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NPD Insights® is a newsletter of The NPD Group, Inc. NPD Insights presents vital information on key market trends and features the NPD services, which help our clients understand, anticipate and capitalize on these trends to build their businesses.

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Uncovering the Bright Spots in the 2006 European Toys Market

Youth electronics and infant toys sparked European consumers’ interest in 2006, ranking high in sales performance across Europe. This was just one finding of a recent NPD study of the European toys market that compared sales performance in 2006 to 2005.

Industry sales grew by an average of 2 percent over 2005; a country-by-country view shows rates varied from -2 percent to 5 percent. Spain and U.K. reported the highest toy market growth in 2006, both reaching 5 percent. Italy ranked third, while growth in France remained stable, and Germany experienced a decline.

TRADITIONAL TOYS across BIG 5
Value Chg (millions €) 2006 vs. 2005
Chart1
Source: The NPD Group/EuroToys

Youth electronics was just one of the most dynamic categories, thanks to the continued strength of Tamagotchi and a host of new products that hit the market in 2006. Robotic playmates and “virtual worlds,” child-targeted versions of high-tech electronics products such as MP3 players, digital cameras and camcorders, and products that mix a variety of functions and play patterns are expected to help the category stay strong throughout 2007. Electronic learning products, infant toys, and pre-school figures/playsets also finished 2006 on a high note, driven by a mix of classic branded products and some targeted licenses.

Infant toys were another source of strength for the industry last year, with growth in all countries and Spain leading the way. In France, Italy, Germany, and U.K., sales of junior electronic toys (including interactive robots/electronic pets) were very robust; in Spain, outdoor toys and board games were best-sellers.

"Innovative infant and pre-school toys, including higher-priced electronic learning products, have created real market expansion in Europe. As a result of new product introductions in these categories, parents may be spending more money per child, and that's good news for manufacturers and retailers. This is happening at the expense of traditional segments geared to pre-schoolers, such as baby/nurturing dolls and vehicles, where we're seeing declines in many markets across Europe," said European Toy Analyst Christina Charasse of NPD's EuroToys.

Although each country’s toys market felt a bit “hungover” after the strong Star Wars year in 2005, licenses still ranked among the main purchase drivers for toys in Europe: 12 percent growth in U.K., 4 percent in Italy, and 3 percent in France. Among the year’s hit movies aimed at children, “Cars” from Disney/Pixar and “Pirates of the Caribbean II”, also from Disney, had the greatest impact on the toy market.

Licensed market penetration on Traditional Toys
Value % - 2006 vs. 2005
Chart2
Source: The NPD Group/EuroToys

Not unexpectedly, with all of the World Cup activity, soccer-related licensed experienced strong growth in Germany. Licenses were also sought-after among children ages five and younger -- in particular, European kids flocked to "Dora the Explorer" and helped "Thomas & Friends" stage a comeback.

To find out how NPD’s information and insights for the European toys market can help you make better business decisions, contact Jane Zimmy at jane_zimmy@npd.com.

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