The toys they are a-changin'
Cécile Prudhomme

PARIS - For Christmas this year, eight-year-old Thomas has asked for... a laptop computer, just so he doesn't have to use his mother's. Last year, when he was seven, he got an iPod.

This Christmas will be characterized by society's evolution toward high-tech gadgets; an evolution that has not bypassed children. For dozens of years, toy manufacturers have not only had to adapt to this technological revolution, but they have also had to adapt to a society undergoing profound change.

Manufacturers are the "victims of a phenomenon that is called "age compression," meaning that children feel older at a much younger age," says Eric Rossi, director-general of Vivid Europe, which owns Smasha-Ballz and Crayola.

The cause of this phenomenon: "The evolution of technology, of course, but also children's exposure to the media, whether that is passive media, such as television, or active, such as the Internet or mobile devices," he continues.

"Children are growing up faster than before, and are therefore not interested in the toy market. The last toy purchase for a child is around age nine, nine and a half, whereas 20 years ago, it was age 11," Rossi says.

This phenomenon, which toy manufacturers have been studying for a long period, however, does not materialize every year. In 2011, the increase in toy sales in France was highest among eight to 11-year olds, according to NPD Group consultancy firm, whereas toy sales decreased for the age zero to two category, with the market staying the same for the intermediary ages.

Last year, many big names in the toy industry brought out specific products that had a lot of success among older kids: Hasbro released its Beyblade spinning tops and Nerf blasters; Lego had its Ninjago series; and Mattel released its Monster High vampire dolls.

"Often, the next year, the younger siblings start playing with these toys, because they’ve been in contact with their older siblings, whereas the older siblings don't want to play with toys that young children like as well," explains Frédérique Tutt, an analyst at NPD Group.

Trying to wow the kids

"New forms of technology are now part of the daily life of children, who are attracted to them more than traditional toys," says Florence Pilard, a marketing manager for Meccano.

Some families do not even think twice about spending the whole toy budget for their offspring on a games console for the living room, or a video game as a collective present for all their children. Children from the age of seven are starting to ask for gadgets aimed at adults.

The loss of this target market is, however, compensated by other phenomena, such as "an increase in separated parents, leading to children getting double the amount of presents," and "a demographic phenomenon with grandparents living longer," says Rossi.

Toy manufacturers are therefore trying to adapt: "We now have to include more features, so that we can wow children," explains Rossi. "For the same price than before, our cuddly toys have more features than ever: When you press on a certain part of their bodies, they do actions as well as make sounds, whereas before they either did one or the other."

Meccano has also been forced to change its strategy in order to continue making products that would interest older children. Now it is focusing on "video game characters that children are familiar with," explains Pilard. "Nine out of 10 children play video games now."

The Meccano company has, therefore, acquired the licensing rights for Rayman Raving Rabbids, Sonic and Gears of War, while also developing specific products that children can build themselves. "It means we can hold onto this target market for a little longer," she says.

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Economy

Merkel's Legacy: The Rise And Stall Of The German Economy

How have 16 years of Chancellor Angela Merkel changed Germany? The Chancellor accompanied the country's rise to near economic superpower status — and then progress stalled. On technology and beyond, Germany needs real reforms under Merkel's successor.

Chancellor Angela Merkel looks at the presentation of the current 2 Euro commemorative coin ''Brandenburg''

Daniel Eckert

BERLIN — Germans are doing better than ever. By many standards, the economy broke records during the reign of outgoing Chancellor Angela Merkel: private households' financial assets have climbed to a peak; the number of jobs recorded a historic high before the pandemic hit at the beginning of 2020; the GDP — the sum of all goods and services produced in a period — also reached an all-time high.

And still, while the economic balance sheet of Merkel's 16 years is outstanding if taken at face value, on closer inspection one thing catches the eye: against the backdrop of globalization, Europe's largest economy no longer has the clout it had at the beginning of the century. Germany has fallen behind in key sectors that will shape the future of the world, and even the competitiveness of its manufacturing industries shows unmistakable signs of fatigue.

In 2004, a year before Merkel was first elected Chancellor, the British magazine The Economist branded Germany the "sick man of Europe." Ironically, the previous government, a coalition of center-left and green parties, had already laid the foundations for recovery with some reforms. Facing the threat of high unemployment, unions had held back on wage demands.

"Up until the Covid-19 crisis, Germany had achieved strong economic growth with both high and low unemployment," says Michael Holstein, chief economist at DZ Bank. However, it never made important decisions for its future.

Another economist, Jens Südekum of Heinrich Heine University in Düsseldorf, offers a different perspective: "Angela Merkel profited greatly from the preparatory work of her predecessor. This is particularly true regarding the extreme wage restraint practiced in Germany in the early 2000s."

Above all, Germany was helped in the first half of the Merkel era by global economic upheaval. Between the turn of the millennium and the 2011-2012 debt crisis, emerging countries, led by China, experienced unprecedented growth. With many German companies specializing in manufacturing industrial machines and systems, the rise of rapidly industrializing countries was a boon for the country's economy.

Germany dismissed Google as an over-hyped tech company.

Digital competitiveness, on the other hand, was not a big problem in 2005 when Merkel became chancellor. Google went public the year before, but was dismissed as an over-hyped tech company in Germany. Apple's iPhone was not due to hit the market until 2007, then quickly achieved cult status and ushered in a new phase of the global economy.

Germany struggled with the digital economy, partly because of the slow expansion of internet infrastructure in the country. Regulation, lengthy start-up processes and in some cases high taxation contributed to how the former economic wonderland became marginalized in some of the most innovative sectors of the 21st century.

Volkswagen's press plant in Zwickau, Germany — Photo: Jan Woitas/dpa/ZUMA

"When it comes to digitization today, Germany has a lot of catching up to do with the relevant infrastructure, such as the expansion of fiber optics, but also with digital administration," says Stefan Kooths, Director of the Economic and Growth Research Center at the Kiel Institute for the World Economy (IfW Kiel).

For a long time now, the country has made no adjustments to its pension system to ward off the imminent demographic problems caused by an increasingly aging population. "The social security system is not future-proof," says Kooths. The most recent changes have come at the expense of future generations and taxpayers, the economist says.

Low euro exchange rates favored German exports

Nevertheless, things seemed to go well for the German economy at the start of the Merkel era. In part, this can be explained by the economic downturn caused by the euro debt crisis of 2011-2012. Unlike in the previous decade, the low euro exchange rate favored German exports and made money flow into German coffers. And since then-European Central Bank president Mario Draghi's decision to save the euro "whatever it takes" in 2012, this money has become cheaper and cheaper.

In the long run, these factors inflated the prices of real estate and other sectors but failed to contribute to the future viability of the country. "With the financial crisis and the national debt crisis that followed, economic policy got into crisis mode, and it never emerged from it again," says DZ chief economist Holstein. Policy, he explains, was geared towards countering crises and maintaining the status quo. "The goal of remaining competitive fell to the background, as did issues concerning the future."

In the traditional field of manufacturing, the situation deteriorated significantly. The Institut der Deutschen Wirtschaft (IW), which regularly measures and compares the competitiveness of industries in different countries, recently concluded that German companies have lost many of the advantages they had gained. The high level of productivity, which used to be one of the country's strengths, faltered in the years before the pandemic.

Kooths, of IfW Kiel, points out that private investment in the German economy has declined in recent years, while the "government quota" in the economy, which describes the amount of government expenditure against the GDP, grew significantly during Merkel's tenure, from 43.5% in 2005 to 46.5% in 2019. Kooths concludes that: "Overall, the state's influence on economic activity has increased significantly."

Another very crucial aspect of competitiveness, at least from the point of view of skilled workers and companies, has been neglected by German politics for years: taxes and social contributions. The country has among the highest taxes on income in Europe, and corporate taxes are also hardly as high as in Germany anywhere in the industrialized world. "In the long run, high tax rates always come at the expense of economic dynamism and can even prevent new companies from being set up," warns Kooths.

Startups can renew an economy and lay the foundation for future prosperity. Between the year 2000 and the Covid-19 crisis, fewer and fewer new companies were created every year. Economists from left to right are unanimous: Angela Merkel is leaving behind a country with considerable need for reform.

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