November 17, 2007 in Business

Toy retailers cut prices to lure nervous shoppers

Anne D'Innocenzio Associated Press
 
Associated Press photo

Cassie the golden retriever keeps watch Thursday at Second Childhood Toys in Hastings, Minn.Associated Press
(Full-size photo)

NEW YORK – Lead on toys was bad enough, but last week’s recall of a toy tainted with a date rape drug threatens to turn into a lump of coal for toy retailers just as the key holiday selling season gets started.

The recall of Aqua Dots comes just as the industry was starting to see shoppers return to toy stores after summer’s high-profile recalls of more than 21 million Chinese-made toys with high levels of lead or dangerous magnets.

Aqua Dots, distributed by Spin Master Ltd. in the U.S. but made in China, was on many retailers’ hot toy lists, and there are very few substitutes, retail executives say.

The good news for shoppers is that they’re being bombarded with free shipping offers and fat discounts as rivals like Wal-Mart Stores Inc. and Toys “R” Us try to draw reticent consumers. Most of the discounting had been planned, but at least one retailer – eToys.com – added free shipping after a disappointing October.

While many toy merchants say shoppers largely have not been rejecting Chinese-made toys – which make up 80 percent of U.S. playthings – they are being choosier. A poll done last month by Harris Interactive showed that one-third of Americans say they will be buying fewer toys this holiday season due to safety concerns, and 45 percent said they will avoid buying toys made in China.

What effect the souring economy will have on sales also is unclear.

The industry is worried that parents’ frugality could derail holiday sales, which showed a meager increase last year after several years of declines. Toy sales were up 0.2 percent last year, according to the NPD Group Inc., a research company based in Port Washington, N.Y.

Sue Warfield, president of the American Specialty Toy Retailing Association, which represents about 500 stores, said her members, long battered by discounters, are bracing for a turnaround.

“One bright side is it’s made people aware there’s more to shopping than just picking something off the shelf,” she said of the recalls. “You have to think a little bit more. You have to pay a little bit more attention.”

Barb Hollenbeck, owner of Second Childhood Toys, in Hastings, Minn. whose toys are about 20 percent higher than items found at discounters, said she’s seeing some new customers and expects higher sales this season.

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