Preschool earns good report card; favorable demographics, product variety promote interest among ret

Preschool manufacturers quickly responded to the latest baby boom with more products than ever before, yet retailers have remained more conservative.

Admittedly, those on both sides have benefited from a higher birthrate, but most retailers describe their increases as comfortable, not exceptional. 

While the number of children under 5 between 1980-1984 rose to the highest levels since 1968, the rapid growth in preschoolers is already nearing an end, said a report in the December 1985 issue of American Demographics magazine. True, the industries catering to preschoolers can count on steady demand over the next decade, but the real growth will be in children of elementary-school age, American Demographics said. The good news for those in the infant and preschool business, however, is that first births are expected to account for at least 40 percent of all births through 1990.

From chains to independents, most retailers have kept the number of offerings in the infant and preschool area the same this year. One explanation offered is the popularity of "item buying' in toy departments--parents skipping over the preschool section in order to purchase the handful of "superhit' toys for their preschoolers, as well as older siblings.

In this, PLAYTHINGS' first of a two part series on the $1.3 billion preschool market, retailers offer their game plans for building loyalty among new parents, and other consumers of toys for children under six. With Hasbro's acquisition of Child Guidance, some retailers see the country's largest toy company as an even stronger factor in the category.

Manufacturer shipments of infant /preschool toys jumped from $739 million in 1984 to $816 million last year, a 10 percent increase. During the same time period, however, the number of units shipped rose just one percent, from 167 million to 168 million, according to Toy Manufacturers of America.

Specifically, infant toys registered the largest gain, with shipments rising from $208 million to $255 million. Blocks jumped from $32 million to $50 million; learning toys fell from $46 million to $33 million; talking/ sound toys, $84 million to $56 million; tub toys, $16 million to $12 million; push/pull toys climbed from $29 million to $42 million; playsets, $43 million to $68 million, and remaining preschool, $281 million to $300 million.

According to FIND/SVP's April, 1985 report, "The Market for Children's Toys and Games,' purchasers of infant and preschool toys spend an average of $32 per child annually. Most are sold through discount outlets, the report continues, and the average retail price is slightly lower than $6 per toy.

Infant and preschool toys were the focus of many spring and summer promotions at toy stores nationwide. Ohio's Value City stores featured savings as much as 62 percent on selected Fisher-Price toys. Greentree, Pa.'s Green Tree Toy Warehouse had a super savings sale in mid-May on its stock of more than 150 Fisher-Price toys, and Play Co. stores of California highlighted six Fisher-Price toys in newspaper advertising in late May. Spokane, Wa.'s White Elephant highlighted Mattel's Angel Bunny consumer contest, and its selection of Angel Bunny items with a $2 cash rebate, in recent newspaper ads.

At Raleigh, N.C.'s Tons of Toys, preschool represents 20 percent of the store's selections, with Fisher-Price, Playskool, and Tomy the major lines stocked. Tons of Toys is an eight-store chain headquartered in Columbia, S.C.

"Preschool is the only category we match by manufacturer,' says assistant manager Keith Archer. The others are stocked according to toy type.

"It is much easier to inventory items if they are grouped by manufacturer,' says Archer, "and it is not a hindrance to the customer. The customers may not know the products but they know the manufacturers --especially Fisher-Price and Playskool.'

Child Guidance's Talk 'N Play and Fisher-Price's Bubble Mower were standouts for Tons of Toys last year, with the latter coming on even stronger this year. Archer attributes this to the continued spell of warm weather N. Carolina has experienced for most of the spring. While transformables grabbed a large percentage of store sales here last year, Archer points to preschool as one of the few steady markets not hurt by their popularity.

Rich Ockwell, merchandise manager for another eight-store chain, Seattle-based Learning World, reports that his stores experienced no carryover in preschool last year. Learning World divides its merchandise between educational toys, school supplies, and teaching materials, focusing on children in cradles on up to 8-year-olds. But, preschool is the strongest area, Ockwell points out.

Lego's Duplo, Fisher-Price, Brio, Playskool, and Milton Bradley are Ockwell's major suppliers, with a fair sampling of imported lines also represented. The selection is well balanced, he says, with no one company dominating. The Duplo line, Brio train sets, and basic blocks have been the best-sellers at Learning World.

The chain also stocks preschool by manufacturer, because "the merchandise looks cleaner that way,' according to Ockwell. "Brand loyalty is very strong,' he says, adding, "we have almost a cult following for Brio.'

Since Learning World is not a "mass market-type' operation, its strength is in basics; this condition favors the preschool market, Ockwell adds. And, so far it has proven advantageous, since there has been no let-up in demand for products in this category.

The five-store Toy Chest chain, headquartered in St. Louis, devotes the entire back will to Fisher-Price, and one of the 14 store aisles exclusively to the other vendors. Playskool, Tomy, Little Tikes, Chicco, Parker Bros., and Hasbro are among the remaining lines carried. Like all other store merchandise, Lexington MA Preschool is grouped by manufacturer.

Steve Grodsky, vice-president of store operations, calls Fisher-Price "the one line for preschool, mainly because of the name identification.' Its prime positioning has been in existence since the Toy Chest's start 12 years ago.

Grodsky sees Parker Bros.' Nerfuls as a good fall item, based on its early success so far. Also, Fisher-Price's new Puffalumps, here retailing for $19.97, is Grodsky's bet for one of the best toy items for the year. Cross-merchandising is used with Puffalumps, in both the Fisher-Price section and with dolls.

Education plays an important part in Grodsky's selection of preschool items, along with play value, fun, and the toy's general value.

Omaha's two Youngtown stores devote 10 to 12 percent of their space to preschool, with Playskool, Fisher-Price, and Lego the front runners. Buyer Stu Muskin has no trouble selecting items, since "everybody's got a preschool line now.' However, he does see one void in the category: spring horses. But, he's confident someone will come out with a good line. In his infant department, battery-operated soft toys have done well this year.

Infant and preschool toys, the majority of which are imported, make up half of the SKUs at The Power of Play, a year-old Sherman Oaks, Ca. store soon to open its second unit. Playtown's Alphabet Learning Board, the Ambi line, Nathan games, and Battat activity centers and shape sorters are the current best-sellers. Basic table and chair sets are also carried.

"Consumers are not looking for something to keep their children pacified. Instead, they want toys that are appropriate for their development,' explains Bonnie Aharoni, owner of The Power of Play. And when they are exposed to alternatives, they develop strong brand loyalty. For example, Aharoni's customers have begun to ask for even less familiar lines like Ambi and Battat, mostly due to word of mouth advertising.

While just about any toy could be considered educational, Aharoni looks for those that require the child to do more than the toy does. "The ratio should be 25 percent that they toy does, and 75 percent for the child to do.'

Developing loyalty among preschool consumers is not an objective exclusive to manufacturers. As many retailers have found, preschool consumers are becoming much more choosy about where they buy their toys. To lure today's more demanding consumers, retailers have become aggressive marketers of their own stores, positioning them as "resource centers.' And infant and preschool products provide the opportunity to lay a foundation for becoming the source for toys.

Aharoni sends out newsletters every three months publicizing different events the store has planned, new product information, book reviews, etc. If you want to promote educational toys, she feels, these other factors must be considered. "It's a package deal,' Aharoni adds.

Dalene Lockhart, owner of Casper, Wy.'s Toy Town, has decided to get her store known to new mothers--right in the hospital. Casper's one hospital includes a coupon good for 10 percent off infant lines in its gift packet for new mothers. "It has made people aware of the store,' she says.

In one of its print ads, Toy Town emphasizes that infant toys are appropriate as baby shower gifts, and the store offers gift wrapping for the occasion.

Ambi, Brio, Chicco, Lego, Kiddicraft, and Little Tikes make up the preschool/ infant section at Toy Town, about 1/4 to 1/3 of the store. Because of the competition from nearby K mart and Target, Fisher-Price is not carried. The only licenses here are Disney and Sesame Street.

At Vancouver, B.C.'s International Toys Express, an infant/nursery alcove is set up, as well as a preschool and toddler center. In the nursery section, an old-fashioned spool crib is centered within the 8-ft. alcove so that mobiles, activity centers, and toys can be displayed.

Nerfuls, My Little Pony, and the German Puky line are singled out by co-owner Beth Flynn as best-sellers. She also reports success with wooden toys from the Orient, which Flynn says matches the quality of European lines.

In infant toys, Flynn says she is making her selections with parents in mind; "They want something to keep the baby content,' she says. Bright colors, music, and simple manipulation are her criteria.

International Toys Express also dabbles in juvenile furniture, carrying the Fisher-Price changing table and foot stool, and table and chair sets. It's an area that may be expanded in the future, Flynn says, "because you cannot do it piecemeal. You must present the items in a proper manner.' And Flynn feels fortunate because her store's floor space makes stocking these items possible.

The store, which captured a PLAYTHINGS Award of Merit for Store Design this year, also has a waiting list for Fisher-Price car seats, because the line is not readily available in British Columbia. But, the area of juvenile furniture and accessories is a source of concern for the store owners, because as Flynn says, "you can tie up a lot of dollars.' While furniture is a part of a child's life, it's a "gray area' for a toy store. On the opposite side, though, is the fact that the store has had requests for many of the items.

Like other retailers, Flynn's main complaint about preschool toys is the discrepancy that often exists in age labeling. "Toys that are meant for children 4 and up can often be enjoyed by 2-year-olds,' she says. Customers at International Toys Express have at times returned items that they feel were too childish for a youngster, despite the label.

Although the state's economy is presently down, Oklahoma City's Learning Tree store is having a good year. "Quality educational toys are doing well,' says co-owner Kathryn Carey Jones. "People are spending their toy dollars more wisely.'

Toys for children three to six make up nearly 40 percent of the 2,500 sq. ft. store, with the infant selection comparable. "We give people choices,' says Jones. However, just three of each product are kept out on the shelf, with one opened to provide consumers with a closer look.

Learning Tree groups infant/preschool items by age appropriateness. Signs are hung in each section, giving relevant developmental milestones for that age group, and what type of toys are suitable.

Drawing on her background as a former nursery school teacher, Jones also speaks to parent and preschool groups on choosing toys.

Today's parents are a tough sell, especially when shopping for infants and toddlers. But toy retailers have learned that convenience, knowledge, and marketing themselves as resource centers can ring up sales year-round, whatever the nation's birthrate.