Video games, licenses play tops in toys - Discount Store News Annual Discount Industry Report; Part 2; Merchandising and Productivity Analysis

Discount Store News, August 2, 1993

Video games, Jurassic Park licensed toys plus electronic and interactive toys are likely to propel 1993 total U.S. toys sales to over $18 billion, an increase of about 7% from 1992.

Already this year, video games, particularly 16 bit, are the hottest toy category. Through April, sales through all retail channels were up over 20% from 1991, according to The NPD Group, a Port Washington, N.Y.-based research group.

"There are no blow-out categories other than video games," said Ed Roth, NPD's director of toy services. "A number are doing well," he said, noting that popular toys through the early spring included several motion picture-inspired action figure lines, Jurassic Park-licensed products, water toys (although not as hot as last year), and a number of nostalgia toys such as Creepy Crawlers plus Littlest Pet Shop by Kenner. Particularly, a strong seller in video games is X-Men, which is based on the characters from Marvel Comics.

The real test of a toy's success, however, comes in the fourth quarter when the money-making toys are rolled out and aggressive advertising promotions bombard the airwaves.

During the industry's premier event, the American International Toy Fair, held annually in New York in February, the trends established for Christmas 1993 included: try-me packages; dinosaurs of all kinds, including Barney and Jurassic Park; radio control devices; arts and crafts; arcade games; foam dart products; 3-D games and puzzles; educational toys; and backyard water toys.

In addition, nostalgia toys are projected to do well again this year, following a strong 1992. Also, "talking" toys, that is, toys with computer chips embedded in them, should crack the category wide open this coming holiday season.

Potential winners of the "talking" toy category include:

* TV Terrier by Tiger Electronics, a plush dog with a high-tech inner body which interacts with a companion video program that prompts the dog via flashes of light, to bark, howl, etc.;

* Tyco's talking dollhouse; * Mattel's Baby Walk 'n Roll, a radio-controlled doll in an infant walker, that giggles when moving forward and squeals with delight in reverse;

* Mattel's See & Say Howdy Talking Pony, a stick horse without the stick. This horse makes 18 different sounds or words, including a snort, when his reigns are pulled;

* Playskool's Talking Barney. The familiar purple dinosaur says 572 phrases and encourages children to respond to questions;

* Parker Brothers Talking Board Games, a series of six games featuring popular licensed characters such as Barney and Mickey Mouse.

* The Omega Virus, a 30-minutes talking electronic board game by Milton Bradley;

* Galoob's Fancy Sounds, a glove-like electronic toy that children can wear, which makes over 100 phrases and turns every toy into a talking toy;

* Talk 'n View Magic Mirror by Just Toys. The mirror is modeled after a scene in Snow White;

* Power Modelers by Revell-Monogram, an animated construction and racing simulation program on CD-ROM;

* Big Bruiser by Buddy, a 30-in. truck that looks like an 18-wheeler and features sound, voice and lights;

* Little Smart Dr. Doctor by V-Tech, an electronic physician's kit that includes games and sounds. Also, Dial A Smile, an electronic telephone that produces 150 phrases.

Last year's hot toys included some perennial favorites like Barbie, G.I. Joe, Batman and Ninja Turtles, plus Super Soakers, Barney, roller skating dolls and Puppy Surprise.

Also, 1992 was an overall success for toys with every toy category recording sales increases. Particularly hot last year industrywide were dolls, up 33.3%; plush, up 15.5%; and activity toys, up 13.3%.

Robust 1992 sales have provided a great momentum for individual toys in 1993 even while the toy industry is battling the forces of change.

The toy supermarket industry is nearly dead, replaced by the powerful presentations by the discount department store retailers.

Although predictions of the demise of the specialty toy sector have been widely reported, the final blows occurred only last month when Lionel Corp. announced it was closing its remaining stores and exiting the business. The chain, in Chapter 11 bankruptcy for two years, could not come up with a restructuring plan that was acceptable to its creditors.

Prior to Lionel's demise, Child World liquidated last year after plans to reorganize the troubled chain could not be resolved.

The exit of these two chains leaves only two national chains in the toy specialty field, Toys "R" Us and Kay-Bee Toys.

Discount store retailers, particularly Wal-Mart, Kmart and Target, have moved into the business in a big way in recent years and now account for a large share of toy sales.

In fact, according to The NPD Group, the top five chains selling toys were, in order, Toys "R" Us, Wal-mart, Kmart, Target and Kay-Bee Toys. These chains had a 48.1% market share in 1992, up from 46% in 1991.

The 1992 list of the 20 top toy retailers includes 11 discount store retailers, four toy chains--including Child World and Lionel--two catalogers, Sears and JCPenney, plus a speciality retailer, Electronics Boutique.