Overall holiday spending is expected to be muted as the second wave of COVID-19 worsens, causing ongoing economic uncertainty and tighter travel and gathering restrictions. One report from Deloitte Canada says holiday spending is expected to fall 18 per cent, with one in three Canadians planning to spend less.
But retail analysts say the lack of normalcy in 2020 may a driver for strong toy sales. Much of the drop is tied to lower spending on travel, dining out and entertaining, and experts suggest parents will forgo gifts for each other or make other sacrifices to put toys under the tree.
"People will want to do something to keep it as close to normal as possible, especially if you've got kids," says Tim Sanderson, executive vice-president and national lead for retail with JLL Canada
In fact, the toy category has proven resilient throughout the pandemic so far.
Since lockdowns last spring, parents have scooped up “boredom busters” like puzzles, Lego, arts and crafts supplies, board games and outdoor activities.
Now retailers are expecting that trend to hold up during the biggest gift giving season of the year.
“With all kids’ events, camps and schools closing, parents have really tried to compensate to make sure that their kids are having fun or entertained or distracted,” says Gail Banack, chief kids officer for Indigo Books & Music Inc.
“We're continuing to see that trend going into the holidays.”
With strong toy sales expected, retailers have rolled out sales early to keep shopping safe and physically distanced. Black Friday deals have been extended over the month, for example, to spread out shoppers and avoid long queues.
They’ve also released hot toys lists and tips ahead of schedule, and are encouraging parents to shop early to avoid disappointment.
The messaging appears to be working. While there are fewer customers shopping in stores, there are also fewer people just browsing or “shopping around.”
“There has been a decline in traffic in our stores, but we're seeing that offset by the average transaction value going up with larger basket sizes,” says Sarah Jordan, CEO of Mastermind Toys.
She says the toy store chain, which focuses on educational kids’ toys, has also seen meteoric growth in online sales and curbside pickup orders.
“Customers are crossing off their holiday shopping list earlier than ever before to avoid crowds and last-minute trips to the stores,” Jordan says. “The bigger ticket items are flying off the shelves.”
Indeed, the messaging from retailers and mail delivery services urging people to shop early is working – perhaps too well, for the procrastinators among us.
Retailers say some inventory is already thin as people shop earlier than normal.
Sean Williams, vice-president and chief merchant with Toys "R" Us Canada, says the toy industry has been good at avoiding the Tickle Me Elmo toy shortages of years past – a plush children’s toy that sparked a holiday shopping frenzy in 1996 after it sold out.
But he says the pandemic is not something the industry could have prepared for.
“There's been an insatiable demand on the consumer side for toys throughout the pandemic,” Williams says.
He says early holiday sales numbers are “far exceeding our expectations.”
“There are some items that are going to disappear and be much tougher for people to find for the big day.”
With that in mind, executives from three of the country’s top toy retailers are naming the hottest holiday toys, giving some insight into what products could run low on inventory – or are already nearly sold out.
One of the most sought-after toys this season is a collaboration between plastic construction toy maker Lego and video game company Nintendo. Lego Super Mario Adventures lets users build real-life versions of the video game levels, like deserts and grasslands.
“It’s had a spectacular debut,” says Mastermind's Jordan. “It is proving to be a popular item … if you want it, you should get it soon.
She adds: “If there is a hit toy of the season, that is certainly it.”
The next hot toy is the Star Wars “The Child” Animatronic Edition – also known as Baby Yoda.
The Hasbro figure makes sound effects inspired by Disney Plus’s “The Mandalorian,” with a motorized head, ears and eyes.
“It just landed and it’s starting to fly off the shelf,” Williams with Toys "R" Us says.
Another hot item is expected to be Present Pets by Canadian toy company Spin Master.
The interactive pets unbox themselves, revealing one of two possible plush puppies programmed with more than a hundred sounds and actions.
“For parents that aren't ready to buy a puppy, this is a great alternative,” says Banack with Indigo. “It's really bringing together the innovation of the pet with this trend that we've been seeing for years about unboxing.”
Other hot sellers include Vtech’s Kidizoom Creator Cam, MGA Entertainment’s Na! Na! Na! Surprise Ultimate Surprise Rainbow Kitty and Spin Master’s Hatchimals Pixies Crystal Flyers toy.
But toy retailers say classic children’s gifts like games, puzzles and outdoor activities are also expected to post strong sales this holiday.
“That was something that really took off during COVID and has sustained itself,” Banack says.
She says many parents are trying to limit screen time for children, increasing the appeal of some of the more traditional gifts.
“I think one of the objectives of every parent going into the holidays is to get their kids off devices,” Banack says. “We believe books are always a great choice.”
This report by The Canadian Press was first published Nov. 17, 2020.
Companies in this story: (TSX:IDG, TSX:TOY)
Brett Bundale, The Canadian Press
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