Skip navigation


Retailers are making a list and checking it twice when it comes to toys this holiday season.As the toy-selling period hits its busiest peak in the coming weeks for the holiday season, supermarkets polled by SN are diving deep into their toy chests to portray the right product mix, price and image. They want to get a bigger piece of a very lucrative pie.The toy industry garnered $21 billion in sales

Retailers are making a list and checking it twice when it comes to toys this holiday season.

As the toy-selling period hits its busiest peak in the coming weeks for the holiday season, supermarkets polled by SN are diving deep into their toy chests to portray the right product mix, price and image. They want to get a bigger piece of a very lucrative pie.

The toy industry garnered $21 billion in sales last year, up 1% from 2001, according to the NPD Group, Port Washington, N.Y. But the mass merchandiser channel controls a 40% market share in toys, according to industry sources, while supermarkets and drug stores combined hold roughly 5% of the toy market. Yet supermarkets remain bullish that they can capture a bigger share of the category, whether it is through forming partnerships with national toy retailers or customizing their own toy programs.

While stores like Albertsons, Boise, Idaho; Stop & Shop Supermarket Co., Quincy, Mass.; and most recently Sears, Hoffman Estates, Ill., have enlisted the expertise of retail partnerships -- Albertsons and Stop & Shop with Toys "R" Us, Wayne, N.J., and Sears with K-B Toys, Pittsfield, Mass. -- other retailers have created their own in-house approach to merchandising toys.

Save Mart Supermarkets, Modesto, Calif., has set up a successful year-round core toy program in all 84 stores, said Steve Urgo, general merchandise buyer. This includes an assortment of evergreen boys' and girls' toys like dress-up kits, craft sets, bicycles and larger plastic toys, he said.

"Our customer doesn't start out to go to Save Mart to buy their Christmas toys," he said. "We need to get them while they are [in the stores] and attract them to the right item at the right price, tied into a nice seasonal presentation. That's been our strategy and that seems to work really well for us."

Price Chopper Supermarkets, Schenectady, N.Y., works directly with toy manufacturers like Mattel, El Segundo, Calif., to offer branded toys that "allow us to make quality and price image apparent to the customers," said Mona Golub, spokeswoman.

"We will definitively look to compete with other toy-selling entities out there," Golub told SN. "[Branded toys] is where supermarkets can compete on the same plane."

Rosauers Supermarkets, Spokane, Wash., focuses on "classic everyday toys we know will turn," said Gordon Thompson, general merchandise buyer. "It's a tough business to be in, with a lot of hits and misses. There's a lot of inventory left over if you miss, and the markdown can be pretty substantial."

Additionally, he said, smaller chains are at a disadvantage in merchandising the trendier toys. "So many of them get allocated to the larger chains, it's hard to get your hands on them," Thompson said.

Save Mart would rather merchandise "classic, stable toys that are proven winners," said Urgo. "We don't want to put ourselves in the position of going head-to-head with big mass retailers because if it got into a pricing situation, we'd just be trading dollars. Another question is why, when we can turn around and sell something that is a solid sale and maintain our margin."

Retail partnerships with national toy merchandisers like Toys "R" Us assist supermarkets with getting the right toys at the right time, said Karianne Cole, spokeswoman, Albertsons.

"Toys 'R' Us is going to give us a competitive edge because it gives us a well-known, high-quality brand of toys across the board," she said. "[Toys 'R' Us] can help us get the right products into our stores."

Albertsons is "geared up and on track" for the holidays, making good on its goal to have the majority of its 2,300 stores converted to include Toys "R" Us-branded "Toy Box" sections by year's end, Cole said. The retailer's Rocky Mountain division is rolling out the new toy sections this month and jumping right into the holiday season presentation, she noted.

"Toy retailers are forging partnerships with other types of retailers to recapture market share that is going to discounters," said Diane Cardinale, spokeswoman, Toy Industry Association, New York. "It's a win-win for both. Supermarkets get the toy expertise and the toy retailers get the reach into another outlet."

However, supermarkets like Save Mart prefer tailoring their own toy programs rather than going for outside help from traditional toy outlets in spite of the "marketing oomph" supermarkets may receive from a nationally branded toy business, Urgo said. "I think I would rather put those programs together myself, rather than have to be held to any kind of requirements to make that [retail partnership] happen, i.e. space allocation, point-of-purchase, signs, timing of things, pricing," he said.

"You have two businesses trying to protect their own entities. For us, we've been successful enough in putting our own programs together," Urgo said.

While the "marriage" of national toy retailers and supermarkets is a good one in many cases, smaller regional food operators have the opportunity to search for a partnership in the toy business with a regional player, said George Whalen, president and chief executive officer, Retail Management Consultants, San Marcos, Calif.

"There are some ways to make this marriage work regardless of the size of the supermarket company," said Whalen. "It takes some exploration and some creativity." Retailers need to balance the assortment of products they display by creating a mix of branded and trendy toys, and classic toys, said industry sources.

A combination of "hot sellers" and classic impulse-type toys work best in space- crunched supermarkets, said Cardinale.

"Retro" toys, educational and learning games, and interactive toys are trending well for this holiday season, and supermarkets could play up the "retro" category in particular, said Whalen. Updated classic or retro toys include My Little Pony, Care Bears, Strawberry Shortcake, Barbie and Easy Bake Oven.

"These toys are so well-known, they don't require a selling process," Whalen said. "It's got to be [toys] that are easy to recognize and easy to buy."

This holiday season, Price Chopper will merchandise educational toys from LeapFrog Enterprises, Emeryville, Calif., its first foray in selling learning toys, said Golub.

In the end, the various selling strategies in this competitive season may not come down to the merchandising display approach, price strategy or customer loyalty, said Thompson of Rosauers. "Everyone is looking for a deal at Christmas," he said.


Annual 2002 Toy Super Categories

13.6% infant/preschool learning; $2.9 billion

12.5% dolls; $2.7 billion

11.8% outdoor/sports; $2.5 billion

11% vehicles; $2.3 billion

10.6% arts and crafts; $2.3 billion

10.3% games/puzzles; $2.2 billion

9.7% all other toys; $2 billion

6.9% plush; $1.5 billion

6.7% action figures; $1.4 billion

3.6% building sets; $765 million

2.2% learning/exploration; $457 million

1% trading cards and accessories; $221 million

Source: NPD Group/NPD Funworld/Consumer Panel