Disney’s Star Wars merchandise stuffed animals featuring the character Grogu, commonly known as Baby Yoda.
Chukrut Budru | Sopa Pictures | Light Rocket | Getty Images
There are two things keeping the toy industry afloat right now: inflation and a consumer group known as “kidults.”
These kids at heart are responsible for a quarter of all annual toy sales, worth around $9 billion, and are the biggest growth driver in the entire industry, according to data from the NPD Group.
This age group, which the NPD defines as 12 and older, has been a steady contributor to the industry for years, but spending has accelerated in the wake of the pandemic, resulting in annual gains despite harsh comparisons.
It is also an important moment for the toy industry as the Christmas season is just around the corner. While sales of board games, puzzles, and playsets increased across the board during the pandemic, the first nine months of 2022 saw a 3% decline in sales volume. Higher toy prices helped offset those losses as sales revenue rose 3% for the period, NPD reported.
Kidults, who tend to spend more on toys, have a strong fondness for cartoons, superheroes, and collectibles that remind them of their childhood. They buy goods like action figures, Lego sets and dolls that are usually considered “for children”. However, in recent years, toy manufacturers have developed product lines just for these consumers, recognizing that there is high demand for this generation of adults who still want to have fun.
“The definition of adulthood has definitely evolved,” said Jeremy Padawer, chief brand officer at toy company Jazwares. “What it used to mean to be an adult was to be a very upstanding, serious member of society.
“Now we feel a lot more free to express our fandom as part of our adulthood,” he said.
During the ’70s and ’80s, the toy industry began to shift from one that was all about the next innovative item and began to develop more products based on entertainment franchises. Of course, there were toys based on movies and TV shows even before that time, but this is when the trend was in full swing.
“In 1977 ‘Star Wars’ started and you started seeing a lot more licensed products in retail where we celebrated our fan base with toys and collectibles,” said Padawer.
This included non-toy goods such as sheets, dishes, and clothing.
“At that time almost all children were the intended recipients,” he explained. “But these kids, born in the ’70s and ’80s, were really the first generation to have that many licenses and that many products that were demonstrably linked to them. And it’s no big surprise that these kids are in their 30s and 40s that they continue to demonstrate that.”
This goofy trend started gaining momentum about a decade ago when superhero movies and comic book culture exploded into the mainstream. Over the past five years, that’s had an increasing impact on toy company earnings, said James Zahn, editor-in-chief of The Toy Book and editor-in-chief of The Toy Insider.
Toy makers like Lego took in these consumers and created lines, often associated with nostalgic entertainment properties, just for this cohort. Hasbro’s Black Series of action figures is a prime example of this, serving the desire for high-quality Star Wars and Marvel collectibles. Mattel also has lines of Barbie and Hot Wheels designed specifically for this group of buyers.
Toy companies have even started creating their own TV and movie content to support toy lines. Mattel has set up its own in-house film company and is set to release Barbie in July 2023, and Hasbro has acquired eOne and will bring Dungeons & Dragons: Honor Among Thieves to theaters in March.
These films are not intended for young children but are aimed at this older group of toy-loving consumers.
Other brands like Funko have always catered to adult collectors who are in tune with their inner child.
But nostalgia doesn’t have to be tied to intellectual property.
“We know this generation takes their work very seriously, but at the end of the day, they also want to have fun,” said Josh Shave, Razor’s senior director of marketing.
Razor began selling its classic kick scooter in 2000. Within six months, the company had sold more than 5 million units.
“Twenty years later, all these kids have grown up,” Shave said, noting that Razor designed electric versions of its scooters and ride-ons just for these folks.
“The Razor Icon is literally the grown-up version of the kick scooter, but it’s electric,” he said. “I’ve just finished an event and everyone’s like, ‘Oh my god, I’m so glad they came up with all these adults. I’m so glad they came up that this reminds me of…’ and they would tell me a story.”
The Razor Icon, which can reach 18 miles per hour, retails for $600 and is part of the company’s broader collection of items for kids. There’s also the Rambler, a version of the retro mini motorcycle that looks like a ’60s swoop bike and can reach speeds of 15.5 miles per hour. It costs $660.
Lego Star Wars toys are on display at a Toys “R” Us Inc. store in Paramus, New Jersey, on Tuesday, November 26, 2019.
Bloomberg | Getty Images
Zahn also pointed to Basic Fun as another example of a company that is transforming its traditionally kid-centric toys into unique items for adults. The toymaker has teamed up with Netflix to create a larger version of its Lite Brite set based on Stranger Things that can be hung as a work of art. It costs $100.
“And a lot of that we’ve seen expanded during the pandemic because people have gone home and rediscovered the game,” Zahn said.
That connection with the imagination didn’t end with the lockdowns.
For the trailing 12 months through the end of September, the Kidult group represented 60% of dollar growth in the industry, despite accounting for just a quarter of sales, according to NPD checkout data.
“So that was a huge stroke of luck,” said Juli Lennett, vice president and industry adviser for NPD’s US toy practice.
However, the stakes remain high for the toy industry in the final weeks of the year.
Inventory has been a major challenge for retailers across the board. Supply chain snafus threatened to empty shelves for holiday shoppers last year, prompting many big stores to hedge their bets on how much merchandise to order and receive shipments earlier than usual. As the supply chain loosened, many had inventory, leading to higher discounts as demand eased.
Some companies, like MGA Entertainment, the maker of LOL Surprise dolls, have decided to offer more items that sell for less than $15 to cater to more cost-conscious parents.
CEO Isaac Larian told CNBC that the company had about 20 products selling between $5 and $15 last year. This year there are over 200.
Kidults, on the other hand, are a desirable consumer because they are often willing to spend more than others on items for themselves.
“Right now, adult toy buyers are driving the growth in the toy business,” Larian said.