From Factory to Shelf: An Inside Look at Target’s Holiday Toy Merchandising Strategies

Walking into the toy section of a store like Target during the holiday season can be overwhelming for shoppers, who are faced with toy aisle upon toy aisle of great products to choose from. Thousands of additional products can be found online. Those that make it onto store shelves during the season are often thought of as the crème de la crème, and being chosen for Target’s shelves can bring tremendous success to a toy manufacturer.

Stephanie Lucy, Target’s vice president of merchandising, chats with Elizabeth A. Reid of The Toy Book to talk about holiday merchandising strategies, how it makes its toy selections, and what Target is doing to become a top destination for holiday shopping.

The Toy Book: Let’s paint a picture of how great toys get to Target. How far in advance do you plan for each holiday season?

Stephanie Lucy: We actually start looking for content for the holiday season in September or October the year before. For example, we are going to market right now to look for products for next holiday season.

TB: So, how do you pick the toys? When you are at market, what do you look for?

SL: First of all, it starts with us evaluating what is currently working at Target—what’s selling and what’s not—and ensuring that we understand what the guest is interested in. Beyond that, it really is strong partnerships with our vendors. We do business with the largest toy manufacturers around the world. So, it’s sitting down with them and understanding what they believe the hottest toys are going to be, and what they believe content should look like for the year to come.

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NRF Forecasts an Average Holiday Season

The National Retail Federation (NRF) is expecting this year’s holiday season to be just average. Although last year’s holiday season outperformed most analysts’ expectations, NRF expects 2011 holiday retail sales to increase 2.8 percent to $465.6 billion, close to the 10-year average holiday sales increase of 2.6 percent. Last year, retailers experienced a 5.2 percent increase.

For the first time this year, NRF used its holiday forecasting model to create a projection for seasonal hiring in retail. According to NRF, retailers are expected to hire between 480,000 and 500,000 seasonal workers this holiday season, which is comparable to the 495,000 seasonal employees they hired last year.

Toys “R” Us Expands Layaway Service

Toys “R” Us, Inc. is expanding its layaway service for this holiday season for Toys “R” Us and Babies “R” Us stores nationwide. The retailer’s layaway service was introduced in 2009 for “big gift” items, such as bikes, sing sets, dollhouses, play kitchens, and more. Beginning Saturday, October 15, Toys “R” Us will offer layaway on nearly all of its products in 450 of its approximately 600 Toys “R” Us stores nationwide.

The in-store layaway option gives customers 90 days to pay for their items. A 20 percent down payment is required and there is a $5 service fee for layaway. In order to guarantee that items will be ready by Christmas, all layaway orders for toys must be paid in full by December 4. For more information, click here.

NPD Analyst: ‘Retailers Scrambling to Recover Lost Sales’

Marshall Cohen, chief industry analyst of The NPD Group, initially expected that the holiday 2010 season would “be remembered as a good year, not a great one.”

“To be great,” said Cohen right before Christmas, “the consumer would have to be in a frenzy and retailers would still be stocked with plenty of product to go around.” According to Cohen, retailers practiced the theory that it is better to sell out than to have leftovers.

On Monday, Cohen revised his outlook saying: “Holiday 2010 just went from a truly Merry Christmas for retailers to a lost weekend with retailers scrambling to recover lost sales.” Cohen called the post-Christmas weekend “brutal,” citing an already shortened post-holiday shopping weekend due to the holiday falling on a Saturday and the Sunday snowstorm in the Midwest and Northeast.

“All-in-all retailers will lose about 0.5 [percent] of sales with the loss of this big post-Christmas day. And by the time they make it up, the sales will fall out of the range of the ‘holiday numbers,’” Cohen said. “Consumers will now have to wait longer to use those gift cards and make their returns. This is an important part of the sales in that consumers tend to spend approximately an additional 16 percent above the face value of gift cards and returns.”

Toys Top Kids’ Holiday Wish Lists, Says NPD

After asking parents “What is on your child’s wish list for the upcoming holiday season?” for three weeks, The NPD Group has released its results. According to the results, 38 percent of parents with kids ages 0-14 responded with toys. Other answers included video games (15 percent), consumer electronics (9 percent), clothes (7 percent), sporting goods (6 percent), and books (3 percent).

Top toy categories included dolls, vehicles, building sets, and arts and crafts. The top 10 properties (in alphabetical order), across all weeks, were American Girl, Barbie, Dora The Explorer, Leapfrog, Lego, PillowPets, Star Wars, Toy Story 3, Transformers, and ZhuZhu Pets. Top video game hardware systems on kids’ wish lists included the Nintendo Wii and Nintendo DS.

The survey tracked 4600 mentions of wish-list items. The research comes from NPD’s Kids Industry Data Service (KIDS).

Early Results from NPD Show Higher Conversion Rate for Black Friday

The NPD Group has announced its early results for the Black Friday weekend in a report entitled The Anatomy of Black Friday and Cyber Monday 2010. According to the NPD’s early results, there was a slight rise in conversion (those shoppers that actually made purchases) for the weekend compared to last year’s Black Friday weekend, up 4 percent.

“Conversion rates for Black Friday and super Saturday are always very high but to see growth of 4 percent over the year before tells us two big things,” said Marshal Cohen, chief industry analyst of The NPD Group. “One is that those people that went to shop, bought and two, retailers did a better job of luring consumers in with big deals and great savings.”

NPD also reported that 33 percent of consumers bought items for themselves on Black Friday, compared to 26 percent during the normal holiday period.

The Anatomy of Black Friday and Cyber Monday 2010 is an online survey of 1768 U.S. consumers ages 18 and older. The survey assesses what the consumers did on Black Friday (and to come on Cyber Monday) and why. The preliminary data was collected between November 26 and the morning of November 27.

TIF and BGCA Kick Off Holiday Season with Toy Distribution

In time for Thanksgiving, representatives from the Toy Industry Foundation (TIF) and Boys & Girls Clubs of America (BGCA) will deliver new toys and games to more than 5,000 children at Florida’s MacDill Air Force Base.

The event, to be held November 17, will be the latest and largest event during the first year of the new TIF-BGCA Play Comforts partnership. Senior MacDill Air Force officials will be on-hand to accept the toys on behalf of the Air Force community. According to TIF, Play Comforts is the only known toy distribution program to support every branch of the U.S. military. TIF plans to distribute 25,000 toys to military children through the Play Comforts partnership by the end of the year.

Learning Express Expands with New Pop-Up Stores

Learning Express has opened four new pop-up toy store locations in time for this year’s holiday season. All of the Learning Express temporary holiday stores are owned and operated by existing franchisees. The new Learning Express holiday stores are located in: Wesley Chapel, Fla. (The Shoppes at New Tampa); Hinsdale, Ill. (36 E. Hinsdale Ave.); Garland, Tex. (The Firewheel Center); and Burlington, Mass. (The Burlington Mall).

Holiday Spending Expected to Rise Slightly This Year

According to another NRF survey, 2010 Holiday Consumer Intentions and Actions, U.S. consumers plan to spend an average of $688.87 on holiday-related shopping, a slight rise from last year’s $681.83. More than 60 percent of shoppers said the economy would impact their spending, down from last year’s 65.3 percent, but shoppers plan to compensate by spending less (81.5 percent), comparison shopping online (30.9 percent), shopping for sales (54.1 percent), and using more coupons (40.6 percent). The most important factors when shopping this holiday season, said survey respondents, were sales and discounts (41.8 percent).

As in years past, most holiday gift-givers will spend most of their budget on gifts for family ($393.55), followed by friends ($71.45), and co-workers ($18.26). Total spending on gifts ($518.08) is expected to increase 2.1 percent from last year. Other holiday purchases will include decorations ($41.51), greeting cards and postage ($26.10), candy and food ($86.32), and flowers ($16.86).

For more results, click here. This survey was conducted by BIGresearch.

TRU Premieres “Bootiques” and Expands Holiday Pop-Up Stores

For this Halloween season, Toys “R” Us stores nationwide and Toysrus.com have introduced Halloween “bootiques” filled with costumes, accessories, candy, safety items, and more. The company has also expanded its Halloween safety product assortment, and has launched a new digital costume catalog online at Toysrus.com/Halloween. In addition to the new selection of safety products, parents and kids can prepare for Halloween night with Halloween safety tips at Toysrus.com/Safety.

Toys “R” Us has also announced plans to operate approximately 600 Toys “R” Us Express stores in malls and shopping centers nationwide, in addition to its 587 full-size Toys “R” Us stores in the United States. The new pop-up stores will add an additional 2.4 million square feet of toy-selling space for the holiday season. In addition, the company’s more than 260 Babies “R” Us stores will again offer a wider selection of toys for the holiday season.