How Australia Deseasonalized its Toy Market

By Philippe Guinaudeau, Director

Revenue multiplied by six over the past six years. Sound good? It’s music to the ears of  Australia’s toy marketers. They’ve managed to make July anything but a traditional off-peak month for the toy market.

Australia has become the only country in the world to achieve a second heavy consumption peak during the year. It’s truly Christmas in July, according to NPD’s OzToys data: consumers ring up sales equal to 80% of December’s sales, and July accounts for about one-fifth of the country’s annual toy sales.

How did it happen? Six years ago, Target launched a toy catalogue in July with a double promise: Book your holiday gifts in July on special, and Target would hold them on lay-by (or layaway, to U.S. retailers) until the holidays. No deposit required. The July sales boom was born and the game was ON.

That first year, July sales accounted for 8% of total toy sales for the year. Now, five major retailers in Australia each print 40- to 60-page catalogues that reach potential customers in July. In 2006, 18% of sales for the year happened in July -- and July 2006 included the Australian toy market's best-selling week ever, including all past Christmas weeks!

Now, although still very important to consumers’ decisions to purchase toys and games in July, lay-bys only represent a small portion of sales. In July 2006, nine out of ten buyers walked out of stores with their toy purchases (representing 73% of the total market value). Sixty-seven percent of toys left on lay-by are intended to be picked up in December. In 2006, only 30% of July catalogue sales were intended for Christmas; of those, 67% were lay-by purchases.

Promotional prices in July also help to boost sales: 43% of the advertised items in July catalogues are not discounted; the remaining 57% are promoted at an average discount of 25%.

While early savings and lay-by are important to customers, they also want to be sure their kids still get the latest and hottest toys come December. To make sure they’re not missing out by purchasing early, July buyers say they add new purchases in November and December. And that means July catalogue sales have not only created big business for July, they’ve also supported a strong increase at Christmas!

In partnership with GfK, NPD offers OzToys, a point-of-sale tracking service for the traditional toy, video game, and PC software markets in Australia. Since 1997, our weekly market information has given clients the insight they need to understand trends and make critical business decisions. To find out what OzToys can do for your business, contact Philippe Guinaudeau at Philippe_Guinaudeau@npd.com.