I’d like to deconstruct the myth that the China lead-contaminated is responsible for the drop off in toy sales this year. Lead-contamination worries or not, parents are still buying toys and kids are still playing with them this season.
That said, toy sales are down. According to the national retail federation, 35 percent of consumers purchased toys for the holidays--down 2 percent from last year.
While the headlines certainly didn't help sales, they didn't cause consumers to dramatically change their shopping habits. According to S&P's forecast, "The impact of lead toy recall will indeed impact the bottom line of toy retailers but this impact will be relatively minimal." The headlines are also not the sole factor hurting sales.
S&P's survey of 1,000 shoppers shows that while 25 percent of consumers did cite the toy recalls for changing buying habits, 31 percent were unaffected. That sentiment is mirrored by research at internet firm hit wise. Just take a look at this list of the top 5 toys searched for online this week:
1 - Barbie
2 - Lego
3 - American Girl
4 - Bratz
5 - Airsoft Guns
Barbie and American girl dolls--both made by recall linked brand Mattel --were among the top five toys searched for online this week. So if the lead-contamination scandal isn't the culprit, why the weakness? Resoundingly, analysts say there just aren't any blockbuster traditional toys on the market.
There’s nothing that kids just have to have this Christmas. In fact, the only 'gotta haves' are electronics. Consumers are continuing to buy the same popular electronics items that they did last year--like Nintendo Wii and guitar hero. That dollar shift began before any of the Chinese-made toy scandals hit the news cycle.
Can the toy industry strike back? Or will they simply adapt to the changing trend and make tech-toy versions of traditional characters/playthings? We’ll have to wait for February, when the toy industry debuts its new products in order to see whether traditional toys can counter the demand for anything that requires batteries and a plug.
Questions? Comments? retaildetail@cnbc.com