While inflation and rising interest rates will likely force Canadians to tighten their belts for Christmas shopping, one category of items could save the day for retailers: toys.
Like many other experts, Bruce Winder predicts that Canadians will not spend as much as in years past. However, toys might be the exception. “Toys are the last thing you want to stop buying when you have kids. We want to put something under the tree for them. We will do it in a more economical way. »
Tamara Szames, an adviser to the firm NPD, says the toys will be the stars of retail. “Toys continue to outperform all other categories in the retail sector,” she points out.
The toy sector remains resilient, but Mme Szames says he’s seeing setbacks for children’s board games, books and dolls.
She also mentions that toy sales declined 17% in the first six weeks of the fourth quarter. “That’s a pretty significant decline. »
But she acknowledges growth was “astronomical” last year, noting consumers shopped earlier in 2021 for fear of a shortage.
“If we compare the sales of 2022 with 2019, the growth amounts to 22%. Spending on children for the holidays will remain a priority,” said Ms.me Szames.
Consumers are also waiting to see the discounts that will be offered during the holiday season before buying gifts.
“Consumers are waiting for the Black Friday deals,” says Mastermind Toys CEO Sarah Jordan. We are returning to a more normal sales pattern, as before the pandemic. When we look back, we see that Black Friday was the starting signal. »
Several retailers are already offering discounts on the occasion of the next American Thanksgiving which falls next Thursday. The pace of sales should pick up from next week.
Consumers seem to be more influenced by price than in recent years, says Mme Jordan. “People want to stick to their budget. Our customers are twice as likely to buy gifts costing less than $25 than gifts costing less than $50 on our website. »
People don’t wait for certain toys. The most popular toys, like those in the interactive Magic Mixies Crystal Ball series, are going like hot little dogs on the internet.
Many consumers prefer to go to stores. They’re leaning more towards the good old classic toy, adds Mme Jordan.
“Soft toys are the fastest growing products,” she says. These are toys that are easier to buy in stores because you can see them, touch them and even smell them. » Mme Jordan estimates the increase in sales of these items at 30%.
Consumers are looking for more affordable toys, says Marty Weintraub, a retail expert at Deloitte.
“It is likely to see that consumers are looking less for high-end products,” he predicts. There is always a large choice for quality products. What we will see is more selective behavior based on price. »
Surpluses?
Inflation could have other implications for retailers. These could end up with surpluses in stock at the end of December.
Last year, stores struggled with supply issues. Many had found themselves with empty shelves well before Christmas.
Experts say businesses ordered earlier than usual to avoid running out of stock. They end up with a larger inventory than usual.
“Stores were gearing up for a big sales season, but inflation squeezed demand,” said Tandy Thomas, an associate professor at Queen’s University.
“Excess inventory will be a problem this year. This means that retailers will be highly motivated to get rid of them and offer even deeper discounts. »