A growing number of toy companies are increasingly targeting family members rather than just parents due to intergenerational wealth inequality: millennials, the generation now having kids, hold just 3% of US wealth. Baby Boomers, in contrast, have 60% of US wealth. While millenials are today’s new parents, grandparents have the disposable income.
While parents spend more, grandparents’ spending has grown faster than any of the other purchasing demographics. Online spending on toys by grandparents has grown particularly quickly. In fact, grandparents account for roughly $7B of the $28B toy industry spending in the U.S. And, of adults aged 30+, 37% are grandparents, the highest rate in history as the population pyramid widens at the top.
Another big shift in the toy industry is the move to subscriptions. Lovevery offers educational toys for kids on a subscription model, with each toy designed for children of a specific age. Subscriptions are easy for consumable products and challenging for durables—to sell a toy subscription is to suggest that it’s a toy the child will get bored of. Targeting specific age ranges gives Lovevery a justification for subscription purchases rather than one-time buys: the playmat for an 18-month-old is meant to transition to a set of blocks for a two-year-old. It also gives them a way to understate pricing: new toy kits are delivered every two to three months, but the price is expressed as a monthly subscription.
Lovevery’s product positioning helps them target people other than parents with a low-risk gift. Since each toy is designated with an exact age range, the product line fits perfectly for birthday gifts—relatives don’t necessarily know what gift is appropriate for a two-year-old, so gifts that are vetted as perfect for that exact age feel safer.
Parents who buy toys are also buying time they can spend on work. “Screen-time guilt” makes educational toys more appealing – It can take parents from feeling guilty about spoiling their kids with gifts to feeling like they are investing in their education.