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Crisis could spur cautious toy purchases

Wary consumers will seek value when choosing gifts

Associated Press / October 7, 2008
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NEW YORK - Will financial market turmoil be the Grinch this Christmas?

With parents already facing high food and gas costs and slumps in the job and housing markets, the turmoil in the financial sector could further spur them to cut their spending, focus on less-expensive toys, and consider which toys will get the most use, specialists say.

The National Retail Federation trade group predicts holiday sales overall will rise a meager 2.2 percent to $470.4 billion, the slowest growth since 2002. Toy specialists predict the hottest toys will be items like the Bakugan trading card game popular with boys, interactive toys such as Elmo Live, and gaming consoles like the Nintendo Wii.

"People will be on a budget this year," says toy analyst Chris Byrne of Timetoplaymag.com, "and there will be less inclination to go outside that budget."

While Byrne says the toy industry is typically "recession-resistant," this year also has the presidential election, which could distract some shoppers, and five fewer shopping days between Thanksgiving and Christmas than last year.

BMO markets analyst Gerrick Johnson expects total sales of traditional toys during the last three months of the year to decline about 2 percent from the year ago period, when toy sales totaled $10.4 billion, according to market research firm NPD Group.

Toys "R" Us chief executive Jerry Storch takes a philosophical view.

"I've said it over and over, Christmas will come this year," Storch says. "I think we need to remember that parents are going to buy Christmas presents."

Until now, it has been a strong year for the toy industry, as recall-related fears faded and toys related to "Iron Man," "The Dark Knight," and other superhero movies were strong sellers. But the holiday season, which accounts for the bulk of yearly sales, remains critical.

Executives at The Toy Insider, a trade publication that puts together a list of toys expected to be hot for the holiday season, mulled including a $300 toy this year - they wouldn't say which one - but decided against it. While the list has several items above $100, including Hasbro's Furreal Friends Biscuit, an interactive puppy, and Hannah Montana's Malibu Beach House playset, the group made a conscious effort to include lower-priced toys, according to Jonathan Samet, group publisher of Adventure Publishing Group, which puts out The Toy Insider.

Johnson says the season will also be difficult because of a lack of a "must-have" toy.

Mattel Inc. has on offer its Elmo Live doll, which speaks and moves around. While likely to be popular, it is not expected to duplicate the Tickle Me Elmo craze from more than a decade ago.

"The closest thing has been Bakugan from Spin Master, but I'm not sure that has cross-gender appeal," Johnson says.

Other hot - but pricier - toys may include EyeClops Night Vision Infrared Stealth Goggles from Jakks Pacific, which are working night-vision goggles that retail for about $80, and Leap Frog's TAG Reading System for $49.99.

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