Retailers should anticipate a last-minute rush for toys due to a shorter holiday calendar, according to research by NPD Group.
Although toy sales have declined by 5.5% year to date, the toy industry could make up those losses in the fourth quarter and end the year strong thanks to an anticipated rush for last-minute gifts.
There are six fewer days between Thanksgiving and Christmas this year. The last time this happened was in 2013, according to NPD. That year, the toy industry experienced a surge of sales during the final week of the holiday season, posting growth of nearly $280 million.
"We should expect the same levels of growth this year during the week of Christmas," Juli Lennett, vice president and industry advisor for toys at the NPD Group, said in a statement. "With the online channel becoming less of an option as we get closer to Christmas day, it's a great opportunity for brick and mortar stores to gain share. Retailers need to have the inventory on shelves through Christmas Eve or risk losing out on this last minute rush."
Christmas falls on a Wednesday this year, giving shoppers one more weekday for last-minute shopping compared with 2018, when Christmas fell on a Tuesday. NPD anticipates this additional weekday before Christmas will help retailers. For the last two years, the additional day before Christmas has added $200 million in sales to the week, said NPD Group in its release.
Another factor that will contribute to fourth-quarter sales growth for the industry compared with the year-earlier period is that the Toys R Us store closures will no longer play a role. Last year, shoppers stocked up on toys and tucked them away for holiday gifts when the former toy retailer held liquidation sales, which hampered sales during the holiday season.
Also, even though retailers such as Walmart and Target expanded shelf space for toys during the holiday season, some toymakers had a hard time finding a place to market their products.
These factors contributed to a 2% drop in toy sales in 2018.
Lennett at the time called the decline a "solid performance" considering how much the landscape had changed that year. Toys R Us was estimated to account for 10% to 15% of all toy sales prior to its closure in June 2018.
The toy industry is also riding on third-quarter sales momentum heading into this year's holiday shopping season.
U.S. toy industry sales rose 3% to $3.69 billion in the third quarter compared with the year-earlier period, according to NPD Group.
Action figures and accessories, outdoor and sports toys, games and puzzles, and building sets were the four categories that posted sales gains of the 11 tracked by NPD.
The top-performing brands based on total dollar sales growth were all driven by content such as movies, video games and YouTube. This includes names such as "Toy Story," Fortnite, Pokemon, Ryan's World and Pinkfong Baby Shark.
The top performing brands overall included L.O.L. Surprise!, Marvel Universe, Barbie, Pokemon and Nerf.
— CNBC's Sarah Whitten contributed to this report.
