Toy segment sales get dolled up for 1990 - Discount Industry Annual Report: part 2: Merchandising and Productivity Analysis

Discount Store News, July 16, 1990

Toy Segment Sales Get Dolled Up for 1990

A product more commonly associated with most discounters' consumer electronics department was named the No. 1 toy in America last year by Consumer Reports magazine, which polled 12,000 families.

The popularity of Nintendo video games has continued this year and shows no signs of fading. Toy retailers can't seem to get enough Nintendo product--hardware and software programs--to fill their shelves.

Nintendo's success has spurred more toy vendors to step up their efforts to develop new toys that create the same level of excitement in other toy categories.

While Nintendo continues to cast a big shadow over the entire toy business, a number of toys are making an impression on the category.

In 1989, the baseball card trading craze reached a fever pitch and is still running high; miniaturization left many categories untouched and was still a strong force at the 1990 International Toy Fair. Hyper cars, play food and G.I. Joe also were important last year.

At Toy Fair 1990, dolls, particularly Barbi and the reintroduction of Cabbage Patch and Holly Hobbie, signaled a return to traditional playthings, dolls in particular. So plentiful were the new doll offerings that many have termed 1990 "The Year of the Doll."

This year, the word "doll" definitely took on a new meaning. In 1990, dolls wet and mess their pants, wear diapers, cry, change the color and length of their hair and even get born and later reveal their gender.

Miniaturization was still strong at the Toy Fair, as were fully-jointed action figures and board games. Basic toys, long pushed aside to make room for technology-driven playthings, made a comeback. Such familiar toys as yo-yos, Silly Putty, G.I. Joe and Mr. Potato Head continued their dominant roles.

The licensing fever infected many more categories at the 1990 Toy Fair, permitting both manufacturers and retailers to take advantage of this cyclical business. With licensing affecting nearly 60 percent of the toy business, the ever-popular Mickey Mouse and Sesame Street gang were almost everywhere. But they weren't alone. Teenage Mutant Ninja Turtles, Batman, Dick Tracy and The New Kids on the Block, among many others, also were on numerous products.

Holly Hobbie, the familiar blue girl in silhouette, is in the process of a comeback. Appearing back in her traditional garb as well as more contemporary versions, the Holly Hobbie art has been licensed to a laundry list of products. However, a recent DSN trip to Toys "R" Us, Child World, K mart and Caldor, in Paramus, N.J., failed to uncover even one Holly Hobbie product, not even the Holly Hobbie rag doll which Mattel introduced in March.

Serendipity played a role at the Toy Fair this year as themes from the democratization of Eastern Europe cropped up. While the market has still not seen a Gorbachev doll, the Toy Fair did witness the introduction of a Gorbachev board game and Berlin Wall puzzle. No doubt the 1991 Toy Fair will offer many more toys on the same theme.

One of the hottest toy segments this year appears to be pre-school. In fact, according to the Toy Manufacturers Association, pre-school toys grew by 10 percent in 1989 over 1988, making it the fastest growing segment of the nine categories the association monitors.

A by-product of increased births and a return to interest in basic toys, pre-school toys totaled approximately $1.1 billion in 1989, equaling 9.7 percent of the toy category, according to NPD, a toy market index. NPD follows toy sales through its Toy Retail Sales Tracking Service that records sales of 10 sample retailers, including Child World, Target, Hills, Venture and Bradlees, accounting for 20 percent of sales, and extrapolates results for the entire industry.

Expanding Pre-School Business

Many retailers are expanding the size of their pre-school business, increasing shelf space by as much as 10 percent to 15 percent because of steadier sales and profits. In fact, pre-school picked up space at the expense of trucks, kids' arts and crafts and creative activities, according to Kevin Curran, director of traditional toy marketing for Fisher-Price.

Retail sales of toys for all avenues of distribution--including discounters, full-price department stores, full-price specialty toy and hobby stores and category killers--was an estimated $13.4 billion in 1989, up from $12.75 billion in 1988, according to the Toy Manufacturers of America. This year, toy sales are projected to rise 4 percent to 6 percent to over $14 billion. Video games sales, led by Nintendo, totaled over $3 billion last year, the industry's largest category.

In 1989, toy sales declined in just two categories: plush toys, which fell 14.1 percent, and toy guns, off 12.5 percent. Sales of activity toys were level with 1988, according to TMA.

All other toy categories grew. Led by infant and pre-school toys, games and puzzles were a close second, up 9.8 percent; dolls, up 9.3 percent; vehicles, up 8.2 percent; action figures, up 5.7 percent; and ride-ons, up 4.4 percent.