Buyers Not Tickled by Toy Shortages

By Jayne O'Donnell, USA TODAY

Retailers' official list of this year's hot toys came out Thursday, but just try getting two of the most popular, T.M.X. Elmo and Sony PlayStation 3.

PS3, which went on sale at midnight, was expected to sell out in minutes. Shortages are likely until spring. Retailers haven't been able to get enough Elmos since Fisher-Price's flashy September launch.

Some wonder if the shortages are planned. "I don't think it's coming from not understanding their demand, because there is so much history for these companies to go on with both products," says Kim Roffey, strategist at Kurt Salmon Associates. "It's calculated."

Vicki Petersen of Omaha, who has searched in vain for a T.M.X. Elmo for her 2-year-old granddaughter, thinks it's hype. "Knowing the Christmas season is here, you would think the manufacturer would know by now to make enough so kids wouldn't be disappointed," she says.

David Allmark, general manager for Fisher-Price's licensed toys, says the Elmo shortage wasn't planned. The "totally unprecedented" reaction to the 10th anniversary Elmo "stunned" everyone at Fisher-Price, he says. "Our business is not about creating unfulfilled demand."

Shortages aren't unusual in game system launches. Manufacturers often must produce tens of thousands of units before glitches are worked out, and production delays caused Sony to reduce the number of PS3s it could ship to the USA. It hopes to have 400,000 in stores today and 1 million by the end of the year. "There are going to be some shortages," says Sony Computer Entertainment America President Kazuo Hirai. "I just need to ask for those people who couldn't get it day one to be patient."

Tracy Mullin, CEO of the National Retail Federation, which commissioned the hot toy survey of 8,000 consumers, says no matter the reason, "If the shelves are empty, retailers are left holding the bag, explaining to customers why popular merchandise is not available."

"Our buyers are fighting for every last item they can get," Ernie Speranza, chief marketing officer for KB Toys, says of Elmo.

Consumer psychologist Kit Yarrow says limiting or delaying supply are among manufacturers' few options when it comes to creating demand among consumers.

"I didn't want one until I found out that everyone else did," laughs Yarrow. "Get it?"

The $39 giggling Elmo, which can roll over and stand up, is being sold on eBay for up to $100. Some bidders were offering more than $2,000 Thursday for the $600 PS3.

Nov. 17, 2006