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One of the most destructive, and evil accomplices of the Illuminati and the New World Order....... Wal-Mart This article is from The Detroit Free Press CHANGING THE GAME: Toy makers rethink deals after Wal-Mart kills smaller chains February 17, 2004 BY JOAN VERDON KNIGHT RIDDER TRIBUNE It's a drama that will be played out on toy shelves across America this year -- the next installment of Toy Wars. Last year's version, Toy Wars 2003, could be subtitled "Wal-Mart -- The Empire Strikes First." Wal-Mart Stores Inc. slashed prices on hot holiday toys in October, other toy sellers followed suit, and by January already ailing FAO Schwarz and Zany Brainy were out of business and KB Toys was bankrupt and closing nearly 400 stores, including 21 in Michigan. This year's sequel is shaping up as "The Toy World Fights Back." As toy makers and sellers gather this week in New York for the American International Toy Fair, manufacturers find themselves having to choose a path for their companies. Should they continue down the road of relying on Wal-Mart to increase their business, offer more exclusive deals to Toys "R" Us, or seek out new sales paths, such as drugstores, supermarkets and video stores? Toy executives are used to cutthroat competition and revenues that rise and fall with a roll of the retail dice. It's an industry with more rapid ascents and sharp declines than a game of Chutes and Ladders. But 2003 scared them. Manufacturers that courted Wal-Mart for its buying clout worry that they've made the discount Goliath too big a player in the toy world. Wal-Mart is the top seller of toys in the United States, Toys "R" Us is No. 2, and Target is No. 3, according to industry statistics. "If you sell to Wal-Mart, you don't have to sell to anyone else. They're that big. But guess what -- who owns your company then?" said Robert Solomon, CEO of Applause LLC, a California-based plush toys and gifts company. Manufacturers too often take the approach of, "I'm going to go with the hot date," he said. "It was Toys 'R' Us 10 years ago. Now it's Wal-Mart." In 2003, Toys "R" Us Chairman John Eyler Jr. saw Wal-Mart's price-slashing strategy as a direct attack on his company's core business. It's not easy, he said in announcing poor holiday results in January, "to compete against the largest business entity in the world who uses your product as a loss leader." A number of toy manufacturers agreed. Now, they're quietly trying to give Toys "R" Us extra weapons against Wal-Mart in 2004. At the manufacturers' showrooms in the Toy Center building at Fifth Avenue and 23rd Street, the most closely guarded Toy Fair secrets this week will be the special deals being given to Toys "R" Us, Target and other smaller retailers. Manufacturers want to help Toys "R" Us the most, said Jim Silver, publisher of the Toy Book, a trade monthly. As the author of the leading Hot Holiday Toys list, he gets sneak previews of toys, provided he doesn't reveal details until an embargo date. "Some key manufacturers showed me really special, unique items that will be exclusively for Toys 'R' Us," Silver said. "Anybody who is also selling to Wal-Mart is not saying anything on the record. Off the record, they're saying they're looking at having special products that only go to certain retailers, having launches at Toys 'R' Us and giving them the product exclusively before it becomes available to other retailers," Silver said. "They love the business Wal-Mart does. They love how well their operation is run. They don't love them killing the profit margins. They don't like them devaluing brands by price-cutting," Silver said. "If you have a toy that sells for $29.99 and you see it on sale for $19.99, you think the thing is dying and they're giving it away. You think of it as a closeout," he said. Wal-Mart spokeswoman Karen Burk said she couldn't comment on whether Wal-Mart lost money on toy sales, but said the company will "continue to focus on being the low-price leader," adding, "That includes on holiday toys for next year." Neil Friedman, president of Fisher-Price, the preschool division of Hasbro, said manufacturers can't dictate what price a toy is sold at, "but we are always concerned if our brand is devalued. Fisher-Price is a premium brand because of all we put into it," he said. Continue |