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Kidults is the biggest sales engine in the toy industry

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Plush toys from Disney’s Star Wars merchandise featuring the Grogu character, commonly known as Baby Yoda.

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There are two things keeping the toy industry afloat right now: inflation and a group of consumers known as “kidults.”

These kids at heart are responsible for a quarter of all toy sales per year, or around $9 billion, and are the industry’s biggest driver of growth, according to data from the NPD Group.

This cohort, which NPD defines as ages 12 and older, has been contributing steadily to the industry for years, but spending has accelerated in the wake of the pandemic, driving year-over-year gains despite difficult comparisons.

It’s also an important time for the toy industry, with the holiday season approaching. While sales jumped across the board for board games, puzzles and playsets during the pandemic, the first nine months of 2022 saw a 3% drop in sales volume. Rising toy prices helped offset those losses, as revenue for the period jumped 3%, NPD reported.

Children, who tend to spend more on toys, have a fondness for cartoons, superheroes and collectibles that remind them of their childhood. They buy merchandise such as action figures, Lego sets, and dolls that might generally be considered “for kids.” However, in recent years, toy manufacturers have created product lines just for these consumers, realizing that demand is high for this generation of adults who still want to have fun.

“The definition of adulthood has definitely evolved,” said Jeremy Padawer, chief brand officer at toy company Jazwares. “What it used to mean to be an adult was to be a very honest and serious member of society. And to do that you had to demonstrate it intellectually, emotionally, in every other way.”

“Now we feel a lot more free to express our fandom as part of our adult lives,” he said.

In the 70s and 80s, the toy industry started to move away from being an industry that was pretty much the next innovative thing and embraced creating more products based on entertainment franchises. Sure, there were toys based on movies and TV shows before that time, but that’s when the trend kicked into high gear.

“In 1977, ‘Star Wars’ launched, and you started to see a lot more retail licensed products, where we were celebrating our fandom with toys and collectibles,” Padawer said.

This included non-toy goods such as linens, dishes and clothing.

“At the time, the recipients were almost all children,” he explained. But these kids who were born in the 70s and 80s were really the first generation that had so many licenses and so many products that they could obviously get attached to. And it’s no big surprise, as these kids are in their 30s and 40s, that they continue to demonstrate that.”

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This kidulting trend started gaining prominence about a decade ago as superhero movies and comic book culture exploded into the mainstream. It’s become more important to toy company bottom lines over the past five years, said James Zahn, editor of “The Toy Book” and editor of “The Toy Insider.”

Toymakers such as Lego have embraced these consumers and created lines, often tied to nostalgic entertainment properties, just for this cohort. Hasbro‘s Black Series for action figures, is a prime example of this, tapping into the desire for high-quality Star Wars and Marvel collectibles. Even Mattel has lines of Barbie and Hot Wheels that are designed specifically for this group of buyers.

Toy companies have even started creating their own TV and movie content to support toy lines. Mattel has launched its own in-house movie company and is set to release “Barbie” in July 2023 and Hasbro has purchased eOne and will bring “Dungeons & Dragons: Honor Among Thieves” to theaters in March.

These movies are not designed for young children, instead, it’s aimed at that older group of toy-loving consumers.

Other brands, such as Funkohave always been aimed at adult collectors who are in tune with their inner child.

But nostalgia doesn’t have to be tied to intellectual property.

“We know this generation takes their jobs very seriously, but at the end of the day, they also want to have fun,” said Josh Shave, Chief Marketing Officer at Razor.

Razor began selling its classic scooter in 2000. Within six months, the company had sold over 5 million units.

“Twenty years later, all of these kids have grown up,” Shave said, noting that Razor has created electric versions of its scooters and ride-ons just for these people.

“The Razor Icon is literally the adult version of the scooter, but it’s electric,” he said. “I just finished an event and everyone is saying the same thing, ‘Oh my God, I’m so glad they came up with all these adults. I’m so glad they came, it reminds me of…’ and they were telling me a story.

The Razor icon, which can reach 18 miles per hour, sells for $600 and is part of the company’s largest collection of children’s items. There’s also the Rambler, a version of the retro mini-motorbike, which looks like a ’60s swoop bike and can hit 15.5 miles per hour. It retails for $660.

Lego Star Wars toys are displayed inside a Toys ‘R’ Us Inc. store in Paramus, New Jersey, U.S., Tuesday, November 1. 26, 2019.

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Zahn also cited Basic Fun as another example of a company transforming its traditionally kid-centric toys into one-of-a-kind items for adults. The toymaker has teamed up with Netflix to create a larger version of its Stranger Things-based Lite-Brite set that can be hung up as artwork. It costs $100.

“And a lot of that we’ve seen expand during the pandemic because people have gone home and rediscovered the game,” Zahn said.

This link with the imagination did not end with the confinements.

In the past 12 months ending in September, the kidult group accounted for 60% of industry dollar growth, despite only accounting for a quarter of sales, according to data from NPD Checkout.

“So that’s been a huge boon,” said Juli Lennett, vice president and industry advisor for NPD’s US Toy Practice.

Still, the stakes remain high for the toy industry as it heads into the final weeks of the year.

Inventory has been a major challenge for retailers at all levels. The supply chain snafus threatened to make shelves bare for holiday shoppers last year, leading many big box stores to hedge bets on how much merchandise to order and receive deliveries earlier than usual. As the supply chain loosened, many had excess inventory, leading to higher discounts as demand waned.

Some companies, such as MGA Entertainment, which is the maker of LOL Surprise dolls, have decided to offer more items that sell for less than $15 to meet the needs of more cost-conscious parents.

CEO Isaac Larian told CNBC the company had about 20 products that sold between $5 and $15 last year. This year there are more than 200.

Kidults, on the other hand, are coveted consumers because they are often willing to spend more money than others on items for themselves.

“Right now, adult toy buyers are the reason for the growth of the toy industry,” Larian said.

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