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Wal-Mart Dethrones Toys R Us

March 29, 1999

NEW YORK (AP) _ Wal-Mart Stores Inc. was the nation’s biggest toy retailer in 1998, dethroning Toys R Us Inc. for the first time in more than a decade, analysts said.

Wal-Mart’s sales accounted for 17.4 percent of the market in 1998, while Toys R Us held a 16.8 percent share last year, according to data released Monday by The NPD Group, a Port Washington, N.Y.-based market research firm.

Wal-Mart’s market share rose from 16.3 percent, while Toys R Us fell from 18.3 percent in 1997. NPD does not release dollar figures of sales.

``It was inevitable that Wal-Mart would get to the position that they were ahead of Toys R Us,″ said Sean McGowan, a toy analyst at Gerard Klauer Mattison. ``They are building stores at a faster pace and using toys to build traffic.″

``But I think it happened faster than most people expected,″ he said.

McGowan estimated that Toys R Us had been the leading toy retailer for at least 15 years. NPD’s database only goes back as far as 1991.

The other toy retailers in the top five included: Kmart, with a 8 percent market share; Target, with a 6.9 percent share; and KB Toys, with a 4.9 percent share.

The reign of Toys R Us as the top-selling toy retailer has eroded in recent years as the discount chains _ Wal-Mart, Kmart and Target _ began adding more toys to their selling floors and offering them at cheaper prices.

``It’s a matter of convenience for a lot of people,″ said Cliff Annicelli, editor of Playthings MarketWatch, a trade publication.

``Parents don’t have the luxury to just shop for toys,″ he said. ``It’s easier to just go to Wal-Mart, where they can do the rest of their shopping and still get the best toys.″

Also troubling for Toys R Us is the significant changes in the way children play. Kids who used to like action figures and dolls until they were 10 or 11 years old now want high-tech toys, beauty sets and sporting goods by the time they get to first grade.

With Toys R Us still dedicating a majority of its selling floor to toys, that means it’s losing out on the big sales of products like video games and CD-ROMs.

Recognizing that its sales were sliding, Toys R Us last fall launched a reorganization plan, which included redesigning its stores and broadening the array of merchandise it sold. Its new focus includes clothing and electronics, rather than just toys.

The news of Toys R Us’s slide in market share comes just days after the Paramus, N.J.-based company announced that its president and chief operating officer had resigned.

Earlier this month, the company also reported that its fourth-quarter earnings fell 18 percent from a year ago.

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