#232: The Underconsumption Core TikTok Trend is Shaping the Future of Toys

What is the "Underconsumption Core" TikTok trend and how might it effect the toy industry? From "Loud Budgeting" to "Underconsumption Core" Gen Z and Millennials are leading an era of saving over spending, and they aren't keeping quiet about it. As the cost of living skyrockets while wages remain stagnant, the U.S. is bracing for a financial downturn. But this time, consumers are anticipating, preparing, and talking about how they're cutting back, all over social media.

If you haven't yet explored the implications of this trend on the toy industry, now is the time. In this episode of the Making It In The Toy Industry Podcast, we dive deep into the potential impact of "Underconsumption Core," drawing parallels to the 2008 recession and its influence on toy sales. We'll examine the toy categories that thrived during that financial crisis and discuss how today's focus on mindful spending might shape the toys we develop and how we market them.

Key Takeaways:
Resilient Categories: Arts and crafts, building sets, and games and puzzles weathered the 2008 financial storm, suggesting these could be strong contenders for future toy releases.

The "Underconsumption Core" Trend: Driven by a focus on budgeting, a desire for lasting value, and the challenges of a high cost of living, this trend may lead to a demand for durable, multi-use toys and an "Underconsumption Core" aesthetic.

Low-Price Novelty Success: During economic downturns, low-price novelty items and arts and crafts products often appeal to both high-income and budget-conscious consumers, offering a potential strategy for future product development.

Tune in to gain valuable insights on how the Underconsumption Core trend may impact the toy industry's pricing strategies, revenue growth, and overall consumer behavior. Don't miss out on the opportunity to adapt your toy business or career to align with the changing consumer landscape.

Transcript

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plan toys posted a video under the under consumption core trend showing off some of their wooden toys and how they're used. No, that video didn't get many likes. And in fact, there was a comment from a user snarkily saying this. Under consumed by buying more. Right. Consumers are not stupid. We can not just market to them using a trend that they have coined intentionally to buy less stuff and try to trick them into thinking that our existing brands, as they currently are fall, into under consumption core. Hey there toy people, a Azhelle Wade here. And welcome back to another episode of making it in the toy industry. This is a weekly podcast brought to you by the toy coach.com. Today, we're diving into a topic that's not just relevant, but also eerily familiar We are going to be talking about the rise of the under consumption core trend. It's a movement that's been gaining serious traction. Among gen Z and millennials. in 2024 on Tik TOK. And it's been driven by this high cost of living widespread budgeting efforts across generations. And a growing desire to make every dollar count. this trend echoes what we saw in the 2008 recession when low cost, high value toys and games became the unsung heroes of the toy industry But unlike 2008 today's consumers, aren't just looking for cheap thrills. They're also being more selective, more mindful, and they're searching for products that provide lasting value. That is the heart of this under consumption core trend. It does bear some striking similarities to the economic climate of 2008, just as consumers tighten their purse belts during the recession today's consumers are increasingly conscious of spending, and they're not afraid to talk about it. Widely online. seeing reports on under consumption, the looming potential financial crisis high cost of living homes and food prices being out of reach of so many Americans, student loans returning. It got me thinking. What does this mean for the toy industry? What can we prepare for and what can we learn based on what happened in 2008. Now, if you've been following along with me and the blogs, you already know that there is huge opportunity currently in the art and craft space of the toy industry. That opportunity was born out of a major craft player, being taken out of the game almost completely. that would be Alex brands. They downsize, they changed a lot. They used to have a massive presence in the arts and craft aisle. And it's not as big as it once was. So that created an opportunity, but we've also just seen consumer interest growing in arts and crafts products. Even in that tween age. With that in mind, before I dive into my thoughts on what the under consumption core could mean for the toy industry. We've got to look back at history and man, was this a fun dive to dive back into? by the end of today's episode. You are going to have a clear vision of what happened in the 2008 financial crisis and how it affected the toy industry compared to a few other industries. then you're to understand the under consumption core trend, what it is, what it's driving. we'll talk about what this potential recession could cause a resurgence of desire for in the toy industry. And we'll talk about categories in the industry that are really positioned to thrive and how you might change your future strategy for what you're going to be releasing in the coming year. If there is in fact, a financial downturn. to get started, We've got to rewind to 2008. So in February of 2008, An article by NBC states as economy fades, toymakers stress play value. NBC did a profile of what kinds of products the toy industry was releasing at this time. So we're talking top of 2008. We know something's coming, but it hasn't hit yet. Products already in development, are coming out. We can't pull back what happened. major manufacturers were releasing high price items. At this time, Hasbro had a talking parrot for 69 99. Leapfrog had a tag reading system for 49 99. And Vtech had a, we liked joystick for 69 99. But those were actually the mid price points in 2008. Some toy companies released products up to $300 range, including Hasbro's robotic golden retriever for 1 79 99 and Fisher prices, power wheels car at $289 99 cents. the toy industry was really hedging their bets at this time on high price point items, high innovation, heavy robotics, but that was early 2008 and analysts were saying. parents are not going to be spending that kind of money on their kids. So what happened? So September 15th, the market crashes, panic sets out on wall street. Everything is down. The stock market's tank everything's going under. Jobs are lost. Homes are lost. We are in the worst of financial times. at the start of the biggest quarter for the toy industry. Q4 is when the toy industry generates 70% of the revenue that we have over the year. And at that time, is when the market tanks. So obviously we're freaking out. Markets were terrible that year. Overall retail dropped by 3.6%, according to a CNBC article, which we will link in the show notes. toy industry sales dropped 3%, Building sets and plush saw a respective growth of 26 and 22%. While vehicles were actually down 16% youth, electronic sales fell 14% and dolls dropped 10% So what this calls me back to is during COVID, we did see the rise of squish, mellows, and other comfort plush. So it does seem that in a panic, whether it's societal, emotional health or financial panic plush have got the power. From my perspective, Things like, beanie, BA B bouncers. And of course jazz were squished my lows, and the FX stitch could be perfectly poised if we do enter some sort of financial crisis in the coming year. Now back to looking at 2008, licensed toys represented 27% of toy industry sales. things like Barbie, Crayola, star wars, and Webkinz came out on top licensing is everything there's power in that connection, that IP, and that can help with stand. something like this major financial crisis. Let's go to 2009. the us toy market was 21.4, 7 billion in retail sales. it's down less than 1% from 2008 numbers. we're not back at our 2007 numbers, but only down. 1% after a major financial crisis is not bad at all. what allowed us to stay afloat? What worked basically? Why were people spending, what were they spending on? we look at the super categories. Building sets up 23%. Arts and crafts up 7%. I've worked in arts and crafts in the toy industry since the beginning of my career, starting at horizon group USA, going to Blumenthal Lansing and moving over to. Working in arts and crafts at toys or Russ and then working with creative kids on their arts and crafts line, arts and crafts and building sets. Have this open-ended play pattern and extended entertainment value. And an attractive price point that aligns with the consumer needs when we are in times of financial struggle. There were other categories that increased as well in 2009, Including action figures, which were up 4%, which I assume is, was led by the power of IP and then games and puzzles, which were up 1%. Now today games and puzzles is a huge category for the toy industry. I would venture to guess that if. We had a larger offering of games and puzzles at this time, that would have been one of the super categories as well. This does make me think about my theory, toy math, where we are combining different categories to create a super camp category. As we look at potential financial struggle and crisis for our consumers moving forward. What if we combine arts and crafts and games and puzzles, can we perhaps create something that not only brings families together and creates laughter and humor like games? While having the open ended and extended entertainment value. Of crafts. What can we do there? What's really interesting about this 2009 report, is what happened to, electronics in the toy industry, we're always like, oh, we have to get more digital, but in 2009, Electronic toys saw the largest decline. 17% compared to 2008 followed by plush. I wonder if the reason for the decline in electronic toys was primarily cost because the majority of the plush being sold were electronic plush, that's why there was a dip in that category. there wasn't really a focus on. Low price point, collectible plush like we do have today. Okay, let's move on to get a clearer picture of what we were thinking was vibing in the toy industry in 2009. I want to take a look at the toady winners. So toady are the toy of the year awards. They offer awards in a variety of categories, let's take a look at the 2009 toady winners. the top of the chain toy of the year was Bach Hogan battle brawlers a spin master product. that was a license that was huge that year. the other winners are Crayola color, wonder magic brush. Hi. To remember that battle brawlers battle pack leapfrog tag reading system. for real friends biscuit, my love and pup by Hasbro and then banana grams, the game Additionally Playmobile horse farm As well as Elmo live by Fisher price and air hogs, zero gravity, Mike Rowe by spin master. Crayola 3d sidewalk, chalk by Crayola. and then Bakugan actually went property of the year. and then, create your own pop-up book set by creativity for kids Estelle was also a winner in 2009. A lot of arts and crafts. So that actually does support the theory that there weren't a lot of other plush options besides electronic toys and seeing the toady winners and most of them not being electronic on their own, aside from the two electronic plush. we can see It wasn't really electronics driving sales. it was more arts and crafts. Crayola had Two wins in this category and then fiber Castile, how to win. So there are three. Yeah. And then three of the winds. Our IP. So very interesting. So we're seeing, IP and arts and crafts really led the charge in 2009. Now in 2010. Retail sales and the toy industry actually increased 7% in 2010, from 2009 and the price points. Consumers love the most in this. Time of turmoil, The five to $10 price point. What we can learn from what happened from 2008 is how consumers are likely to react. If there is another financial downturn, how they might not buy anything until Q4 and how we need to be ready with discounts at that time. we can see how they're likely to focus on arts and crafts. And building sets. we can surmise that there is a huge opportunity in plush that offers real play value, not just a cuddle, plush, but deeper play value I'd once reported on, beanie bouncers where Ty just released this. Plush beanie baby, that combines outdoor play. So it's a plush and a ball in one. So how can we create plush that really combined play patterns and keep it at an affordable price point. Knowing there is economic instability, our consumers are becoming more discerning. consumers are drawn to high quality multi-use products. Let's talk about what's happening right now. And this under consumption core trend. What is it? Why should you care about it in the toy industry? Under consumption core is a movement on Tik TOK. And this demo is very aware of the environmental and financial impact of over consumerism. They are shifting away from product halls, which are like these giant purchases and run throughs of new products for brands. Instead, they're opting for items that are durable, versatile, and built to last. This is a trend driven by economic pressure. Yes, but also a growing awareness of sustainability and mindfulness in consumption. what's happening on Tik TOK is this users are posting videos of products that they use around their house that are reused or thrifted products that were used in the past for another purpose being used for a new purpose today, They're showing off the fact that these products are old and being used and repurposed for years. So recently under consumption core has made its way to toy talk Now all the under consumption core videos For some reason have the audio of Nora Jones is don't know why, and it didn't come for some reason. But you're listening to Nora Jones and looking at a video of this person's home and seeing the product That they say equates to an under consumption core. User Christina. He stated she loves this trend and is sharing thrifted, wooden toys. bamboo PJ's that have been reused and passed down for generations, thrifted baskets to store toys in. And reuse juice containers that were deuce bottles at one point, and now being reused for water, milk juice, et cetera. She also shows images of baby accessories that are being bought second hand because the babies go through them so quickly. People are loving under consumption core specifically for the baby side of the toy business. And a lot of the users are priding themselves on quality, over quantity as is the heart of the under consumption trend. so far, I've only found one toy company trying to use the under consumption core. A trend in their marketing, and that is planned toys. plan toys posted a video under the under consumption core trend showing off some of their wooden toys and how they're used. No, that video didn't get many likes. And in fact, there was a comment from a user snarkily saying this. Under consumed by buying more. Right. Yeah, so that just tells us that our consumers are not stupid. We can not just market to them using a trend that they have coined intentionally to buy less stuff and try to trick them into thinking that our existing brands, as they currently are fall, into under consumption core. We can not just show any wooden toy, any natural toy, any high-quality toy. And just say, this is under consumption core. That is not at all going to cut it. What we need to do instead is understand why our consumers care about under consuming, what that means, and then market products that align with their values. when you look through tick talk, And under consumption core, you will see someone that buys something and considers it as under consumption. is someone who is looking at a product and seeing how it can live in their home, live on their shelves, live in their life and have multiple uses. something outside of the toy industry to look at is one user posted about a water bottle that she uses for all of her liquids. one user talks about a coat that she's had for five years. With toys and games we'll talk about, a basket instead of a toy box Other users will speak about how they've thrifted all of their toys and haven't bought any. it is a challenge for us in the toy industry, because we cannot ignore things like this. We do have to think about okay, what does this mean for our industry? Are people gonna think that we are no longer needed or valued? I don't think so. Here's why. In the toy industry. The trend for under consumption core could actually manifest into a demand for toys that are built to last and offer multiple forms of play. For example, craft kits from companies like project joy studios that encourage kids to create museum quality. Art could be a hit. These kids not only offer unique creative expressions each time, but also result in artwork. Could be said, could be deplete displayed or cherish for years to come. high quality wooden toys that are meant to last and be passed down. A toy that can help you learn and a toy that can help you play really thinking about how our products can live in different areas of our consumers lives is going to make it more appealing to them. I believe that this under consumption trend is going to encourage us in the toy industry to think about the use of our products making sure they're high quality enough to be used in multiple scenarios and by multiple ages of Children or family members, I believe it's going to become even more important to show the timeline or lifecycle of a product to our consumers. if you look at the way that we normally do packaging and the toy industry, we normally show the product and a kid of one age, two genders, maybe two races. playing with that product. What we might need to shift into doing in the toy industry is now on the packaging marketing materials show kids of multiple ages playing with the product, or showing an older kid handing off the product to a younger kid, to give the story to the parent that. This is a product that you can't pass down for generations to have copy on our packaging on our websites to say high quality product that can last for generations. In this surge of under consumption what is most important is going to be the companies that have a reputation with consumers for high quality. Because when those companies come out with something brand new and innovation, something, they say, you don't have this in your toy box and you need it. Consumers are more likely to trust the company that has graced their. home With high quality products, rather than things that immediately broke, ended up in the landfill, didn't make their homes beautiful or aesthetic. So that is what we should be focusing on for under consumption the underlying movement and mission of our customers. Our ideal target market. What do they want? What are we not delivering that they feel they need to not buy new toys. They feel it's better for them to buy thrifted. What is it that we are not delivering to them in our messaging and product development. Now one thing parents may not think about when they're buying these thrifted products while yes, they are more affordable. You actually don't know the current safety status of those products. When products are recalled, they're pulled off shelves, but when products are recalled veteran thrift stores, They're not as closely monitored or regulated. So you don't actually know the safety of a toy you're buying from a thrift store. Not only that, but toys in thrift stores, don't have the complete packaging, right? So they don't have the messaging that tells you, is this safe for this age or that age? How do you use it? Pieces can be broken, missing. there is some cause for concern that consumers are going to thrift stores for certain toy products. they may not be safe for certain ages. what does that mean for the reputation of that toy company, whose products in this sort of store being bought secondhand? And now if the consumer experience with that product is poor, are they going to relate that back to that company? they might. it's not a fair representation because that company would have never sold something used or broken in that way. it's just an interesting thing that we need to think about moving forward. So the under consumption core trend. this mindfulness and spending, it does bear striking similarities to the economic climate of 2008. It seems like consumers are tightening their belts before the economy does it for them. We've been here before and we're going to slow the roll. We're going to save our money and buckle up because we think something is coming down the pike. if we don't have a big financial meltdown, if we just have a little bit of dip what should we be prepared for moving forward? What I'm predicting might happen is that this under consumption core trend that is currently rooted in a real desire to reuse, save money, save the planet. Could evolve into an under consumption core astatic. Back in the two thousands, there was a huge trend for rip jeans. And I remember seeing all these girls in tattered jeans, sometimes I thought, oh, those look cool. it was the trend at the time. So I wonder if under consumption core will lead us to an almost weathered and used. Aesthetic for toys and games. I know that sounds crazy. why on earth would anybody want weathered toys? Listen, weirder things have happened. Okay. if you go on and you look through these under consumption core videos, you will notice a consistent aesthetic. For the toys it is very, beige and brown because they tend to be a lot of wooden toys. the aesthetics that could arise from this once the financial concerns are handled. is one of a weathered wood look for wooden toys. a kind of distressed, plastic effect on our toys. that's a look we haven't seen before that I could see being ushered in by this under consumption. Just core trend. I do think that could be the outcome. If we do not go into a financial downturn. Now, if we do go into a financial downturn, what do we learn from the past? How do we prepare for that? As far as the products and assortments that we're developing, for 20, 25 and beyond, It's about not buying an excess. if we look at what did really well in 2008, that's when products like silly bands first made it onto the scene. We also know that's when building sets arts and crafts, kids all grew and were bubbling to the surface. Economic downturn is a really good time for toy sales in dollar stores and places like dollar tree And mass discount discounters like big lots. And it's also a really great time for novelty products like silly bands, And opening price point products for toy lines in general. if we look at the blueprint of what silly bands left behind. silly bands was a low price point novelty item in 2008, just in time for that financial downturn. You could buy a lot even if you didn't have a lot of money and get a collectible feel. So if we're moving into 2024 with a potential financial crisis, consumers are aware that consuming is not it. What do we produce as the toy industry that will keep our revenues up, keep our industry afloat. So is it that we need to create more physical products where the consumption is actually a digital arm? Like we have some companies already entering the roadblocks world with their brands. Zuru toys has a roadblock strategy. MGA has had some things in roadblocks as well as I believe jazz wears and squish mellows. is it that we offer a high quality. mid price point toy in the physical toy aisle and then low price point, ad-ons or expansions that somehow add to that physical toy element in a digital world, whether it's roadblocks, an independent app or a website, some sort of add on that consumers buy. That way, if there is an economic and under consumption core stays around for a while, the consumption turns digital and thereby no longer has That negative environmental impact that under consumption core followers are trying to avoid, but it stills allow for that collectible energy and that hype that the toy industry thrives on. In times of economic downturn especially when they arise in our Q4 era. Now today's consumers, particularly younger generations are, more likely to prioritize experiences over material possessions. So we, as toy companies have to think about how are we communicating the experience that you will have with our toy product, whether on the box the Amazon page or our website, there has to be a clear understanding and experience to be had once the product is purchased. for retailers, what is the experience of purchasing that product? All of these experiences are more and more important to our consumer because it's all a part of their daily life. If we look at our toy lines, how can we focus on experiential play toys that encourage creativity, problem solving, and social interaction with family members, which is why our games categories are doing so big, but also prioritizing sustainability. can we offer more eco-friendly and ethically produced toys, or have partnerships that make recycling or donating products easier? Because our consumers are thinking about the life cycle of products they're buying. where is this going to be in my house in five years? We need to answer that question Asking it prevents them from buying it at all. we got to think about developing hybrid products, toys that combine digital and physical play elements is a way we can thrive in this under consumption core trends. The current under consumption core trend aligns with broader consumer Shifts towards sustainability and conscious spending. So it is essential that we pay attention to how this is going to impact consumer behavior and spending habits moving forward. Interestingly, we discussed arts and crafts. That category stands out it appeals to both sides of the spectrum, those looking for high quality goods and those looking for entertainment at a low price. high-quality trend arts and crafts. can provide a unique experience every time every product can result in something new and meaningful, making it a worthwhile investment, even a social investment for their family, for the budget, conscious consumers. Those can offer extended play time and creativity at a reasonable cost, which is a major selling point in economic downturns. one quick example, moon sand by spin master. It became popular in 2008 and provided endless creative possibilities and was marketed as a mess free and reusable product that could be molded into various shapes. Offering long-term value at a low cost. today we explored how the under consumption core is driving demand for high quality multi-use products, particularly among high income consumers. We talked about how financial strain could lead to a resurgence of low price, novelty toys selling out in our industry, Because those are best for budget conscious families. We also highlighted the arts and crafts category as a unique segment that appeals to both sides of the coin, both those looking for high quality and low cost, because it offers creativity and value. And we also talked about what could happen from the under consumption core how it might lead to an entirely new graphic aesthetic, or product aesthetic for our toys. So the question I want to leave you with today is this, are we about to head into a consumer led recession because of this trend? A pre-session if you will, one not led by actual financial downturn. But led by, consumers refusal to spend their money in the reckless ways of the past. What impact will have on the toy industry? Will we raise all of our prices collectively To maintain our revenue and industry growth, or will we just wait out this trend? And if you want to read some of the reports that quoted in this episode, head over to the toy coach.com forward slash 2, 3, 2, and if you love this podcast and already left us a review, what are you waiting for? Your reviews mean so much to me. They keep me coming back week after week with new episodes, just for you. So please wherever you're listening, even if you're watching on YouTube, leave a comment, That means so much. if you're listening on apple podcasts or Spotify, scroll down, Look for where you can give a rating. Give us that full. Five star rating and leave us a review. Let me know what you think. I read reviews on the show As always, thank you so much for spending this time with me today. I know your time is valuable and that there are a ton of podcasts out there. So it truly means the world to me that you tuned into this one until next week. I'll see you later. Toy people.