Holiday toy sales: Recalls are in play


Toy recalls have certainly garnered their share of attention this year, but toy industry and studio consumer products executives say the problem will have little effect on holiday sales.

The weakened economy and rising gas prices? That's another story.

There were 61 toy recalls in fiscal 2007 ending Sept. 30 compared with 40 the previous year; there have been 23 additional recalls just since Oct. 4, according to the U.S. Consumer Product Safety Commission.

Studios and networks have been impacted as numerous licensed entertainment toy lines — many manufactured in China by Mattel and its Fisher-Price division — are part of the recall. They include Mattel's Sarge die-cast cars from Disney/Pixar's "Cars," several "Dora the Explorer" and "Go, Diego! Go!" products based on their respective Nickelodeon preschool series and Batman action figures from the Warner Bros. franchise, among others.

"The information we have seen so far is that while there is concern with toy sales, it's more about what's going on with the economy and not about the toy recalls," said Robert Marick, Disney Toys North America vp and GM. "This is the feedback we're getting from speaking to our buyers and our retail accounts. We're not expecting the recall to affect overall toy sales."

Disney's "Hannah Montana" is expected to be the hottest entertainment-related toy property.

Toy Wishes contributing editor and toy consultant Chris Byrne said he expected this year's toy sales to be flat, if not slightly lower than the $30 billion in U.S. sales of traditional toys and video games last year. "But I don't expect the recalls to have an impact; it's the economy that will have the impact."

But not all signs point to a toy shopping season unmarred by the recalls. Market researcher Harris Interactive reported last week that 33% of Americans said they will purchase fewer toys, while 45% will avoid buying toys manufactured in China this holiday season. And Columbus, Ohio-based BIGresearch said Tuesday that its online survey of nearly 8,000 consumers during the first week of November found that 57.5% of adults said they would avoid buying toys made in China.

Target has said its toy sales have been soft this fall, and said October sales were weaker than expected. Additionally, Wal-Mart said that though it has seen an increase in toy sales week-by-week since September, sales are still softer overall than last year because of "many factors," including the economy. A Wal-Mart spokeswoman said it was hard to tell if the recalls were contributing to the softer sales.

Harris, which conducted an online poll of 2,565 U.S. adults between Oct. 9-15, said its anecdotal data might not bear out once holiday shopping gets under way in earnest on Friday, the day after Thanksgiving.

On Monday, California Attorney General Jerry Brown sued 20 companies in state court, including Mattel Inc. and Toys "R" Us, claiming they sold toys containing "unlawful quantities of lead."

Toy industry experts claimed that despite safety concerns sparked by the recalls, parents will still buy toys for their children.

"Parents are not going to disappoint their children for the holidays," said Jonathan Samet, publisher of Toy Book and the Toy Insider holiday guide. "They're still going to give them toys, though I think parents will be more selective. What the research that's being done is showing is that overall there are concerns, but they're not going to affect buying habits."

Toy industry and studio execs insist consumers actually feel more confident about buying toys after the recalls, having witnessed the swift actions taken by the industry to get toys with dangerous levels of lead paint, loose magnetic parts or other safety issues off store shelves.

The most frightening recall of all occurred this month when it was discovered that the popular Aqua Dots toy — on nearly every top holiday toy list — was coated with a toxic chemical that, if ingested, could metabolize into the date rape drug GHB and cause comas.

"I think people believe if there was a problem, toys have been pulled," said Michael Bartok, executive vp licensing for Paramount. "Consumers are reasonably confident that the right measures are being taken."

Even Disney/ Pixar's "Cars" line, which saw the recall of Mattel's Sarge die-cast cars, has not seen sales waver. "We've seen this year that momentum hasn't slowed at all on the Cars brand," said Doug Wadleigh, vp marketing for Mattel boys' entertainment brands. "In fact, it's getting stronger sales this year than last year. We worked proactively to get recalled product out of the marketplace, and as a result of our actions, we haven't seen a slowdown in sales."

Wadleigh said once it learned of the safety issues involved with its toy lines, Mattel was thorough in testing all its toys at retail so consumers would feel confident in purchasing them for the holidays.

The fact that studios like Disney and such retailers as Wal-Mart and Toys "R" Us have announced that they are taking actions above and beyond what the toy companies are doing to ensure product safety is helping instill further confidence as well, industry experts said.

But the Harris Interactive survey found that only 38% of consumers feel that recent actions taken by toy companies and retailers increase their confidence in toy safety, while 44% said the increased monitoring and testing don't change their perceptions.

Disney said it has increased the number of personnel in its product integrity department to monitor and confirm manufacturers' safety tests and to conduct safety tests of its own independent of its licensees. "We are now randomly test-sampling product that we are actually pulling off the shelves to ensure that the product meets the highest standards possible," Marick said.

Other studios also are expected to be more vigilant in their monitoring of toy safety, with their legal departments beefing up the provisions in their licensing agreements with toy companies. "I don't think anybody now is going to say, 'That's not our area; we'll let the manufacturers deal with it,' " said one studio executive. "Everyone wants assurances that the toys that will be put out are safe."

Despite all the recalls, Mattel, Fisher-Price and other toy companies do not appear to have suffered any major damage in their relationships with the studios, nor have they had to pay any major fines or penalties. If any lawsuits emerge as a result of the recalls and unsafe licensed toy products, industry experts say the toy companies, not the studios, will bear the financial burden.

"We took this very seriously and took all the right steps necessary to make sure we understood and fixed the problem. I think the studios responded very favorably to that," Wadleigh said.

Despite the millions of toys recalled — many of them tied to films and TV shows — studio execs insist their brands have not been damaged.

But one studio exec who declined to be named admitted, "It's disconcerting when you have a toy product that's unsafe. Your brand gets tainted."

With consumers still expected to be buying plenty of toys this holiday season, "Hannah Montana" is the biggest entertainment-related hit. "For entertainment, I don't think there's anything hotter," Byrne said. "I think anything Hannah Montana is going to be sold out by the second week of December."

The Hannah Montana pop star stage that hooks up to an iPod or MP3 player made at least six holiday toy wish lists, including the Toy Insider hot 20 and Toy Wishes 2007 holiday hot dozen.

" 'High School Musical' is the other one that's hot," Byrne said, though it didn't make Toy Wishes' top dozen. "This is going to be Disney's year."

"The American Idol Talent Challenge" from Tech 2 Go, a DVD game that allows you to sing along with your favorite idols, made both the "hot dozen" and "hot 20" lists.

Without any huge toy merchandising films out this holiday season, such summer blockbusters as "Transformers" and "Spider-Man 3" are expected to be big hits at retail for the holidays, especially on the heels of their DVD releases.