Retail stores are discounting toys to drive sales and clear out abundant inventory.
Key Details
- The U.S. toy market was up 13% in 2021 to $28.6 billion, according to the NPD Group.
- Since the market was up, many retailers were heavily stocked with toys for this holiday season but are now discounting to clear inventory.
- Many large retailers are heavily advertising deals to lure shoppers in the remaining days before Christmas.
- According to Retail Dive, retailers will likely have to see a double-digit sales acceleration to clear out the excessive amount of toys.
Why it’s news
For the last three years, supply-chain issues have plagued many stores—causing them not to have enough stock to keep up with the demand for holiday shopping.
This year was the first year Americans could expect a regular holiday season as supply-chain issues eased and many stores were packed full with inventory.
Retail stores were loaded with toys for Christmas but did not sell nearly enough to clear out inventory, so shops are now adding heavy discounts to clear things out.
Jefferies analysts have found that some toys are selling well, including Legos and toys related to movies and streaming TV shows. Still, others remain on the shelves even with heavy discounts.
The weakest-performing toys have been board games, puzzles, and Nerf products—all of which have received discounts to attract buyers.
The two weeks leading up to Christmas are some of the busiest shopping days, with 158 million people expected to shop the Saturday before Christmas alone.
Last-minute shoppers can rejoice since retailers have been swamped with so much inventory. The few days leading up to Christmas will be packed with significant discounts, especially in the toy aisle.