The new year is quickly closing in, and amidst the celebrations and festivities, there is a dark cloud hanging over the global economy. Rising inflation rates and cost of living are at all-time highs, putting retailers in a challenging spot as they try to maintain sales across all categories. Amid these challenges, how will the toy industry fare in 2023?

“If inflation continues to rise, the first half of 2023 will likely see consumers cutting down on discretionary spending and focusing instead on essentials,” Maura Regan, Licensing International’s president, tells Kidscreen. “However, licensed products have shown strength during difficult economic periods in the past, and toys connected to beloved brands will likely weather any potential downturns better than other products.”

Regan predicts that several factors—including inflation, ongoing supply chain issues and conflicts around the world—will affect consumer behavior, but she is optimistic that the industry can weather the storm.

“The incredible partnerships that exist in the toy industry, and the support that we see those in this community lend to each other, will always help alleviate the difficulties we face as professionals,” she says.

Rob Corney, Bulldog Licensing’s group managing director, agrees with Regan, adding that brands will need to add more value in the immediate future to remain market competitive.

“Parents still want to invest in their kids’ education and enjoyment,” says Corney. “Those brands that are able to bring both of these elements together are likely to fare comparatively well in the first half of 2023 as parents look to continue to support their children’s development.”

Because people are tired of bad news and are keen to make up for missed social events post-pandemic, consumers may spend more in retail and entertainment to sustain their happiness and soften the impact of ongoing stressors, Corney posits.

“One of the big changes we’ve seen in the market is in people looking for an experience,” he says. “[Consumers] have been conditioned by lockdowns to value their time out, so we’re seeing a lot of interest in license-branded events. In recent weeks, we’ve signed a number of agreements ranging from stage shows to outdoor entertainment for our brands, and we look forward to launching these in 2023.”

Meanwhile, Toronto-based Spin Master is shifting its strategy in the new year to focus on long-term growth by diversifying its business across its toys, entertainment and digital games segments.

“For 2023, that means expanding our core toy portfolio with new innovation, driving our beloved franchises forward, and building our licensed partner portfolio,” says Max Rangel, Spin Master’s CEO and global president. “Our diversified entertainment content will serve as a catalyst for growth and innovation in toys, digital games and licensed consumer products. And with the introduction of new, open-ended digital play experiences, we will attract new users to join our established and engaged audiences.”

Rangel adds that expansion through acquisitions is another part of the toyco’s long-term growth strategy into next year. In November, Spin Master acquired the Canadian puzzle publisher 4D Brands International (pictured), after purchasing the Swedish games developer Nørdlight earlier in August to expand its digital games portfolio.

“We are thinking bigger in terms of acquisitions, and we’re excited to share more news when we can,” says Rangel.