No hot product? That can be real holiday buzzkill for toy industry

Calling the next Zhu Zhu Pet, Tickle Me Elmo or Furby.

Retailers are hoping for a hot toy in 2012 to attract shoppers, but the "it" toy phenomenon has become less reliable due to the recession, the rise of social media and an abundance of choices.

In years past, hot toy sellouts had parents trolling websites, calling retailers to check on shipments and putting their names on waiting lists. But since 2009, no toy has been such a breakout hit.

Did consumers kill the hot toy phenomenon during the recession? "They certainly made it more difficult," said Roberta Bonoff, president and CEO of Creative Kidstuff toy stores.

Shoppers are more sophisticated now, Bonoff said, and they respond to buzz from other consumers, not just marketing from manufacturers. They are less likely to be influenced when manufacturers release limited quantities to create artificial shortages. "They don't want to be manipulated by the industry," she said.

One challenge is that it's difficult to be a big seller and be scarce at the same time, said Sean McGowan, a leisure and lifestyle analyst at Needham & Co. Inc in New York.

People think it's only a "hot toy" if there are massive shortages around the country, McGowan said. But toys that are popular and well-stocked can sell many more than one that is hot but in short supply.

Why? Wal-Mart alone supposedly bought a million Furbies this year, McGowan said.

As much as consumers like to think they're driving this toy machine, major retailers still think they know best.

"If Toys 'R' Us, Wal-Mart and Target buy a lot of a toy, that's a good sign. They're right more often than they're wrong," McGowan said. Wal-Mart sells 30 percent of the toys sold in the U.S.

Still, retailers large and small have been more cautious the past several years. Toy sales were down 2 percent in last year's holiday season.

Retailers have responded with leaner inventories, said Eric Handler, media and entertainment analyst at MKM Partners in Connecticut. "No one wants to get stuck with markdowns," he said.

A mention on a TV talk show still does wonders, Bonoff said, but social networking is just as important. Both are just as likely to sell toys today as a PR machine behind a massive ad campaign.

Several promising sellers have already given retailers reason to be excited this year. Toys 'R' Us has seen brisk sales for the Doc McStuffins Time for Your Checkup doll and Tabeo kids tablet, said PR manager Adrienne O'Hara.

Both are on the Toys 'R' Us' annual list of hot toys put out in September, but O'Hara said shortages aren't part of the plan. "It's our strategy to get regular shipments and have them in stock," she said.

That doesn't always happen. The Doc McStuffins doll was out of stock at local Toys 'R' Us stores and its website earlier this week, although Amazon had stock from sellers at twice its normal $40 price.

Diverse interests

"I'm not aware of any new breakout toy that all the kids want this year," Walsh said.

Kids have also changed. Electronic toys and video games now make up a larger part of the toy market, said Handler. There are fewer board games and tablets. While girls still play with dolls, boys play less with action figures and more with video games.

Kids have more diversity of interests than ever before, Bonoff said. Electronics take a chunk, but so do sports and art classes and music lessons. "The toy market is diluted with all the other activities kids are doing today," she said.

Customers aren't asking for the hottest thing on the market as often as, "What can I get for a 5-year-old who is into science?" Bonoff said.

Sometimes, toys can be very good sellers that don't rise to the level of an "it" toy because they're classic or old-fashioned. Lego Ninjago, Lego Friends and Gelarti arts and crafts stencils are extremely popular, but most people think a hot toy has to be tech-related, said O'Hara.

Another reason that it missed being labeled "hot" is that it wasn't a single product. "There are 10 to 15 different pieces," Kennedy said.

The good news for toy sellers is that the lack of a hot toy does not necessarily affect overall sales. It's not like there's only one toy, said Handler. "Kids always have lists."