Parents Are Buying Their Kids Experiences, Not Toys
Toy and game companies are seeing sales declines, as parents opt to spend on making memories for their children rather than on new products for them.
Toys and entertainment giant Mattel, for instance, reported in its first-quarter 2024 financial results Tuesday (April 23) that net sales were down 1% year over year, and the company expects challenges going forward.
“We do expect some decline in 2024, although at a lesser rate than last year,” Chairman and CEO Ynon Kreiz told analysts. “The decline is due to the same factors that impacted 2023 in terms of a lighter theatrical film slate and the impact of a shift in consumer spending towards … experiences and services.”
Indeed, it seems this trend can be seen across the industry, as toys and games company Hasbro shared in its own first-quarter earnings release Wednesday (Apr. 24) that revenue from consumer products was down 21% year over year, even as revenue from its more experiential offerings was on the rise, with digital gaming up 7% and entertainment soaring 65%.
Discussing these results on a call with investors, Hasbro Executive Vice President and CFO Gina Goetter said the decline in consumer products “was mostly driven by broader market softness across our key brands.”
During times of economic uncertainty, consumers may turn to experiences as a means of seeking comfort, stress relief, and escape from everyday worries. This could lead to increased spending on experiences that provide emotional fulfillment and relaxation, such as dining out, vacations, or attending concerts and events, even if shoppers need to cut back on spending on products to afford these.
Indeed, PYMNTS Intelligence finds that older generations — those more likely to have children and grandchildren — are more likely to save for meaningful experiences than Gen Z consumers, who tend to disproportionately prioritize saving for products. The recent study, “New Reality Check: The Paycheck-to-Paycheck Report – Why 60 Percent of Gen Z’s Live Paycheck to Paycheck,” which draws from a survey of more than 3,500 United States consumers, finds that Gen Z is the only age group to be more likely to cite buying an expensive retail product as their top financial goal than to cite paying for an upcoming event or show.
Conversely, millennials and bridge millennials are the most likely to list paying for an event or show as their main goal. Plus, across generations, consumers are more likely to prioritize paying for a trip or vacation than either of these.
Overall, consumers are cutting back on retail spending. The February/March edition of the New Reality Check: The Paycheck-to-Paycheck Report study, which is based on responses from more than 4,200 U.S. consumers, revealed that 60% of shoppers have cut down on nonessential retail purchases due to product price increases. That share rises to 66% for those who make between $50K and $100K annually and to 69% for those who make less than $50K. Plus, half of shoppers have turned to cheaper retail merchants because of this inflation.
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