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Toy industry expands beyond traditional retailers
hese days, it's hard to predict where the next hot toy will turn up.
This past holiday season, one of the must-haves came from consumer electronics chain RadioShack Corp., which latched onto a small radio-controlled car called ZipZaps that can be recharged in 45 seconds. Parents cleared the $20 toys off store shelves, or, if they shopped too late in the season, settled for one of several competing knockoffs.
"It was our most successful product launch in history ever," said Don Carroll, senior vice president and general manager of the Fort Worth, Texas-based chain.
RadioShack's newfound status in toyland is an example of how the $20.3 billion toy industry is expanding beyond traditional retailers such as discounters and Toys "R" Us. The growing sophistication of children and toys themselves is partly behind the trend, but so are changes in the retailing industry, including the financial problems of retailers such as Kmart Corp. and FAO Inc. that have led to hundreds of store closings.
The shift in toy retailing is expected to be one of the concerns of manufacturers and storeowners at the 100th American International Toy Fair, the toy industry product expo that officially began Sunday.
Grocery stores, drugstores
In another example of the change, traditional toy stores like Toys "R" Us and K-B Toys are selling toys to grocery and drugstore chains to compete with discounters. And manufacturers like Lego are making deals with apparel stores.
At Starbucks coffee stores, customers can sip cafe latte while purchasing board games like Hear Me Out! which the company sells exclusively. Cranium, Starbucks' first splash in the game business in 1998, was named the best game of the year by the Toy Industry Association last year.
Shoppers will now find toys year-round at RadioShack, which is creating new versions of the 2 1/2-inch-long ZipZaps and working with suppliers to develop other toys. RadioShack was previously known for larger radio-controlled trucks and cars, but never had an exclusive gotta-have toy until ZipZaps.
"The search is on to put the toys where consumers are, instead of trying to attract (consumers) to toy stores or another mass merchants," said Chris Byrne, an independent toy consultant. "Companies have to keep growing somehow."
Byrne estimates that a typical parent goes to the toy store once a month, but visits a grocery chain at least once a week. Meanwhile, retailers like RadioShack are using toys to draw parents who hopefully will also pick up some electronics items while they're at the store.
Theresa Massa, of Middletown, N.J., is the kind of shopper the toy industry is targeting. A mother of four children ranging from ages 1 1/2 to 17, Massa has time to go to the toy store only once every three months. But she shops at the local grocery chain several times a week.
"Now and then I go the toy store. I like to make fewer trips," said Massa. But she said she would buy more toys if "they were in front of me and I liked them."
She'll also go wherever the hot toy is. Massa tried to find ZipZaps at RadioShack this past holiday season, but was unsuccessful. She ended up buying another version online, she said.
Picking up pace
Massa hasn't seen a lot of toys at nontraditional outlets, but as the trend accelerates, she should expect to see more. Here's how the trend is picking up pace:
Toys "R" Us, which started supplying toys to grocery chains a year and a half ago, now sells to 31 grocery stores including Giant stores in the Washington, D.C. area.
K-B Toys Inc. supplied toys to Sears, Roebuck and Co. last holiday season in 77 locations, up from 29 a year ago. Last fall, it became the wholesaler of toys to drugstore chain CVS Corp.
Lego Systems Inc. has tripled its business selling toys to supermarkets such as Food Lion and Stop & Shop and the Rite-Aid drug chain in the past three years. It's also expanding into crafts stores for the first time, with a line called Clikits, an arts and crafts kit for teens.
Home shopping channel QVC, which attracts 80 million viewers per week, has doubled its toy sales from three years ago.
Selling board games and other items to chains outside the traditional toy industry requires different strategies.
Toys "R" Us ran tests at grocery chains to see which toys sold best, and found that products priced $10 to $15 that are also portable have the most success, according to Francesca Brockett, executive vice president.
"We're trying to meet a different occasion" rather than focusing on holiday sales, she said. Toys "R" Us is aiming its supermarket sales at parents who are buying gifts as small rewards for their children or purchasing birthday gifts.
Lego set up a special sales force to pursue selling to alternative outlets.
"We want shoppers to bump into the Lego brand in every relevant location," said Andrew Black, the company's president.
With Clikits, the company will also be selling to teen clothing chain Limited Too. Clikits allows teens to create handbags and other accessories by snapping plastic pieces together.
Meanwhile, Lego will be making an exclusive version of a radio-controlled car for RadioShack, marking its debut at the consumer electronics chain. The goal, Black said, is to double Lego's market share in this country to 6 percent.
"It's only a matter of time," he said.
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