This story from the Miami Herald reports Toys R Us is counting on heavy discounts to lure customers. Um, heavy security would be nice too.
Toy giant counting on heavy discounts
Anticipating weak Christmas sales, Toys R Us is relying on promotions and deep discounts to lure customers to its stores.
By Heather Burke, Bloomberg News
Toys R Us, the largest U.S. toy-store chain, is putting very aggressive promotions in place this holiday season to draw in shoppers facing the worst financial crisis since the Great Depression.
“We know that value is very important in this economic situation, and we’re determined to be aggressive throughout the holiday season in offering that value,” CEO Gerald Storch said Friday. “We knew that the economy was going to be soft. Obviously, no one had a crystal ball to know that we have a financial crisis like we’ve had.”
U.S. retailers may post the smallest holiday gain in six years amid declining consumer confidence, the highest unemployment rate in 14 years and a recession. Barbie-doll maker Mattel and Hasbro generated at least 40 percent of their 2007 profit during the fourth-quarter holiday season.
Toys R Us is offering 50 percent more promotions earlier this year than last, Storch said. It is selling a High School Musical 2 three-pack of dolls for $15.99, down from $39.99, and half off the Little Tikes Cook n Learn Kitchen. Toys R Us, which runs 586 toy stores in the United States, also advertised during its biggest two-day sale ever half off various Lego AS construction play sets and Mattel’s Barbie Princess two-pack dolls.
Toys R Us faces competition this weekend from other retailers, including Wal-Mart, the largest U.S. toy seller.
Holiday toy sales this year may fall 3 percent more than in 2007, according to Gerrick Johnson, a toy analyst at BMO Capital Markets in New York. Thirty-five percent of consumers polled expect to spend less on toys this season, according to a survey conducted Nov. 6 to 8 by Americas Research Group.
Half of annual toy sales occur in the fourth quarter, said NPD Group Inc., a Port Washington, New York-based research firm. In 2007, toy sales dropped 2 percent to $22.3 billion.
“In good times and bad, the last thing parents cut from their budget is a Christmas present for their children,” Storch said. “What they want are the hot toys.”
Storch, a former Target executive, was hired in February 2006 to head Toys R Us. He closed unprofitable stores, spruced up locations and added exclusive products to win back market share from Wal-Mart.
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