Tuesday, November 28, 2006

The last stand of the toy chains

Toys R Us and K-B are trying everything to stay alive. I've often argued that the outcome of retail consolidation will be two players in each category, but toys may be the channel that disappears entirely (along with music stores, of course).

Put together a 5% decline in category sales over the past two years and the fact that 58% of toy sales are now through the mass/discount channel, and things look bleak for the last two toy chains (a similar combo of circumstances killed Tower and other music chains).

One attempted solution is to expand the definition of "toys":
Toys "R" Us recognized the importance of youth electronics over the past year. The new strategy: Add coveted merchandise, such as Fisher Price's digital camera (for ages 3 to 10), and get as many exclusives as possible, including a Black & Decker Jr. electronic workbench and a pink version of the VTECH Nitro notebook, a laptop with learning activities and music lessons aimed at young children.

"We were late to be on top of youth electronics and slow as an industry to innovate," acknowledged Ron Boire , US president of Toys "R" Us ...

"We got pigeon-holed in our view of what a toy was," he added. "We let ourselves be defined as a place that sells molded plastic."

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