September 24, 2023


Everyday Fashion

Retail looks beyond its old love — the movies

Retail looks beyond its old love — the movies

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In 2019, toy retailers were blessed with the holiday release of hit movies like “Frozen II” and “Star Wars: The Rise of Skywalker,” as well as a robust list of releases earlier on in the year. Included in the list of spring and summer blockbuster films from 2019 are: “The Lion King,” “Avengers: Endgame,” “Toy Story 4” and “Spider-Man: Far From Home.”

Those are the types of films that adapt easily to the toy market and can notch a meaningful difference in performance.

“When it’s a really hot movie, like in years past Star Wars or some of the Disney movies that are out, they can really be significant drivers of sales,” Joe Feldman, senior retail analyst at Telsey Advisory Group, said. “And they can become the must-have toy for a particular holiday season.”

Hasbro’s entertainment and licensing business reached $115.8 million in the third quarter of 2019, up 20% from the previous year, and the company touted the early customer enthusiasm for its “Frozen II” and Star Wars products. Then the pandemic happened. Movie theaters closed, films got delayed and toy companies were left hanging. The impact is still being felt on movie theaters: Regal Cinemas’ parent company filed for bankruptcy this September.

“The licensing business tied to entertainment has been just a huge component of the U.S. toy industry going back decades,” James Zahn, editor-in-chief of trade publication The Toy Book, said in an interview. “What happened when the pandemic hit is that the licensing and the products became terribly out of sync because we started having delayed theatrical releases.”

According to Zahn, “Trolls World Tour” was one such victim, with product hitting shelves in February 2020 and the movie not hitting screens until the spring. Toys related to “Minions: The Rise of Gru” and “Top Gun: Maverick” suffered similar issues. Still, sales were not as catastrophic as one might think.

In 2020, Hasbro’s licensing business fell below 2018 levels, tumbling 23% from last year to $89 million, but overall industry toy sales through August that year grew 19% year over year, according to Juli Lennett, U.S. toys industry adviser at the NPD Group. They grew another 19% through August of 2021, and were up 3% year over year through August this year. For the 12 countries NPD is currently tracking, licensed toys are outperforming the market.

This year, toy companies have something to look forward to again. Hasbro executives cited Marvel’s “Black Panther: Wakanda Forever” among seven blockbuster films the company was merchandising against, and a lineup of more than 20 streaming or TV shows. But in the intervening years of a pandemic-challenged entertainment business, toy companies have survived without the robust support of major theatrical releases and eager movie-goers.

“This year specifically, we probably have the least reliance on theatrical releases tied to toys going into the holiday season that I’ve seen in several years with the exception of the big superhero movies,” Zahn said, citing the Black Panther film and DC Comics’ “Black Adam.”

Instead, toy companies are capitalizing on evergreen intellectual property like Star Wars and leaning into faster manufacturing cycles to jump on whatever entertainment customers are turning to, big screen or not. 

It’s not that the movies don’t matter anymore: Blockbusters will always be important sales drivers, and a rebounding movie business is good news for toy companies. But frankly, my dear, the toy industry doesn’t need movies the way it used to.

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Movie ticket sales are still significantly down compared to pre-pandemic years (2021 ticket sales were about 50% behind 2019). The licensed toy business that relies on those films, on the other hand, is up.

Currently, the licensed toy market makes up 31% of total toy sales, according to Lennett, which is one of the highest levels in almost 20 years of tracking. That number is also up about four share points since 2019, which was a much better year for movies.