ELBO's newest foray EBkids...should be a huge success. They are scheduled to open the first of many stores dedicated to youngsters and the following article is a good example of why it will be a blockbuster.
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From Computer Retail Weekly: (A good read)
www.crw.com
Entertainment News
Retailers Get Smart With PC Toy Sections
CompUSA, Best Buy Will Promote Emerging Category
By Aaron Ricadela New York
8:25 PM EST Tues., May 18, 1999
Toys that talk, walk or otherwise interact with kids and their home computers have been an experiment for vendors, a curiosity for consumers, and an enigma for retailers since the first products shipped more than two years ago.
That is about to change.
As established toy makers and start-ups prepare more innovative smart toys for release this fall, retailers including CompUSA, Best Buy, Toys R Us and Electronics Boutique plan to dedicate portions of their stores to displaying and explaining these hybrid peripherals to consumers.
Smart toys from Microsoft, Mattel and Lego have performed remarkably well at some stores, while others have struggled with the proper way to merchandise stuffed animals, Barbie dolls and Lego sets that draw functionality from the PC. Hasbro Interactive also has done well with its "no-tech" CD-ROM playsets, which sit atop a computer keyboard.
This year, manufacturers are pushing the idiom beyond interactive dolls to include products such as a PC-enhanced microscope, developed by Mattel and Intel, and a pirate ship with movable action figures that cue on-screen actions from newcomer Zowie Intertainment. Vendors said when properly explained, interactive toys yield higher cash register rings than traditional CD-ROM entertainment and can spur sales of related software and peripherals.
Forrester Research, Cambridge, Mass., predicts the smart toy category will surpass $500 million in retail revenue by 2000.
Retailers are starting to catch on. CompUSA will "dedicate a portion of our store" to interactive toys, Executive Vice President of Merchandising Larry Mondry told analysts this month. Mondry also said Sega of America's Dreamcast console system, due Sept. 9, signals convergence between PC entertainment and video games.
One vendor said CompUSA has designated the U-shaped walls at the end of its software aisles for smart toys and other new technology that will keep kids coming back.
Best Buy is considering a dedicated interactive toy section with wider shelves to accommodate the products, industry sources said. Last year, the chain reportedly lost sales because shelves were not restocked in time.
The most likely scenario at CompUSA and Best Buy would be a limited test in 10-20 stores this fall, with a broader rollout in January, according to one vendor.
Meanwhile, Toys R Us is accelerating expansion plans for its "R-Zone" format, which includes video games, interactive toys and music, according to vendors and analysts.
Even Electronics Boutique, which is hampered by smaller stores, is considering reformatting its layouts to accommodate the products, according to vendors.
Jerry Madaio, vice president of merchandising at Electronics Boutique, admitted shelf space is a constraint but said he was enthusiastic about new products.
"We've been very excited about this category since [Microsoft's ActiMates] Barney shipped," Madaio said. "We've bought in every interactive toy that's come to market, we've bought it in heavy, and we've hit the stores very hard with inventory."
Yet challenges for stores abound. If products are placed in the toy section, retailers risk confusing consumers who may not realize that a PC is required. And placement in the software section robs valuable shelf space because of the packages' large size.
"It's also a very risky category," said Madaio. "These products have a higher cost of goods [than software], and most vendors don't want to see them back."
Hasbro Interactive, for one, is addressing retailers' concerns by designing planograms of multi-vendor smart toy sections.
"Retailers are struggling with how to make the most out of a growing category," said Tim Evans, director of retail channel marketing at Hasbro Interactive. "They're really going much more aggressively toward letting the consumer--hopefully the child himself--get their hands on it."
Hasbro is pitching accounts on company-staffed demonstration stations to explain products like its Tonka Dig 'n Rigs playset, due this fall for a suggested retail price of $39.95. "That's a simple concept, but until you get your hands on it, you don't understand how easy it is to get in and play."
Sue Hughes, vice president of sales at Mattel Media, said it is important for merchandising to "communicate the age range" PC-enhanced toys target. Mattel plans to ship its QX3 Microscope under the IntelPlay brand this fall for an estimated street price of $100. The toy aims for kids ages 6 and older. A second IntelPlay toy, the Me2Cam, has been delayed until spring 2000.
Separately, Mattel Media plans to ship a Nickelodeon-themed digital camera for boys (ESP $70) in October.
Vendors have their concerns about the interactive toy category, too. Several suppliers said Target's decision to stock products in the toy section risked perplexing consumers. Likewise, Wal-Mart plans to display interactive toys in the computer peripheral area, which does not instantly cue parents to buy additional software.
So manufacturers are devising their own solutions.
Al Nilsen, vice president of marketing at Zowie, said in-store demonstrations are difficult to merchandise and do not always communicate how products work. The company is compiling a two-minute videotape for specialty stores that shows its PC-enhanced toys, Red Beard's Pirate Quest and Ellie's Enchanted Garden (both due in Sept. for about $50 to $60 each) in use.
Don Coyner, group product manager at Microsoft, said Toys R Us and Wal-Mart merchandise the company's new Teletubbies ActiMates dolls with other products based on the license, which means parents do not need to think hard about where to find them.
And Hasbro's Evans said he is encouraging Wal-Mart to cross-merchandise its playsets with teasers in the software area so shoppers know where to look for complementary products.
All retailers need to consider consumers' shopping patterns, Evans said. "It's not only finding a place for [smart toys], but reinventing the traffic flow of their stores so that the place becomes a central location."
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EOM
Good luck,
RBL |
