The global toy market increased by 2.3% in 2008 to more than $78 billion, according to a report by market research firm NPD Group. And that number is projected to rise to $80 billion by 2012. The news could re-energize plans for Toys “R” Us to take its stock public, and Sears is thinking of getting into the toy business as well.
At a time when even fast food chains can’t get consumers to open their wallets, news of an industry on the rise is rare and welcome. This weekend’s Financial Times speculated that Kohlberg Kravis Roberts, the private equity owner of Toys “R” Us, may be considering taking the toy giant public again. KKR was reportedly considering taking the toy store and several of its other properties public in 2007, but as the economy began showing signs of dropping, they held off on the decision. KKR purchased Toys “R” Us, the number two toy retailer in the U.S. behind Wal-Mart, in March 2005 for more than $5 billion.
At the same time, Sears is attempting to re-enter the toy business by testing toyshops in 20 stores around the country, starting August 15. Sears abandoned its year-round toy efforts in 2001.
The market for playthings may be the perfect way for retailers to get a boost in the tight economy. The toy industry in the United States is huge, contributing $21.7 billion in 2008. And even though only 9% of the world’s children live in the U.S. and Europe, 57% of the world’s toy consumption (actually down from 60% in 2007) takes place there.
But not all news is good news in Toyland. Former toy store company KB Toys filed for bankruptcy in December and shut down its stores. The company’s assets, including 15 registered trademarks including KB Toys and Toy Works, and more then 65 URLs, including kbtoys.com, are to be auctioned off later this week.