy industry had experienced a 30% per capita decline in sales since 1998 and that as a result “that traditional toys and games are likely in the early stages of secular decline in developed markets.”
The reason for my investigation was that the 30% number seemed much too high and that I could not find support for it anywhere else. The claim that the industry was in what amounted to a long term decline was a major statement that needed to be explored because it caused toy stocks to decline and it called into question the very health of the toy industry.
As a result of my discussions with the author of the Goldman Sachs report, Michael Kelter; the toys and games analyst for Euromonitor International, Utku Tansel, Head of Toys and Games Research at Euromonitor International and a subsequent article by NPD Senior Vice President, Russ Crupnick, I have found the following:
The Goldman Sachs number of 30% is too high by anywhere from 17% to 25.3%.
Per Capita sales for all toys
Goldman Sachs -30% since 1998
NPD -13% since 1998
Euromonitor -4.7% since 1998
Per capital sales of toys to children are actually up since 1998:
Per capita sales for sales to children
Goldman Sachs NA
NPD (ages 0-11) +13% since 1998
Euromonitor (ages 0-14) +4.7% since 1998
Michael Keltner and Goldman Sachs stand behind their report. Based upon the information from NPD and Euromonitor, however, it simply does not appear that the toy industry is in the midst of long term decline. In fact, all things considered, despite the competition from digital and other new forms of play, the toy industry appears to be holding its own.
For those of you who have the time to read more, I will provide a review of the details of how events occurred and what I learned in my next posting.