Toy Sales: Big Boxes, Low Prices Rule

Forget the eggnog: Christmas is for toys. And as Dec. 25 looms, toy sellers are holding their breath to see if their pricing strategies will pay off this year.

CNBC’s Margaret Brennan reported from the mecca of kids’ playthings, FAO Schwarz in Manhattan – where even on a Tuesday morning, the aisles were jammed with shoppers.

The posh toyshop is a mandatory stop for parents and tourists, but Brennan quoted a study by NPD Group saying that toy retailers account for a mere 17% of total toy sales. She told “Morning Call” the main players are the so-called big box stores, which account for some 57% of all toy sales.

And the big boxers hit the ground running this year: Brennan said that Wal-Mart began slashing prices in October, cutting the tab on nearly 100 items. Toy prices at the world’s top retailer are on average 3% lower than at discount rival Target, and 5% lower than at Sears Holdings’ stores. But the cuts aren’t squeezing toy manufacturers, according to A.G. Edwards toy analyst Timothy Condor, He sees “pretty good fundamentals” on toymakers like Hasbro and Mattel.



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