︎︎︎episode 72

Just Kidding Around: The Rise of the Kidult (pt 1)

Feb 7th, 2023

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The rise of the “kidult”

Pour yourself your boozy seltzer of choice, grab a pack of Dunkaroos, and snuggle your favorite stuffed animal, because today we are going to dig into the trend of “kidulting.” This is part one of two. And I am excited to wow you with a mixture of nostalgia, data, and margarita-seeking dogs.

A few weeks ago, we talked a bit about how the 2022 holiday shopping season was pretty disappointing for the retail industry.  And the toy industry was no exception. By the time the holiday season rolled around, toy sales year-to-date were falling behind the previous year.  Yet there were some bright spots. According to NPD, an American market research company that does a lot of work around the toy industry, “Of the 11 toys supercategories tracked by NPD, six saw sales increases versus 2021. Plush toys enjoyed the highest growth, increasing by 32%, followed by action figures and accessories at 12%, explorative and other toys at 10%, and building sets at 5%. Outdoor and sports toys and dolls had the largest sales declines, falling by 7% and 8%, respectively…The three fastest growing subclasses during the year to date were non-strategic cards and stickers, followed by traditional plush toys, and action figures and collectibles.”

We are going to come back to that list in a few minutes, but if someone read that to me and asked me for my guesses on what was happening there…my mind would go immediately to collectibility and adults.

Hasbro, one of the biggest toy companies in the world, had an incredibly weak holiday season. Its big investments for the holidays were Play-doh, games, Nerf, and My Little Pony.  These are all properties that focus on children. Many toy industry experts have seen a significant drop off in games, Play-doh, craft sets,  and other toys that kept kids busy during the early years of the pandemic. And while Hasbro does have some action figure properties that could appeal to people of all ages (Transformers, Star Wars, G.I. Joe and Marvel), analysts referred to them as “tired,” without any new movies to renew interest.

Mattel (the home of Barbie and Fisher Price) also had a rough 2022, lowering revenue forecasts going into the holiday season, saying that “sales of infant and toddler toys, dolls, action figures and building sets slipped in North America in the third quarter.” We’re going to come back to Mattel later because they are doing something different that could be a big win for the company as it picks up momentum.

In general, the toy industry had a pretty great 2020-21 partially because parents bought more toys for their kids to keep themselves busy at home.  But another thing driving that sales increase was…drumroll please…adults buying games, collectibles, plush and other nostalgic things for themselves.

The industry is calling this emerging cohort of toy customers ages 12 and up “kidults.” While 12 sounds pretty young to me, it’s generally considered (by the industry) the age that kids begin to lose interest in toys.  I disagree, but whatever. I was a late bloomer! These “kidults” are spending money, accounting for 25% of toy sales for the past few years, totaling about $9 billion per year. In fact, while the “kidults” were only a quarter of toy sales last year, they accounted for 60% of the growth that industry experienced. The remaining growth was primarily fueled by inflation (higher toy prices).  And “kidults” are a great way to fuel sales because they are far less price sensitive than parents, so they are totally fine paying a much higher price for something that feels nostalgic or important to them.

Juli Lennett is NPD Group’s toy industry advisor. She told Business Insider that this boom in adults buying toys is the direct result of the pandemic and social media.

“The adult consumer was looking for something to soothe their anxiety and stave off boredom — an adult pacifier, if you will — during these difficult nearly three years. And, because they had stopped doing other entertainment activities outside the home at the height of the pandemic, they had the extra money to spend. Now many of them are hooked."

We have seen time and time again how social media can really drive sales in a wide variety of categories. For years, Instagram has helped fast fashion and beauty brands grow and grow, blurring the line between advertising and user generated content.  Moving into the pandemic, we started to see social media fuel sales of new products as we looked for community with one another in a time when we couldn’t see one another IRL:  cookware, skincare, workouts, supplements, trendy foods, puzzles, electronics, furniture and home improvements, SEEDS and gardening…I could go on and on.

And social media also helped fuel the sales of toys to adults. TikTok, Reddit, and even Instagram make it very easy to find others who share your interests, whether it’s cooking, kawaii aesthetic, Hello Kitty or Legos, collectible blind boxes, or your growing collection of stuffed animals.

This rise in toy sales is coming from Gen Z, Millennials, and Gen Xers, which is kinda surprising when we know that these generations have far less wealth than previous generations. They are struggling with student loan debt, high cost of living, record high rent, and inflation.  Yet, in most cases these toys can be an “affordable luxury.” And I have a few reasons why they are opting for toys over other categories:

What it means to be an adult has changed.

People get married a lot later, more and more adults are living with their parents, and frankly, less of us are interested in the “prescribed path” of marriage, home ownership, kids, and retirement.  Even those of us who have signed up for all of those things aren’t interested in the rest of the “rules” around what we are supposed to be doing at each age. I have mentioned this before, but I think Gen X and the Millennials are in a great position to redefine aging and the tired old perceptions of aging.  Part of this is dispelling the boring notion that we have to give up childlike fun and wonder as adults.  Adults want to remain creative. They want to have fun. They want to be interested in things. Participate in fandoms. Collecting things like toys, stickers, and cards were once seen as childlike activities, something left behind around high school. But that has changed.

Jeremy Padawer, chief brand officer at toy company Jazwares, told CNBC, “The definition of adulthood has definitely evolved. What it used to mean, to be an adult, was to be a very upstanding, serious member of society. And to do that you had to demonstrate it intellectually, emotionally, in every other single way. Now we feel a lot more free to express our fandom as a part of our adulthood.” 

I think this is something we saw begin with Gen Xers, who really embraced a lot of the toys and characters of their childhood, buying and reselling these items to one another.  That’s basically how eBay took off!  That’s still happening, but now toy makers (and so many other industries) have observed this and they are cashing in by creating new stuff that still scratches that same itch, but makes it a lot easier to scratch.

We have changed how we live and where we spend our money.

The reality is that the pandemic changed a lot of social behavior. In the beginning of the pandemic (2020), we experienced a social shock, as we were forced to stay home.  In 2021, more things opened, but in a pre-vaxx world, it just wasn’t fun to go to a bar.  Clubs and music venues remained closed for the most part. Restaurants struggled to provide service.  And by 2022, when more things were seeming “normal” (and I mean “normal” in quotes), we still experienced wave after wave of new covid variants.  And by then, we had changed our social and leisure behaviors.  Data shows that we eat out a lot less.  That first day of the pandemic forced us to learn how to cook and we saw that it saved us a lot of money. People go out drinking and clubbing a lot less often.  All that money we spent on drinks and cover is still in our pockets.

And some of this could be generational. Gen Z drinks less than previous generations. And we know that drinking is EXPENSIVE.  According to a University of Michigan study, “Between 2002 and 2018, the number of adults aged 18-22 in the U.S. who abstained from alcohol increased from 20% to 28% for those in college and from about 24% to 30% for those not in school.”  It would also make sense that the generation who was raised by the “wine moms” and rejects the “it’s wine o’clock somewhere” signs at Home Goods, might think that drinking just isn’t that cool.

But I also think technology has changed our social behavior in a major way, no matter what generation you call your own. Maddie Thomas–a Zoomer herself–wrote an op-ed for The Guardian called “Like many of my fellow Gen Zers, getting drunk is not on my agenda.” She says,”In the past, if you wanted company, the easiest way was to go out. And going out usually involved a drink. Now you can talk to five friends at once, often on multiple platforms, from the comfort of your bedroom. You can start searching for a new relationship in your pyjamas, with no makeup on, swiping left and right.”

And I’ll just add here that collecting these toys, participating in these fandoms…these guarantee a new group of friends all over the world with common interests.  Like Hello Kitty? Join a few subreddits and FB groups, and suddenly you have a whole new community of friends. These social relationships could even outweigh the focus on “experiences” that millennials were “legendary” for having. Like, a trip only lasts a few days and it’s solely your memory.  But joining a group of Lego fanatics and sharing your new builds? That’s an experience that just keeps on going and brings new relationships with it.

We still need the comfort of nostalgia.

Let’s face it, the world gets scarier every day.  The future becomes more and more uncertain. And it is normal human nature to look back to easier, simpler times.  Jennifer Lynch of The Toy Association told the Today show, "Over the past two plus years, living through the pandemic, adults really started to gravitate towards toys and games, not just to spend more time with their families, which they were doing at home, but also for themselves to destress and kind of escape the realities that they were in.”

We have talked about the power of nostalgia quite a bit here, as we saw many nostalgic trends like rollerskating, reading YA fiction, and watching old movies and television series in the early years of the pandemic.  Friends, The Office, Gossip Girl, and Beverly Hills 90210 enjoyed a major resurgence in the first year of the pandemic.

And as we discussed a few episodes ago, we have seen that extend to nostalgic foods, including “healthy” versions of sugary cereal, boxed mac and cheese (healthy mac and cheese brand Goodles raised $10 million in funding), low carb “pop tarts” by Legendary Foods, and all of the junk food on steroids from Tasty and other websites.

We can’t forget about McDonald’s 2022 launch of the “Adult Happy Meal,” which Forbes called out as one of the biggest mistakes made by a company last year.  Not because it wasn’t a hit, but rather that these Adult Happy Meals sold out within one week!

“We're taking one of the most nostalgic McDonald's experiences and literally repackaging it in a new way that's hyper-relevant for our adult fans,"  said Tariq Hassan, McDonald’s chief marketing and customer experience officer.

The meals were similar to the classic Happy Meal, with either a Big Mac or a 10 piece chicken nuggets, french fries, a soda, and a toy made in collaboration with streetwear brand Cactus Plant Flea Market. The “happy meals” ranged in price from $9-12 (before tax)

Visits to McDonald’s during the week of Oct. 3, when the boxes were introduced, were up by more than 37% compared with the same week in 2021, according to Forbes.  So yes, they were wildly successful.  McDonald’s didn’t buy enough inventory and there were lots of unhappy customers and employees. These meals were supposed to last through the entire month of October, not one week.  Almost immediately toys were listed on eBay, selling at 10X the price of the original meal.

McDonald’s made a lot of missteps in planning this launch. For one, the boxes weren’t stackable, which was a major pain point for stores because it didn’t allow them to build the boxes in advance, which slowed down service. But McDonald’s also didn’t fully grasp that Adult Happy Meals will naturally sell faster than a regular Happy Meal. Why? Adults can go to McDonald’s at any moment and buy as many as they want. It’s their money. Kids have to ask their parents to take them. And their parents still may say “no” to a Happy Meal when they are in the drive through.

We are going to talk a lot more about how so much of our nostalgia ties into brands and licensed properties in a bit. And the Happy Meal–a literal product made by one of the biggest companies in the world–has become a sort of universal (at least in the U.S) source of nostalgia for generations.   According to Wikipedia, “When the Happy Meal was launched in 1979, the toys were a McDoodle stencil, a McWrist wallet, an ID bracelet, a puzzle lock, a spinning top or a McDonaldland character-shaped eraser.” Over time, the toys became more elaborate, often licensed products.  And collectors pay major money for them now–both the toys and the boxes.

So Kim, what are you memories of Happy Meals?

There is no doubt that Happy Meal sales in this century have been at least partially driven by parents who had nostalgic memories of their own box of food and a toy now buying them for their own children.  Emily Heil wrote a piece for The Washington Post called “I tried McDonald’s Happy Meal for adults, and it didn’t make me happy.” She really captured WHY the Adult Happy Meal was definitely going to be a massive hit: “Grown-ups can buy a bit of childhood fun — that frisson of excitement that came with unearthing your prize from its fry-scented container, the heady sense of ownership that came from having a whole box that was yours and yours only.”

In other words: you’re not buying this for your kids. It’s really just for you!

It allows the customer to take this one moment where maybe, just for the briefest instant, life won’t be so scary and stressful.  And that’s the key with all of the “kidult” purchasing and lifestyle: it’s all about the comfort and escapism of nostalgia. Which brings me to my next point in why “kidults” are driving sales of toys, nostalgic foods, and so much more…