Toy Makers May Struggle This Holiday Season Amid the Absence of Toys ‘R’ Us and More Trade War Fears
Since Toys “R” Us announced it was going out of business earlier this year, other retailers are trying to fill the void in time for the holidays. But the U.S. toy industry is facing some hurdles in the process.
Chains like Walmart and Target are preparing by setting up more floor space for toys in stores across the country, while another chain plans to set up a number of temporary Toy City pop-ups, according to the Wall Street Journal. But toy stores will struggle to fully fill the market void left behind by Toys “R” Us; even amid reports that the toy chain could be making a comeback, that return wouldn’t happen in time for this year’s holiday season, the Journal reports.
In 2017, the company held back inventory on certain products until December when it was able to sell items at a higher price than competitors that ran out of stock earlier in the season. With this strategy, Toys “R” Us brought in $2 billion in sales in November and December of last year, including over $1.4 billion in just the month of December, according to a source cited by the Journal.
But the death of Toys “R” Us also leaves billions of dollars in holiday toy sales open to other retailers that are now working to find ways to make more sales. Retailers are expanding their toy sections, especially at stores that are located near former Toys “R” Us stores.
“This year more than ever, getting the right toys in the right stores at the right quantities at the right time is going to be the game,” Steve Totzke, the Mattel Chief Commercial Officer told the Wall Street Journal. “The companies that do it best—the manufacturers and retailers—are going to win the season.”
Meanwhile, retailers in the U.S. are looking at a political hurdle when it comes to the toy industry’s success this year, according to CNN. President Donald Trump’s trade war with China could hurt the market in the next round of tariffs, as 85% of toys sold in the US are made in China. Toy makers worry that the next round of tariffs—which is expected to include all products imported from China that haven’t been taxed—will drive up the prices on most of their products, making it an even more difficult time to take over what Toys “R” Us left.