It’s not a big secret among avid video game players that 1987 has been the biggest year yet for the industry since the great crash back in 1983. Thanks to powerful new home consoles and a robust lineup of must-have games, retailers are once again discovering that it can be difficult to keep the latest and greatest in stock for the holidays.
We know many chains have completely sold out of their inventory of Nintendo systems, with no chance of getting more by Christmas day. Toys R Us appears to be cashing in on the gaming craze as well with brisk sales, as reported by The New York Times:
Toys ‘R’ Us Prospers As Holiday Sales Rise
By: Isadore Barmash, Special to the New York Times
December 21, 1987
VALLEY STREAM, L.I. – Ida and Joseph Gabay may forgo a vacation and otherwise scrimp because of the money they lost when the stock market plunged. But the Gabays have no intention of playing Scrooge when it comes to their grandchildren.
”What can I do with my four grandchildren but buy them all nice gifts?” Mrs. Gabay said as she shopped at the Toys ”R” Us store here recently.
That seemed to be a widely shared sentiment among the holiday shoppers who filled the Valley Stream store – one of 313 that Toys ”R” Us Inc. has in the United States. Whether they were worried about the economy, the beating they took in the stock market or their union’s pay concessions, not one of the dozen shoppers interviewed was cutting back on toy purchases.
Sales Appear Strong
Of course, toys are historically the last items to be scratched off the holiday shopping list during times of trouble or uncertainty.
Indeed, predictions that toy sales would decline are now giving way to forecasts of increases, albeit modest ones. Frank Reysen, editor of Playthings, a monthly publication for the toy industry, expects retail toy sales for all of 1987 to be about 3 to 5 percent higher than last year.
For Toys ”R” Us, the nation’s largest toy seller, this determination to buy, buy, buy comes as especially good news.
Toys ”R” Us now has more than 20 percent of the market, up from 17 percent a year ago, according to Cathleen Mackey, an analyst at Smith Barney, Harris Upham & Company. Wall Street analysts expect the chain to record sales of about $2.24 billion this year, a 30 percent increase from 1986. Its earnings will jump at least 25 percent from its 1986 net of $152 million, they predict.
‘The Place Explodes’
At the 46,000-square-foot store in Valley Stream, eager shoppers were lined up one recent morning even before it opened at 8 o’clock, and continued to flow in until midnight, when it closed.
”The place explodes,” said Brian Ehlin, the director of the Valley Stream store.
Although manufacturers have introduced some new products in recent weeks (including Coleco Industries’ Couch Potato and Talking Cabbage Patch doll and Fisher-Price’s camera-video recorder), this year has been exceptional for the dearth of exciting new toys. There are no hot new items comparable to the Trivial Pursuit of the 1984 season, the Cabbage Patch of 1985 and G.I. Joe, Lazer Tag and Barbie doll of 1986.
”Producers did not invest much in new product development this year because of a so-so 1986 and retailer cautiousness in the early months of this year,” said Mr. Reysen, the editor of Playthings.
A Wide Selection
But rather than hurting Toys ”R” Us, the lack of superstar toys seems to help it. If consumers are unsure of what they want to buy, they are more likely to go to a Toys ”R” Us store because of its wide selection, analysts said.
”The absence of hot items plays into our hands,” said Charles Lazarus, the chain’s chairman and chief executive.
According to Toys ”R” Us data, video game machines are extremely popular this year. Two of the biggest sellers are the Nintendo full entertainment system at $139.99 and the Sega system at $99.99.
Other high-demand items include Big Bird Story Magic, three talking and movie figures that cost $134.99; Couch Potato, a brown stuffed face and head used as a pillow ($28.99); speaking versions of the Cabbage Patch doll ($89.99), and radio- or remote-control cars, trucks and construction vehicles that go for as much as $200. Prices Are Up
Toys ”R” Us is using a new electronic-scanning cash register system to keep track of what is selling and to reduce checkout lines. The computerized system, which has been installed in 95 percent of the toy stores, has enabled the chain to increase its checkout speed by more than 30 percent, according to Michael Goldstein, the company’s executive vice president and chief financial officer.
At the Valley Stream store, some customers said that prices this year seemed to be up about 10 percent from 1986. But even higher prices were not causing these consumers to trim their spending plans or to take their business elsewhere.
”I know that things are overpriced, including toys, but I don’t have time to shop anywhere else,” said Lorraine James of Brooklyn, who was shopping with her 13-year old daughter, Sabrinya.
William Lee, a bus driver from Ridgewood, Queens, who was in the store with his wife, Elizabeth, added, ”Prices are up but it isn’t stopping us from buying what we want.”