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Toy industry crisis as fewer babies are born in developed world

Consumer demand
By Paul Hodges on 01-May-2014

ToysSlowly but surely, companies seem to be learning the hard way that demographics, not central bankers, drive demand.  The blog is surprised this simple insight is still not widely understood.  But the example of the global toy market highlights the paradigm shift underway:

  • In 1950, there were 83m children aged between 0 – 4 years in the wealthy developed regions of the world
  • They were 10% of the total population, according to the UN Population Division.
  • But their numbers then peaked at 89m in 1960, as fertility rates began to decline
  • Today there are only 70m in this age range, and they are just 6% of the population

Unsurprisingly, the world’s toymakers are now struggling as a result.  Those children who are alive are certainly still playing with toys – many play with electronic games as well as traditional toys.

But demographics drive demand.  So the market is already much smaller, and is continuing to decline.  Thus profits at former high-flying giant ‘Toys-R-Us have halved since 2009, whilst Mattel is suffering due to lower sales of Barbie dolls.

This downturn also, of course, has a global impact.  China manufactures 70% of the world’s toys, and so its growth is being hit by Barbie’s decline.

And the situation seems likely to get worse rather than better.  Not only are fertility rates now falling fast in the poorer regions of the world, but many women in the developed world have abandoned the idea of having children at all.

Thus the Wall Street Journal reports that one in four Italian women now end their child-bearing years without having had any children.  So do one in seven American women, and one in ten French women.

Its hard to sell toys to children who haven’t been born.

Tomorrow, the blog will look at the implications of the other major paradigm shift – the remarkable number of people aged 55+ who are now still alive.