Toy Retailers Won't be Squeezed Too Hard due to the psychology of recession

The global financial market is pretty gloomy these days, and analysts are finally using the “r” word. As in Re-cession. What does this mean for toy retailers, and for your average shoppers looking for toys and games?

First off, you may be surprised to learn that toys is one of the more protected sectors of the economy during a down-turn. As analyst Steve Buxbaum said in a CNN money article earlier this year, “You just can’t explain to a 4-year-old that he won’t get the toy he wants because there’s a recession.”

But of course our children must learn that during tough times, we have to make sacrifices. What this means for many consumers is that they will find ways to meet their needs at discount stores, warehouses and outlet stores more than before. In market lingo, this kind of shopping behavior is known as “trading down.”

Small Retailers May Suffer

On the flip side, recessions hit small businesses the hardest, so small toy retailers and unique toy boutiques are more likely to suffer than the big box stores. This may mean that many small toy shops will go out of business as they cannot cut corners like larger and more monied institutions. However, those toy shops that focus on popular toys that cannot be found at the big box discount stores may find the “sweet spot” to financial success during the credit crunch.

Also, online retai...