Parents hoping to nab the hottest toys this holiday better hit the shops early, or risk missing out on getting the top electronics, dolls and games on their kids' wish lists.
The first holiday season without Toys R Us is going to look very different for parents. While department stores, grocery chains and even drug stores are picking up the slack this holiday season, they may not have stocked enough inventory to meet demand.
"Usually, it is normal to be out of stock on the hottest toys towards [Christmas], but this year could be worse than usual," Steve Reece, CEO of toy consulting firm Kids Brand Insight, said in an email to CNBC. "Other retailers are less committed to the [toy] category."
Toys R Us had accounted for about 15 to 20 percent of all U.S. toy sales last year.
While companies like Target and Walmart have expanded their toy sections for the holidays — Target reallocated 250,000 square feet of permanent retail space across 500 locations just for toys and Walmart expanded its assortment of toys by 30 percent at all of its locations — come January, much of that space will be replaced with seasonal items like Valentine's Day gifts and candy.
The same can be said for retailers such as Kohl's, J.C. Penney and Best Buy that have also cleared more shelf space for toys.
Toys R Us' had massive 40,000-square-foot warehouses to stock toys year-round, while big box retailers sell so many different products that it's risky for them to stockpile a lot of toy inventory just for the holidays, said Richard Gottlieb, CEO of Global Toy Experts.
These stores don't want leftover products that they would have to heavily discount post-holidays, so they are more likely to have been conservative when placing orders for toys earlier in the year, he said. Toys R Us could stock toys without the fear of having to discount them in the new year.
Parents on the hunt for some of the hottest toys this year — like L.O.L. Surprise, FurReal Pets' interactive Chewbacca and the Don't Step In It board game — will have to move fast before they disappear off shelves early in December.
Target spokesman Lee Henderson said the company has been "proactive" in stocking up its toy inventory this year. He said that it's a few weeks too early to determine which toys will be the most in demand, but that Target has made sure to stock up on toys on its top toy list and of last year's favorites.
And some toys are already starting to get scarce, Jim Silver, toy analyst and CEO of TTPM, an online toy review site, said.
"There's concern that if you shop later, you'll run into trouble," Silver said.
He added that demand for L.O.L. Surprise toys, collectible dolls and accessories hidden in layers of plastics inside a dome-shaped case, is already high.
MGA Entertainment's ability to produce new iterations of the toy every few months, including new dolls and new ways to unwrap its contents, has kept L.O.L Surprise fresh and increased its appeal.
In fact, more than 148,000 L.O.L. Surprise toys were sold on eBay between the months of March and September this year, Michael Mosser, eBay's general manager of lifestyle and toys, told CNBC. Mosser said that kind of momentum was rare during "non-peak toy buying season."
For comparison, two years ago, Hatchimals was the hottest holiday toy. However, after January, demand for the product tapered off and didn't begin to rise again until the next holiday season, he said.
In addition, from July to November, there has been a 70 percent increase in searches for L.O.L. Surprise on eBay.
Collectibles remain one of the strongest drivers of growth in the toy industry. In 2017, sales of collectibles worldwide grew 14 percent to $3.9 billion, according to NPD. In total, collectibles accounted for about 8 percent of total industry sales last year.
"While existing toy retailers have been proactive in dedicating more shelf space and increasing the number of toys they carry both online and in stores, having the right inventory at the end will be equally important," Juli Lennett, senior vice president and industry advisor at The NPD Group, said earlier this month. "Ensuring they have a diverse selection of toys, especially toys with high velocity sales in September, is a great way for retailers to maximize sales through the end of the year."
