Just last year, a kid in the Uncle Milton’s ant farm market could choose from half a dozen versions, including glow-in-the-dark or an ant village. Now there are only three. Last year there were 60 types of K’Nex construction kits on the market. This year there are 20.
A year after Toys R Us was imploded, toy manufacturers are still adjusting to the huge loss of space. That means reducing the number of styles they offer, re-evaluating sales of large toys like playhouses and cars, and changing the packaging to squeeze them into smaller retail spaces.
It’s a jolt for toy companies. They had already tried to reinvent themselves amid an onslaught of change, including children’s evolving tastes for gadgets, as well as the rise of Amazon and online shopping. You never expected the legendary chain to liquidate its 800 U.S. branches six months after filing for Chapter 11 reorganization in 2017. Some companies were dependent on the chain for up to 40 percent of total sales.
READ MORE: A bright future for Canadian Toys ‘R’ Us businesses, says the president during visit to British Columbia
A number of retailers like Walmart, Target, and Party City rushed to expand their toy aisles to capitalize on Toys R Us’s death, but toy companies say they can’t fill the void. The shops devoted large parts of the year to toys and served as incubators for new trends. They also say Toys R Us’s massive orders of tens of thousands of units offset the cost of production.
All of this has resulted in fewer opportunities for children.
“Maybe the world just needs some kind of ant farm, but that day you had a choice,” said Jay Foreman, President and CEO of Basic Fun. The Boca Raton, Florida-based company last year bought the assets of Uncle Milton, who works with K’Nex and Playhut to make ant farms. He is now evaluating his overall line-up.
Many parents have taken note of the more limited options.
Stephen Desch of Keyport, NJ said when his now 3-year-old daughter wanted a crab-shaped sandpit he found it at Toys R Us. But he can’t find certain items now, like a plush toy inspired by the Jay character from the Netflix show “Beat Bugs”.
“It’s definitely annoying,” said Desch.
Vanessa Myers of Bristol, Virginia, names too many choices in some categories, such as lighting toys for the tub. But she worries about the dwindling selection of dolls and bicycles.
“I really want dolls that are diverse,” she said in hair color and ethnicity.
READ MORE: Toys “R” Us Files for Bankruptcy Protection in the US; plans to follow suit in Canada
According to market research group NPD Group Inc., Jim Silver, editor-in-chief of TTPM, an online toy review website, Toys R Us collapsed after sales of nearly $ 3 billion, or 12 percent of the U.S. last year Toy Market estimates that 40 percent of Toys R Us’s business was not acquired. Even if Toys R Us’s former investors try to revive the US business in time for the holidays, many expect it to be a shell of what it was.
The effort follows a 2 percent decline in toy sales to $ 21.6 billion last year, with demand easing in the second half of the year due to the loss of Toys R Us. According to the NPD, sales growth has reversed for four consecutive years.
Mattel’s annual sales declined 8 percent last year, reflecting a 6 percent negative impact on the toy retailer’s liquidation. Hasbro’s annual sales declined 12 percent, negatively impacted by the loss of Toys R Us. Mattel had been struggling for a number of years, but a turnaround was beginning to emerge.
Toy makers have grown online, but that’s not a panacea, says Marc Rosenberg, the strategic marketing advisor behind the success of Hasbro’s furry hit, Furby. Physical stores are still driving the toy business and profitability as businesses don’t incur shipping costs, Rosenberg says.
Foreman agrees, saying that his new line of cutetitos – baby hats wrapped in a burrito blanket and launched for the holidays – would have done even better if Toys R Us had been around. As a rule, Toys R Us would have dedicated a 3 x 16 inch display to a hot object in a clearly visible place. Instead, shops gave Cutetitos an area that was 18 inches wide and 5 inches deep.
Isaac Larian, CEO of privately held MGA Entertainment, tripled total sales last year due to its popular LOL toys. The Little Tikes division, which makes toy cars and playhouses that require large display space, saw sales decline 12 percent due to the loss of Toys R Us, despite its business with Amazon increasing 50 percent. A total of 27 percent of the total business came from Toys R Us, at Little Tikes it was 40 percent.
Larian’s Little Tikes toy factory – the largest US toy factory – based in Hudson, Ohio, is 25 percent busy. Larian says he is reducing the number of Little Tikes toys produced mainly because of the loss of Toys R Us. He’s now expanding into housewares to keep the factory busier.
“We reinvent ourselves every day,” he said.
Anne D’Innocenzio, The Associated Press
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