Walt Disney's Star Wars franchise fueled demand for toys again in 2016, helping the industry post a big 5% increase in sales that outperformed the broader retail sector.
Research firm NPD Group said Star Wars sales totaled nearly $760 million in the U.S. alone last year, beating 2015 by $60 million. That made Star Wars the top property in the toy world, based on dollar sales. The perennially popular property has seen resurgent interest thanks to two recent films, 2015's "Star Wars: The Force Awakens" and last year's "Rogue One: A Star Wars Story." Both were released late in the year, during the toy industry's peak holiday shopping season. And with more films to be released in subsequent years, Star Wars is poised to remain a hot toy property for many years to come.
That's good news for retailers like Walmart (wmt) and Target (tgt), which have each moved to stock more toys on their shelves, as well as the world's largest toy specialty seller Toys 'R' Us. The popularity of Star Wars is also a big boost to manufacturer Hasbro (has), which has some of the key licenses for the property.
The toy industry's sales increase in 2016 puts total retail sales at $20.4 billion, NPD said. That percent change was slower than 2015's 7% increase, but builds on several years of success for the industry. Gains were broad in 2016: sales for games/puzzles, dolls, and outdoor and sports toys were all in the double digits. There were also increases for electronics and preschool toys.
Other properties that generated strong sales last year include Pokémon—which saw a resurgence of interest after the launch of the popular mobile game Pokémon GO, as well as toys that were associated with popular films including "Trolls," "Batman v Superman" and "Finding Dory."
"The toy industry is continuing on the strong and steady path of success it has paved for itself over the last few years," said Juli Lennett, senior vice president and U.S. toys industry analyst at NPD.
Big toy makers like Mattel and Hasbro had initially struggled with how to best apply technology to their brands, releasing an initial wave of tech-infused toys for brands like Monopoly and Fisher Price which failed to generate buzz. But toy makers have gotten more savvy about when to add technology and when to let a toy just be, well, a physical toy. Mattel has been especially aggressive in working with outside partners to add tech to toys like Barbie, adding interactive capabilities to the doll and her dreamhouse in recent years. Tech has become so important that Mattel tapped Google (goog) Americas President Margaret "Margo" Georgiadis to serve as the company's next CEO.
While the industry is in a position of strength, NPD cautioned more work could be done. It pointed out that holiday sales were stacked to the final week before Christmas and also during the promotional period around the Thanksgiving/Black Friday/Cyber Monday period. But there was a downturn in sales during the first three weeks of December—and NPD thinks that's a problem.
"The online channel continues to grow at the expense of brick-and-mortar, and the toy industry needs to address how to make up for the volumes tied to in-store impulse purchases – an important sales generator," said Lennett.