Toy industry hits new outlets

? When you turn down Aisle 6 in your local supermarket, you might find Barbie or a board game stocked near the produce and canned peaches.

Toys R Us Inc. is selling toys at several Giant Food stores, while K-B Toys provided dolls, games and other merchandise to 1,000 Safeway stores this past holiday.

The FurReal Friends are piled up and ready for the buyers to inspect in the Hasbro Toys showroom at the American International Toy Fair in New York. The furry toys are Tiger Electronics' latest interactive toy.

Meanwhile, the nation’s three largest toy manufacturers Mattel Inc., Hasbro Inc. and Lego Systems Inc. are making sales at grocery chains and drug stores a priority.

“We need to do everything we can to maximize our business,” said Jim Wagner, a senior vice president of sales at Mattel.

With Kmart Corp. and other retailers poised to close hundreds of stores, the $23 billion toy industry is looking for alternative ways to generate year-round sales, and supermarkets and drug stores are a natural choice. Food and drug stores, whose inventory includes general merchandise such as housewares and party goods, are becoming one-stop shopping destinations for many consumers.

The strategy is expected to be a big issue at the annual International Toy Fair, which begins Sunday in New York.

Tom Conley, president of The Toy Industry Assn., said he believed sales of toys at grocery and drug store chains would become more commonplace as companies including Kmart scaled back.

Kmart, which filed for Chapter 11 bankruptcy protection Jan. 22, is expected to close several hundred stores during the next several months. Kmart had about 7.4 percent of U.S. toy sales in 2000, according to NPD Inc., a Port Washington, N.Y.-based market research firm. Figures for 2001 will be released later this month.

Conley estimated that less than 1 percent of U.S. toy sales occur at nontraditional toy outlets stores other than discounters, department stores and chains including Toys R Us and K-B.

In teaming with grocery stores, toy retailers are offering their expertise in toy merchandising in exchange for a boost in sales.

John Eyler, chairman and CEO of Toys R Us, said recently that impulse shoppers those who see a product and decide to buy it on the spot are likely to be some of the best customers at food and drug stores.

Convenience also will be a big draw. A typical parent goes to the grocery store 96 times a year, compared with only four to six visits to a Toys R Us, Eyler said.

“When someone needs to buy a $10 or $15 present for the neighborhood kids, that doesn’t necessarily mean a destination trip all the way to Toys R Us,” he said.

Toys R Us began selling toys at four Giant Stores in the Washington, D.C. area as part of a test begun six months ago.

Michael Glazer, president and chief executive of K-B Toys, said he’s pleased with sales results at Safeway, and is hoping to sell toys to even more stores in the chain. K-B Toys acts as a wholesaler and consultant to Safeway, he said.

K-B Toys also tested selling toys at Sears, Roebuck and Co., from October through January, according to Sal Vasta, executive vice president and general merchandise manager for the 1,300-store K-B chain, based in Pittsfield, Mass. That was the first time Sears sold toys at its stores in several years.

The toy industry’s biggest challenge is figuring out which products work the best in these new channels. Many companies said they are using different packaging and focus on products with low prices and the most brand recognition.

Lego, which now sells to drug store chains Walgreen Co. and CVS Corp., said it has limited its offerings to smaller, lower-priced products such as Bionicals, some Harry Potter items and Bob the Builder products, said Michael McNally, a company spokesman.

Kevin Murphy, Hasbro’s vice president of sales, said the company has focused on well-known items priced under $10, including Hit Clips from its Tiger division and Playdough.

Mattel’s Wagner is using its Hot Wheels line whose products sell for $1 and are the top-selling year-round toy as the “key to unlock the door to alternative channels.”

Other Mattel products that are in grocery chains are 99 cent Matchbox cars and $5 Barbies.