Games: More than child’s play

The toy and game retailing market in Australia can mean big bikkies for the right product. By IBISWorld’s JASON BAKER.

By Jason Baker

The $763 million toy and game retailing industry in Australia is enjoying strong growth, and the forecast looks promising. It’s clearly more than just a game.

The biggest growth in the industry has come from the TV and computer games segment.

In 1998-99, electronic video games accounted for about 15% of the product segment. Today, IBISWorld estimates the segment has doubled to represent 30% of all toy and games sales.

The growth of video and computer games sales stems from the fact that these games appeal to people of all ages. The new Sony Playstation 3 or Xbox 360, with a retail price point of close to $1000 and an “entertainment” market positioning, are a clear signal that this segment is viewed as far more than child’s play.

Traditional toys and games, which represent 70% of the total market, posted growth of only 2% in 2005. Toy manufacturers are challenged by the continually improving sophistication of toys and the rate at which children are growing up. Toys that was previously marketed to children aged seven are now being demanded by three or four year olds.

In the short term, movie-related toy products are expected to have a positive result for the industry following the success of films such as the Harry Potter  and Lord of the Rings series. Toy merchandise for popular films has proven to be very successful and, with further movie releases from Harry Potter, will continue to boost sales.

Product innovation and technology remains one of the key drivers in this industry, so there will be a continuing need for the development of new interactive toys and video games. Toy retailers believe the education category is likely to experience favourable growth.

This category provides instructive and exploratory products for older school-age children, in addition to being a breeding ground for advancements in science and educational/learning toys.

To be successful, toy stores need to be well located in a high traffic area. The store should position itself to ensure that it appeals to the targeted groups. The toys must be competitively priced. Stock controls must be in place so that adequate stock is available for sale and carry-overs are kept to a minimum.

The future looks bright for this industry. It will be defined by emerging segments and continued technological development. As the target market is growing to include adults, the outlook for this industry is strong.