Toy story:
Increase in population, prices should help industry as latest games, devices make debut

Oct. 13, 2006
By JOSEPH M. DELEON News-Post Staff
jdeleon@fredericknewspost.com

  FREDERICK — The high-pitched whir and bitter smell of a tiny engine burning nitromethane fuel could signal a profitable holiday season for Richard Benjamin, a HobbyTown USA franchise owner in Frederick.
     Mr. Benjamin expects the sales of Hasbro's Nitro XRC — a radio-controlled car that features the speed, smell and sound of a real working engine — to push sales through the roof.
     “It makes a lot of noise, and if it runs into a wall, it'll flip over and still run upside down,” he said last week near a display of radio-controlled cars. Mr. Benjamin expects to carry about 20 of each of two models — the Revolution, a truck that will sell for about $150, and the Ricochet, a reversible vehicle with oversized tires for about $200. Higher-priced toys and a projected increase in the number of children are expected to help revitalize the toy industry over the next few years, according to a report released earlier this month by the market research company NPD Group. The amount of time children spend with toys is also pro- jected to contribute.
     Last year, the toy industry reported $21.3 billion in sales, down from $22.1 billion in 2004. Slow toy sales may level off or improve over the next few years according to the report, “Kids Leisure Time Study.”
     The toy industry, which has sales roughly twice that of the video game industry, has been responding to children's changing preferences, industry analyst Anita Frazier stated in the release. Toy companies will be unveiling many new, innovative products this coming holiday season.
     Generally, children have become more interested in hightech toys, as opposed to traditional playthings like dolls, according to the report.
     “It's certainly something we are watching closely, particularly over the next few months, when nearly half of all annual toy sales are generated,” she said.
     While the toy industry sells more, the video game industry is slowly making gains — sales rose more than 6 percent from about $9.9 billion in 2004, to more than $10.5 billion in 2005, according to NPD Group.
One toy can drive the season
     The popularity of a hot new toy can have a positive effect on the entire industry, according to the study.
     Mr. Benjamin recalled a toy train based on the book and movie “The Polar Express” sold out months before Christmas because manufacturers did not anticipate the demand would be so high.
     “Trains are just one of the favorite things for Christmas time,” Mr. Benjamin said.
     Mr. Benjamin recalled the sale of Robosapien, a programmable robot that dances and does kung fu, helped drive holiday sales two years ago and continues to be a store favorite.
     The study predicted toys such as the T.M.X. Elmo, a robotic Sesame Street doll that slaps its knee and rolls on the ground while simulating laughter, will boost toy sales this year.
     HobbyTown USA doesn't plan to stock the toy.
     “We try to cover the things that are not easily obtained by mass merchandisers,” Mr. Benjamin said. “We tend to go for higher-end, durable products like wooden items for small kids.”
     Those include the Brio line of wooden trains for toddlers, doll houses and hand puppets.
     Mr. Benjamin expects the sale of Lego MINDSTORM NXT, a robot with light, sound and touch sensors that can be programmed with a home computer, to draw holiday shoppers to HobbyTown.
     “I'm and electrical engineer by degree, and it looks like fun even for me,” he said.
A growing industry
     The price parents are willing to pay for toys will translate into more revenue for the year. The average retail price for toys has risen 4 percent from about $6.05 in 2003 to more than $6.30 in 2005, in part due to higher-ticket items, according to NPD Group.
     More evidence for the growth of the toy industry comes from how much time children spend with toys.
     More than 81 percent of children 5-12 play with toys every week, according to the study. Children spend about 9 percent of their free time playing with toys, an average of about nine hours per week. Playing with toys is second only to watching TV, which takes up about 16 percent of children's free time.
     Video games is tied for third, taking up about 6 percent of children's spare time.
     Another indicator is the expected increase in the number of children in the United States.
     Over the next five years, the number of children 5 and younger in the U. S. is expected to increase 6 percent, while children between 6 and 8 are projected to increase about 4 percent, according to the U.S. Census Bureau.
     Mr. Benjamin said more children would likely boost sales, but wouldn't account for all of the growth.
     “I've certainly seen more baptisms at church this year, but some of us are just big kids,” Mr. Benjamin said as he toyed with a hand puppet of a pig that played “Old McDonald Had a Farm.”
     While total industry sales declined in 2005, some categories, such as learning/exploration toys and action figures, showed growth over the previous year. Building sets showed the most growth, up 16 percent from about $600 million in 2004 to $695.2 million in sales in 2005.
     “Everything I carry is with the intention of getting your hands on the product, and my customers appreciate that,” Mr. Benjamin said. “They want their kids to learn motor skills and think through processes. I try to provide a line of products that stimulates the mind.”
     Mr. Benjamin, now retired from engineering, said building sets and exploration toys have been popular since before he was a youngster.
     “I tried to mimic the things I saw as a kid in real life,” he said. “I think that stimulated me into becoming an engineer.”