Technology could save the toy market

Parents have always found the toy business terrifying. But these days, they aren’t alone: the sector is making investors rather nervous too. There are a couple of reasons for this, says Lex in the FT. First, toymakers are heavy users of plastic and as a result they are seeing their costs rise fast, along with rising oil prices. A worse problem, however, is that “children are getting older younger” and their tastes are changing faster. This means that each toy appeals to an increasingly narrow age group and that even the most popular of toys may only keep its cool for a short time.

Parents have always found the toy business terrifying. But these days, they aren't alone: the sector is making investors rather nervous too. There are a couple of reasons for this, says Lex in the FT. First, toymakers are heavy users of plastic and as a result they are seeing their costs rise fast, along with rising oil prices. A worse problem, however, is that "children are getting older younger" and their tastes are changing faster.

This means that each toy appeals to an increasingly narrow age group and that even the most popular of toys may only keep its cool for a short time. And failure to keep up with the times can lead swiftly to collapsing revenues. Take Mattel: recently the company's shares hit a five-year low as it reported, among other things, that sales of the ageing Barbie Dolls fell 30% in the third quarter. Others are feeling the pain too: Hasbro has disappointed the market, German dollmaker Zapf has an accounting investigation as well as young customers to cope with, and all efforts to rebuild the family-owned Lego company have so far "merely succeeded in reducing losses".

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