Toy story '01 tells of hot toy that never was - overview of industry - Brief Article

DSN Retailing Today, Jan 7, 2002 by Molly Prior

NATIONWIDE DSNRT REPORT -- Noticeably absent from this year's holiday sales picture for the second year in a row was a "must have" toy--the kind that inspires a Furby-like selling frenzy that brings consumers to their knees. Whatever missed opportunity this created for retailers, though, this year's hot-toy void cleared the way for several newcomers to share the best-seller spotlight.

"There hasn't been a Holy Grail this year, but there have been a dozen standouts," said Toysrus.com's spokeswoman Jeanne Meyer.

The launch of two compelling video game consoles, as well as the premiere of two highly anticipated feature films, "Harry Potter and the Sorcerer's Stone" and "Monsters Inc.," sent parents scrambling to fulfill wish lists before shelves were bare.

With two big-name gaming systems launching for the first time in history within the same year--let alone the same month--retailers across the board agreed 2001 was a standout year for the video game console. Even with all the hype surrounding Game Cube and X-B ox, last year's console Playstation 2 also saw solid sales. "PS2 held its own, and it hasn't had to discount its price to do it," said toy expert Chris Byrne, known in the industry as The Toy Guy.

While system sales met retailers' expectations, they did not thwart traditional toys from raking in consumer dollars as well. Three weeks before the selling season ended, the only chance consumers had of finding a Harry Potter Hogwarts Castle by LEGO was on eBay. One auctioneer sold his for $147.50, approximately $57.50 above its retail price.

Senior vp of merchandising for K*B Toys Tom Alfonsi said Harry Potter toys that appealed to older children also did well, such as the LEGO play sets, Mattle's Levitating Challenge game and Snape's Potion Lab, and video games by Electronic Arts. Dave Karraker, spokesman for Kmart, said the retailer saw a shift in consumer spending from low-priced impulse items to bigger-ticket gift purchases with the premiere of the movie.

Monsters Inc. products also performed well, with Hasbro's Babblin' Boo stealing the show both in the film and at retail. The $24.99 doll proved to be a late-season runaway hit. K*B Toy Works store manager John Reap said the dolls were snatched up as soon as they hit retail shelves. Both K*B Toys and Toys "R" Us reportedly sold out of the doll just over two weeks before Christmas.

This year, parents were more selective about the licensed products they chose to buy, said Byrne. Their fickleness translated to sales gains for non-licensed toys such as Leap Frog's learning toy LeapPad and Spin Master Toys' Shrinky Dinks.

Ames senior vp and gmm of hard lines Dave Covitz and Reap of K*B Toys both named LeapPad as their top seller. Wal-Mart, Kmart and Toys "R" Us also named LeapPad as a top performer.

Jill Peterson-Burns of San Francisco, Calif., drove to four toy stores, including Zany Brainy and Imaginarium, before finding one at Toys "R" Us late one Sunday evening. "Because kids do have so many toys, I considered LeapPad at least one gift that was entertaining and educational," said Burns.

"Leap Frog is delivering a very strong product and updating it with content each year," said Byrne. Tim Bender, senior vp of sales and marketing for Leap Frog, compared the toy's interface to that of Playstation 2, with plenty of software available to keep LeapPad fresh and current for children ages 4 through 11. Bender added sales were up approximately 100% over 1999. The 3 million LeapPads sold in 2001--2.5 million of which were sold in the fourth quarter--fueled much of the company's growth.

Bender said several retailers even chose to pay a hefty cost to air freight the product to fill shelves. "In a tough retail year, like this one, retailers are trying to deliver what consumers actually want," said Bender.

Spin Master Toys also ended up air-freighting Shrinky Dinks Makers at a whopping cost of $7 per unit to several retailers determined to restock the product by Christmas.

The company sold through approximately 400,000 units three weeks before the season's last selling day. Toy expert Ronnie Goldfinger, who dubbed the product "the ultimate retro toy," named Shrinky Dinks the hottest holiday toy, relative to how many were built and sold. "Shrinky Dinks were obnoxiously big," said Goldfinger.

Classic toys such as Tinker Toys and Lincoln Logs proved their staying power once again this year. Board games also performed well.

Hasbro reported sales of traditional board games have seen a double-digit rise for the first three quarters of 2001, with Monopoly and Scrabble doing particularly well. "Anything that engages the whole family has been a standout," said Meyer of Toysrus.com.

"Board games always do well in a recession," said Byrne. "It's cheaper for parents to buy a new board game then it is to take the family to dinner and a movie.

Even with the console craze and surprise sales superstars, toy sales for the industry will be flat at best for 2001, said Diane Cardinale, spokeswoman for The Toy Manufacturing Association.