Card, gift and stationery stores quadruple share of toy biz

The fact that traditional toy retailers such as Toys `R' Us have seen their lead position stolen by the big boxers is well-known in the retail biz, but another significant shift in the sector has been all but ignored: As a...
February 1, 2001

The fact that traditional toy retailers such as Toys `R’ Us have seen their lead position stolen by the big boxers is well-known in the retail biz, but another significant shift in the sector has been all but ignored: As a glance at the chart below shows, the card/gift/stationery category has quadrupled its share of the toy biz in only five years.

Not only that, but for the first time since New York-based Toy Manufacturers of America (TMA) began gathering such figures in 1991, a card/gift/stationery company landed among the top 10 retailers in 1999: Hallmark Cards ranked eighth with a 1.1% share. This is a big jump from even just a year prior, when Hallmark placed among the top 20 for the first time at number 12.

So what’s behind this category’s fast climb? ‘That’s almost completely attributed to Beanie Babies,’ says the TMA’s Diane Cardinale. Card, gift, stationery and specialty toy stores were ‘the happy recipients of [Beanie Babies manufacturer] Ty’s marketing plan’ to offer the beanbag plush line only at such retailers. ‘Since there are a lot more card, gift and stationery stores than specialty toy retailers, that’s where the majority of the sales were coming from,’ says Cardinale, adding that these retailers ‘tend to be in heavily trafficked mall areas.’

The Beanie Babies craze, which started in 1997 and peaked in 1998 and 1999, ‘really increased the size of the traditional plush category overall,’ says Reyne Rice, director of the toy services division of NPD Group in Port Washington, New York. ‘Hallmark was one of the large ones because they really did a big business with the Ty Beanie Babies. That’s the bulk of their toy sales that [were] recorded.’

Beanie Babies have indeed been a big traffic driver, confirms a spokesperson for Kansas City, Missouri-based Hallmark Cards. The card manufacturer and retailer counts 7,500 outlets nationwide, of which 350 are corporately-owned and the remainder are independently-owned.

But the Beanies, which have suffered a big sales drop since early 2000, represent just one of many factors contributing to the sector’s boom.

The number-two card/gift/stationery chain, Carlton Cards Retail, a division of card manufacturer American Greetings in Cleveland, Ohio, doesn’t carry the plush critters at all (with the exception of a few stores the company acquired over the last three years), says trend category manager Jeff Zelmer. Still, he says, ‘with the onset of Beanie Babies, the consumer became more interested in plush in general. And it helped the plush business for everyone.’

He attributes the recent toy sales increase at Carlton to a concerted effort to establish a stronger presence for its 471 corporately owned stores. Prior to three years ago, the store had been offering a limited selection of everyday plush-four to eight feet of wall space-and some seasonal plush items. ‘We saw through the sales that there was a big opportunity there. It’s something we aggressively pursued, and it’s worked well for us,’ says Zelmer.

This aggressive pursuit meant expanding plush shelf space to an average of 24 feet. Occupying about 15% of wall space, the section is ‘one of the largest plush presentations of any retailer based in a mall,’ says Zelmer. The offering includes about four feet of licensed toys, for properties such as Powerpuff Girls and Scooby-Doo, and the remainder is nonlicensed teddy bears and animals of all sorts from suppliers such as Gund, Russ Berrie and Company and Applause. Prices range from US$4.99 to US$49.99.

Another 12 feet is filled by such items as magnets featuring the Backstreet Boys, Ricky Martin or Betty Boop, kid-targeted keychains based on properties like Rugrats, and novelty jewelry for kids priced at US$6.99 or less. Within that 12 feet, 300 of its stores also offer four to eight feet of Hello Kitty product, ‘a very growing business for us over the past three years’ with girls ages eight to 14, says Zelmer.

The stores also dedicate space to ‘whatever the hot license is at the moment.’ The feature area in 2000 and continuing this year focuses on Harry Potter, offering resin figurines, ornaments, frames, calendars, mini photo albums and keychains, with plush to be added later this year. Licensed features for each of the last three years have included Pokémon, Teletubbies and Winnie the Pooh, respectively. Finally, seasonal plush comes out at Easter, in December and for Valentine’s Day, with the latter being probably ‘the largest plush holiday.’

Pursuing a higher share of the plush business ‘seemed like a natural part of the business because it’s an occasion-driven business and plush is a great all-occasion gift,’ says Zelmer. As a specialty retailer, Carlton Cards isn’t competing with mass-market retailers, and ‘we wouldn’t carry anything that would be available in the mass retailers, because that’s an industry we can’t compete with, nor do we want to,’ says Zelmer. As well, ‘the quality that we carry in our line is somewhat superior, but also it’s more expensive,’ he adds.

How long will the sector continue to see growth in toy sales? ‘I would expect the trend to start to subside because there [are] a lot more alternatives of other types of beanbag plush that people can buy,’ and ‘I just don’t see the frenzy that used to be there [for Beanie Babies],’ says NPD Group’s Rice. On the other hand, says the TMA’s Cardinale, ‘the gift retailers are realizing there is a market out there,’ and she’s starting to see new additions like upscale collector dolls and keychains in these stores recently. For his part, Zelmer says he plans to continue upping the focus on toys, with plush remaining the core.

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