VERTICAL FOCUS: Toys
The toy industry faces several complex supply chain challenges. Here are three of the most significant at play.
Toys That Stick
How many of these all-time favorites did you love as a child? Passing the test of time, many of these items are still in production and remain bestsellers:
- Barbie
- Lego building sets
- Play-Doh
- Matchbox cars
- Tonka trucks
- Hula Hoops
- Frisbee
SC Challenges Are No Fun
The toy industry faces several complex supply chain challenges. Here are three of the most significant, according to industry experts:
1. Geopolitical and economic uncertainty: The global nature of toy production means the industry is vulnerable to disruptions such as trade wars, political tensions, and economic instability. For example, increased costs due to tariffs and potential factory shutdowns can significantly impact production and delivery schedules.
2. Demand volatility and seasonality: Toy sales are highly seasonal, with a major spike before the holiday season. This creates challenges for manufacturers and retailers who need to anticipate demand accurately. Overproduction can lead to excess inventory, while underproduction can result in stockouts and lost sales.
3. Product complexity and evolving consumer preferences: Modern toys often include complex features and require specialized materials. Additionally, consumer preferences shift quickly, with trends coming and going in a short period. This complexity and fast pace make it difficult for manufacturers to maintain efficient production lines and adapt to changes in trends.
By the Numbers: Rubik’s Cube
To celebrate 50 years of Rubik’s Cube, here are some impressive numbers about the iconic color-coded twister that has been bedeviling minds (and fingers!) for the past five decades:
• The original cube has 43,252,003,274,489,856,000 combinations, but only one solution.
• 3.13 seconds: The single-solve world record time, set in 2023.
• The company has sold more than 500 million units since 1974.
• 1 out of every 7 people in the world has played with a Rubik’s Cube.
• $12.97: Cost of the 50th anniversary edition cube on Amazon.
Supply Chain Barbie (With Bullwhip effect)
In summer 2023, all eyes were on Barbie as the megahit movie pulled in more than $1.4 billion globally, making it the highest-grossing film of the year and the 14th highest-grossing film of all time. While Barbie’s toy appeal has long held firm, what’s less widely known is that Ruth Handler, Barbie creator and Mattel cofounder, was something of a supply chain whiz.
Long before advanced data analytics and AI made it accessible, Handler understood the bullwhip effect and the benefits of on-demand data. According to a recent Wall Street Journal article, Handler was unsettled by the six-week lag between sales and reporting that was typical in the 1950s. To get information faster, she enlisted her own “private army of employees” to visit retail stores and find out how many dolls were selling each day. Suddenly, Handler and her team gained access to near-real-time sales data. “She had better information after one day than her rivals were getting in six weeks,” the Journal states, “so Mattel could make smarter decisions faster than the competition.”
Using this analog data and a visionary approach, Handler was able to transform her company and create a lasting impact on the toy industry.
What’s The Toy Story? Cautious Optimism
The toy industry endured a challenging 2023 with an 8% decline in sales from 2022 to 2023, according to research firm Circana. Case in point: Mattel outperformed the industry with a strong fourth quarter in 2023 but projected a continued, albeit slower, industry decline in 2024 before growth potentially resumes in 2025.
However, there is cautious optimism for 2024 due to potential economic improvements and these four strong trends, according to The Toy Association:
1. Sustainability: Consumers, especially younger parents, prioritize eco-friendly toys. Toymakers will focus on using sustainable materials and promoting durability.
2. Fantasy and Mystery: Driven by popular media like Netflix’s “Wednesday,” toys in spooky and mysterious genres are expected to thrive. High-profile properties like Harry Potter also boost this category.
3. Sports: Skill-building and screen-free toys, especially sports-related ones, will gain popularity, supported by the 2024 Summer Olympics.
4. Anime: Anime-based toys are set to grow, appealing to both children and adult fans through popular franchises like “Naruto” and “One Piece.”