Show Buzz: Fall Toy Preview
By Staff -- Playthings, 10/15/2008 5:30:00 PM
DALLAS—The Toy Industry Association’s Fall Toy Preview has been under way now for two solid days and so far the comments most commonly heard contain cautious optimism about retailers’ plans for 2009 tempered by grave concerns over cost increases and the crimp they are putting in manufacturers’ creativity, and more crucially, their profitability.
“It’s better than expected,” said one manufacturer of the mood on Tuesday morning as the toy business’ long-lead retail preview began to pick up steam. “Yesterday[’s stock market rebound] helped a lot … Mostly people are scared about price points, but people generally seem less discouraged.”
Most of “the majors that count” are here, people have been saying, although with seemingly smaller contingents than in years past. The one retailer consistently mentioned as missing is Costco. And today’s rumor was that a pending round of layoffs at Viacom kept Nickelodeon away.
In general, toy manufacturers we’ve spoken to are consistently reporting increases in their costs of anywhere from 15 to 30 percent, and were grousing loudest about the expense involved in separate, mostly redundant rounds of testing for individual major retailers for each of their products in order to maintain those retailers’ stamps of approval – and then having to repeatedly retest those same products throughout the year for subsequent shipments. One manufacturer said it would cost her company approximately $3,000 per item every 90 days just to keep Toys “R” Us satisfied.
The solution, from what we’ve seen, seems for some toymakers to be smaller versions of previously more spacious toys or to avoid licenses wherever possible. For others it’s a new-found emphasis on the higher-margined, less testing obsessed specialty toy market—small as it may be—to build up a new business base. And almost unanimously, toymakers say their higher costs will be passed along to consumers; the mantra of this year’s show might just be “$21.99 is the new $19.99.”
And while here at the Dallas Market Center talk was about the future, out in the wider world major toy retailers were making moves to keep customers coming through their doors in the here and now.
KB Toys today opened the first of 30 full-size stores for the holiday season located in “leading” malls and shopping centers across the country and in Puerto Rico. “These new locations, not only make shopping for affordable toys more convenient, but also bring new jobs to the area,” said Andy Bailen, KB Toys’ CEO. "The stores will be filled with all the best toys, including video games and family DVD movies from our popular Super Value program."
And Toys ‘R’ Us announced yesterday that it had launched a loyalty membership program called Rewards"R"Us in order to thank its “best and most frequent customers for their patronage.” The program offers enrolled customers a variety of exclusive one-time offers and ongoing benefits, deals and promotions at the retailer’s toy stores, at Babies ‘R’ Us and at Toysrus.com.
As part of the program, Rewards"R"Us members can earn "R"Us Dollars on qualifying purchases through special promotions. The first of these promotions, now underway, gives members a $5 reward certificate for every $150 of merchandise purchased online or in-store through December 24.
"We know that today's consumers have many choices of where to shop and spend their discretionary income," said David Sims, director of the company's loyalty program. "The Rewards'R'Us program is a way to let our customers know how much we appreciate their business and to thank them by offering additional opportunities to find great values and enjoy special services in our stores."
It’ll be interesting to see the show’s mood on Thursday. This afternoon’s 733 point stock market drop and a government report that said retail sales fell nearly twice as much in September than expected may put a new dent in the merchants’ optimism.
Stay tuned for another report from TIA’s Fall Toy Preview tomorrow.
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