It's looking ugly for holiday toy sales, thanks to tighter wallets in a gloomy economy.
The National Retail Federation predicts holiday sales will rise just 2.2% from 2007, to $470.4 billion. It's the least growth since 2002, when sales grew 1.3%. While toy sales typically prove more recession-resilient, expert Chris "The Toy Guy" Byrne says people will buy fewer toys — and expect more for their money.
"You're going to see revenue flat or slightly up, but you may see a decline in units sold," says Byrne, an editor at toy industry magazine Time to Play. "What you are going to see lost is that incremental sale, that last toy to have something else to put under the tree."
The toy buzzword this year: value. Retailers and toymakers are using everything from discounts to freebies with purchase to added features to try to spur sales. While Elmo Live is $60, up from $39.99 last year, the toy boasts an expanded repertoire (he can sit, stand, cross his legs and move his arms) and mouth movements better synced to what he's saying.
"Santa's going to fly, but consumers are looking for value," Byrne says. "Value really comes down to what am I going to pay and what's the play value. Parents … may spend $60 for Elmo Live, but it's worth the money."
Other value propositions:
•Bundled deals. As Microsoft tries to grow sales beyond traditional gamers, its new Xbox 360 console has a family-friendlier price of $199 (vs. $249), and starting on Nov. 19, it will offer the Xbox Experience — holiday bundles of content including up to 11 free games.
"It's a great value in terms of what you can do with the new Xbox," spokeswoman Charlotte Stuyvenberg says. "In the economy we are looking at right now, it's a great message."
•With-purchase freebies. The 80 pages of Toys R Us' 2008 Big Toy Book catalog has more discounts and incentives, including a $10 gift card with $75 purchase, a $25 iTunes gift card for buying an Apple iPod Touch, and a life-size Barbie dress, valued at $20, with a Barbie Doll purchase.
"We know that customers are concerned about the economy," says Jerry Storch, CEO of Toys R Us. "All you have to do is watch the TV or read a newspaper, and you're bound to be worried. We want to make sure we provide the most options for consumers no matter what their budget."
•Build-on toys. Some of the hottest toys this year are predicted to be toy "systems" — modestly priced base products to which more pieces or characters can be added.
Bakugan, a planetary battle game by Spin Master using cards and balls that transform shape, is on track to sell 10 million units this year and be one of the top-selling toys. Anton Rabie, CEO of Spin Master, says that's partly because the game starter pack and additional balls and cards, accessories and figures are affordable, at prices from $5 to $20.
"When times are tough, it's (an inexpensive) opportunity to keep a smile on a kid's face," he says.
•$10 toys. Wal-Mart launched a price war last month with 10 top toys — including some Barbie, Hot Wheels and Bakugan items — at $10. Target and KB Toys followed with $10 offers.
NEW & NOTABLE
The economy is anything but shipshape, but Royal Caribbean is introducing its first new ad theme in nearly a decade. On Monday, "The Nation of Why Not" will replace its "Get out there" theme. Royal Caribbean CEO Adam Goldstein says, "We are hoping the spirit of change that played in the election — more optimism and getting people going again — will be great for vacations and for us." The ads come as it tries to shore up bookings, which it expects to be down 4% to 5% this quarter vs. 2007.
Sir text a lot
Rocker, reality TV star and master mumbler Ozzy Osbourne gets around the marbles in his mouth by texting in a new Samsung commercial. When The Great Ozz tries to order coffee, hail a cab or talk to his shrink, he's often misunderstood, until he texts with the new Samsung Propel phone.
"The guy does mumble," says Samsung chief marketer Bill Ogle, adding he still has wide appeal. "Older folks like him because of his Black Sabbath days, but kids like him even more."
The heavy-metal frontman, who was introduced to a new generation of fans thanks to MTV reality show The Osbournes, is getting ready for his next reality show, this one for Fox and tentatively titled The Osbournes: Loud and Dangerous.
Political pet project
After President-elect Barack Obama said in his victory speech his daughters would get a puppy, pet food brand Pedigree made a plea in a newspaper ad for him to adopt a shelter dog. "We'd love to help you fulfill your first campaign promise," it said and listed adoption site DogsRule.com.
Craigslist gets tough
Online classified ad company Craigslist said last week it will crack down on the prostitution-related postings on its websites. As part of an agreement with attorneys generals in 43 states, anyone who posts an "erotic services" ad will be required to provide a working phone number and pay a fee with a valid credit card. The company, which mainly offers free listings, will charge $5 to $10 per erotic listing. It will "donate 100% of net revenue generated from these ads to charity." Craigslist also said that it would hand over that data provided by erotic services advertisers to law enforcement if subpoenaed.
Toying with Mom and Dad
With many parents strapped for cash, kids this year may see fewer toys and trinkets under the tree. With that in mind, advocacy group Campaign For A Commercial-Free Childhood is asking Mattel, Hasbro, Toys R Us and 21 other toymakers and toy retailers to suspend all holiday marketing aimed at children, and target ads to parents, instead.
"It's cruel for companies to dangle irresistible ads for toys and electronics in front of children when parents everywhere are worried about their financial future," says Susan Linn, director.
The Ad Team estimates that the odds of this actually happening are roughly equal to the odds of parents remembering batteries for electronic toys.
Calling all cars
The auto market is on life support, but Cars.com has not put the brakes on its Super Bowl ad plans. The auto-shopping site, a venture of USA TODAY parent Gannett and other media companies, will run a 60-second ad on the Feb. 1 NBC broadcast. Like its game ad last year, the spot's theme will be that Cars.com gives car shoppers confidence.
"There are still people in the market to purchase vehicles," spokesman Steve Nolan says. "We want to make sure Cars.com is front and center for those people … and those who'll return to market as soon as demand starts picking up."
Hold the glutens
"Gluten-free" is becoming the food term du jour. There are more than 2,000 gluten-free products on the market for folks with wheat allergies, reports the U.S. Department of Agriculture. (Gluten is a composite of wheat proteins.) Gluten-free foods had double-digit sales growth in the last year.
Perhaps that helped to nudge the Big Boys of food products to join the action:
•General Mills makes gluten-free Rice Chex.
•Frito-Lay offers gluten-free Cheetos, Doritos and Lays snacks.
•Anheuser-Busch produces Redbridge beer, which isn't made with wheat or barley.
There's even a cookbook on gluten-free baking from the Culinary Institute of America.
And, combining the best of two worlds, 1-year-old Whole Bakers makes Rockin Choco Chip cookies and Chewy Choco Bites that are certified kosher and gluten-free.
By Laura Petrecca, Theresa Howard, Bruce Horovitz, wire reports