Simple merchandising sells toys at Target
Target may be the No. 2 toy retailer in the country, but it’s unmatched in its ability to combine low prices with slick product presentation. Target doesn’t do anything spectacular with its toy sections but manages to execute the keep-it-simple principle to perfection.
“It’s really a combination of subtle things like good lighting, good merchandising and always having things on the shelves and not scattered around,” said toy industry analyst Chris Byrne. “And the sections are easy to navigate and they always have the toys parents are looking for at low prices.”
That approach was on display in April when the new line of “Star Wars” toys was released. Target reconfigured its toy departments to give Hasbro a full aisle for Star Wars toys along with two end caps. At the same time, it promoted the toy line with a special “Star Wars” gift card embedded with a sound chip with Darth Vader’s ominous voice.
Target also makes its toy departments a destination by landing exclusives on hot products. Last fall, it signed a deal with Build-a-Bear Workshops to carry a limited line of clothes and accessories for the make-your-own bear retailer.
And it lands exclusives that appeal to both boys and girls. To that end, it currently has an exclusive on Hasbro’s “Darth Vader Lava Reflection” action figure and another with Mattel for part of its “My Design Scene” collection of dolls and accessories displayed under its “Only at Target” banner.
But the key to its success is making toy departments easily accessible and user friendly year-around. Target gives entire aisles to name brands like Lego and dedicates lots of space to key franchises like “Spider-Man,” “Power Rangers” and “The Teenage Mutant Ninja Turtles.” Key genres like board games and learning toys are also given standalone sections to keep guesswork to a minimum.
And it adds its own unique touch to merchandising by blending traditional with hip. The best example is an aisle that has MGA Entertainment’s trendy Bratz dolls and accessories on one side and Mattel’s classic Barbie line on the other.
Target also has a knack for forging important alliances. This spring, it teamed up with Parents magazine to launch a new online area at www.target.com/kids. Target described the Web site as a “resource for parents and child-related information” that also links directly with Target.com and its toy section.
And while Wal-Mart holds the title of “low-priced leader,” Target manages to keep its prices on par with its largest rival. Byrne says that during the 2004 holiday season “there was probably only a 1% difference in toy prices at Wal-Mart, Target and Toys “R” Us.”
Target can also mix it up on price when it wants to. In fall 2003, it fired the first shot in what became a price war with Wal-Mart that extended through the holidays and wrecked havoc with other retailers, most notably KB Toys. KB Toys filed for bankruptcy in January 2004 citing price pressure from Target and other retailers as the main reason. Since then, Target has avoided low-ball pricing on toys to maintain its margins.
2004 SALES*: $46.8 billion
NUMBER OF STORES: 1,330
Source: Company reports
* For fiscal year ended Jan, 29, 2005
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