Walmart Bets These Toys Are On Your Kid's Holiday Gift List

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A Walmart employee restocks shelves ahead of Black Friday sales last year.
By Krystina Gustafson | @KrystinaGustafs

With back-to-school promotions in the rearview mirror, retailers are already looking for ways to promote their brands for the holidays.

Following Kmart's anti-Christmas commercial that rolled out last week, Walmart (WMT) on Wednesday released its second annual Chosen by Kids Top 20 Toys List -- a list it hopes will get parents spending on the troubled toy category, and help it identify hot items to prevent out-of-stocks and lost sales.

The discounter also said it would "continue to be unwavering" on offering the lowest price.

"When we saw specific trends emerge, we worked closely with our toy suppliers to make sure we were stocking our toy shelves ... with the items kids really want," said Anne Marie Kehoe, vice president of toys for Walmart U.S.

By putting hundreds of kids between ages 18 months and 12 years old in a room to play with 80 toys -- and then having them vote on their favorites -- the company identified five toy trends ahead of the holidays:

Walmarts' 2014 Chosen by Kids Top 20 Toys
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Walmart Bets These Toys Are On Your Kid's Holiday Gift List
To develop its Chosen by Kids Top 20 Toys List, Walmart (WMT) for the second year gathered hundreds of children, 18 months to 12 years old, and learned their favorites among new toys. For the first time, ride-ons and scooters were tested. 

The Razor Crazy Cart ($347 online) can be driven like a go cart or let loose to spin and drift "forward, backward, sideways, diagonally and everything in between." it supports riders up to 140 pounds and requires two 12-volt batteries to run.

Toys from "Frozen," Disney's (DIS) blockbuster movie from last year are to be expected to be very popular this year. The Snow Glow Elsa Doll ($39.97 online) has a dress that lights up, and "a touch of her magical snowflake necklace" generates 15 sounds and phrases from the movie. Raise her arm, and the necklace lights up and plays "Let it Go."
Among the craft projects on Walmart's list is the Make Your Case Cell Phone Case Maker ($24.99), which allows kids to "personalize, customize and accessorize" cell phone cases." It comes with four cases to decorate and molding material for two more for the iPod Touch 5, iPhone 4/4s or iPhone 5/5s. The kit comes with gem and alphabet stickers and designer paper, and kids' pictures and art can be used as well.
In the old days, the only time Hot Wheels flew was when they were tossed over the back yard with a strong arm. But the Hot Wheels Street Hawk Remote-Controlled Flying Car ($54.86) uses seven batteries to fly up to 150 feet. "This vehicle offers a cool combo of on-ground R/C performance, like proportional ground steering, and the aerial performance of a plane."
The LeapFrog (LFLeapTV Educational Active Video Gaming System ($149.97) has "a library of 100+ LeapFrog educator-approved game cartridges, game downloads and videos." Of course, it's not all fun -- math, science, reading and problem-solving are worked in as the system sets up the action via body motion, pointer play and classic control.

Walmart said it would promote the toys through in-store displays that call them out as chosen by kids, on a landing page on, and through online, social and print marketing.

The company on Sept. 12 will also kick off its layaway program for toys that cost $15 or more in baskets worth $50 or more, and will use its Savings Catcher program to match prices from local competitors. The tool compares local advertised prices frorom a customer's receipt, and if it locates a lower price, it will make up the difference on a Walmart gift card. This price matching doesn't include (AMZN).

"Our focus is on having great prices all season long across our toy assortment," Kehoe said.

Trouble in Toyland

Toys have been a trouble spot for retailers over the past few years, as extreme price competition, the lack of a must-have toy and the popularity of mobile gaming have cut into profits. In 2013, toy sales fell 1 percent to $22.1 billion, according to The NPD Group.

The sting has been felt at companies from Toys R Us to Mattel (MAT), with declining sales at Barbie contributing to Mattel's 9 percent sales drop in the most recent quarter.

The industry's bright spot has been for brands that have ties to popular movies or TV shows. Lego, for example, which has gotten a boost from the "The Lego Movie" product line, and recently surpassed Mattel as the largest toy maker when its first-half sales rose 15 percent compared with the prior year.

The findings are in line with a report released by the NPD Group reported earlier this year, which said sales of licensed toys outperformed the industry as a whole by rising 3 percent in 2013.

"I think 'Frozen' has definitely shown everyone this year how strong kids and little girls are engaging with that property," Kehoe said, adding she predicts the Jakks' Snow Glow Elsa Doll will be the hottest item this year.

Another Race to the Bottom in 2014?

Walmart's affirmation that it will once again compete to bring shoppers the lowest price may sound alarm bells in the industry, which last year saw margins take a beating as retailers made aggressive pricing moves to undercut one another.

According to data from price intelligence firm 360pi, over the past year through June -- which includes the past holiday season -- Walmart has consistently offered lower prices than Target (TGT) or Sears (SHLD) in the sports and toys category (though a severe price dip over the summer brought Sears' prices much closer to Walmart's). Amazon's prices were consistently cheaper.

In a recent call with 360pi and Retail Systems Research, RSR analyst Paula Rosenblum said the "big lie" is that in a race to the bottom on pricing, the company with the lowest costs wins.

"In fact what we find is that in a race to the bottom nobody wins," she said.
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