Retailers going after your dollars with toys

Stores expanding their offerings for the holiday season

  • Claudia Towles, the owner of aMuse toy store on Thames Street in Fells Point, works on a display in the front window.
Claudia Towles, the owner of aMuse toy store on Thames Street… (Baltimore Sun photo by Barbara…)
December 10, 2010|By Andrea K. Walker, The Baltimore Sun

There may not be a hot toy craze that has parents fighting in the aisles this holiday season, but that's not stopping retailers from going after the market more aggressively than ever.

Retailers are filling their shelves with traditional toys such as board games, building sets and dolls — and not just electronics — an expansion that comes after a tumultuous period in the industry that saw a decline in sales, intense price competition, bankruptcies and the death of the once-top competitor KB Toys.

This year the market is expected to rebound with a 3 percent increase in sales after two years of declines, according to market research firm NPD Group.

And there are still top toys of the season, even if they're not causing melees. Several stores have already sold out of Squinkies, squishy and economical characters that kids can collect. Zhu Zhu Pets, a top toy last year, are popular again, as are old standbys such as Legos and Barbie.

The entire toy market is nearly $22 billion, and retailers are all trying to get a larger share.

Target is selling 8,000 toys between its stores and website — the most of any mass merchant — and has increased the number of products in its toy catalog by 10 percent. Toys "R" Us opened 600 "pop-up" or temporary stores across the country, compared with 90 last year. Sears opened 79 "toy shops" within its stores across the country after testing the concept in 20 stores last holiday season.

Toys have even become a fixture in retailers known for other kinds of wares. Barnes & Noble for the first time has created 3,000-square-foot play areas in some of its stores where the book retailer will sell educational toys and games — just in time for the holiday frenzy.

"We think that in the past, retailers have diminished their toy sections and gotten out altogether because toys have lower price points and smaller margins but consume a fair amount of shelf or floor space," said Carter Keithley, president of the Toy Industry Association, a trade group. "But the category is coming back, and coming back sharply."

The escalation of the retailers' annual toy wars can be linked to lower prices, fewer players in the market and the revamping of many traditional toys to compete with electronics, industry observers said.

Overall, consumers are also spending a little more this year after a dismal holiday season for retailers last year. Total holiday sales are expected to rise 2.3 percent, according to the National Retail Federation. Some mass merchants hope to use toy deals to bring in consumers who would also shop in other parts of their stores.

While there is no Tickle Me Elmo or Cabbage Patch Kid to get consumers hyped up about the season this year, retailers know they can count on toys being on kids' wish lists. The toy industry generates 40 percent of its annual sales in November and December, according to NPD Group.

"The biggest difference in the toy market this holiday season is that there isn't one must-have toy," said Casey Carl, vice president of toys and sporting goods at Target. "Instead, there are a wide array of new and innovative toys for boys and girls alike, in timeless brands like Barbie, Fisher Price and Lego, but also in new brands like Squinkies, Zoobles, Hex Bugs and Paper Jamz."

Electronic items such as iPods, video gaming systems and computers dominate many holiday lists, but more traditional toys are still must-haves as well. Many traditional toys have incorporated interactive and technology components into their design, making them more attractive to kids.

"Although kids certainly have more choices competing for share of wallet, kids never walked away from traditional toys," said Anita Frazier, NPD's toy analyst.

More affordable toys also have helped drive consumer spending, analysts said. Squinkies sell for $10 for a 16-pack. Zhu Zhu Pets, collectible toys that are being cross-marketed with the "Toy Story 3" movie, sell for under $10.

"Our industry is very price-sensitive, and in real life, people are under some financial distress," said the Toy Industry Association's Keithley.

Meanwhile, the closing of KB Toys created an opening for toy retailers in malls.

And some retail analysts said Walmart has retreated somewhat after driving down toy prices so aggressively in years past that others couldn't compete. Analysts blamed the KB bankruptcy in part on Walmart, and Toys "R" Us and FAO Schwartz have also struggled to go up against the world's largest retailer.

That leaves room this year for competitors to gain more market share.

"Walmart felt like they weren't making as much margin," said Jim Silver of, a toy review site. "They make more money in electronics and computers, so they'd rather compete there."

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