Chapter 13
Getting Products to Customers
Sales Despite Recalls
Retail sales in the U.S. toy industry totaled $21.3 billion in 2005. Mass marketers and
discounters represented 54 percent of total toy sales, while toy stores represented 20
percent. Online toy sales generated more than $1.3 billion in 2005. Building sets and
learning/exploration toys showed the greatest growth during the year. Entertainment
franchises such as Dora the Explorer and Star Wars drove toy sales. Toys associated with
popular youth movies are often sold or given away at fast-food restaurants. Recent toy
recalls have become a concern for fast-food restaurants that attract family business from
the popular toys.
Most toys in the United States are safe; deaths associated with toys are taken very
seriously. Manufacturers use recalls to avoid lawsuits associated with defective products.
Hasbro Inc. recalled 255,000 Playskool toy tool benches after toddlers in West Virginia
and Texas died from choking on the toy’s large plastic nails. The Team Talkin’ Tool
Bench comes with a toy hammer, screwdriver, two 2 ¼-inch plastic screws and two 3inch plastic nails. Toys “R” Us, Wal-Mart, Target, and KB Toys sold the workbench
nationwide from October 2005 through September 2006 for about $35. The toy recall
allowed consumers with the workbench to exchange the plastic nails for a $50 certificate
for another Hasbro product. The Consumer Product Safety Commission concluded that
the oversize plastic nail met federal regulations for small parts and that the company had
complied with federal labeling standards. The toy was recommended for use by children
age 3 and older.
Get the Lead Out
Now the toy industry is actively involved with recalls associated with toys manufactured
in China. The Fisher Price lead paint toy recall was the largest toy recall for Mattel since
1998. Fisher Price recalled almost 1 million toys due to high lead levels in the toys’ paint.
The recall involved all plastic preschool toys manufactured by a Chinese vendor for
Fisher Price from May to August of 2007. Some of the most popular toys recalled
included Elmo Light Up, Ernie Light Up, Big Bird Light Up, Elmo Stacking Rings,
Dora’s Talking House, and the Dora backpack.
China manufactures 80 percent of the toys sold in the United States. During the fall of
2007, many consumers vowed that they would not purchase toys made in China due to
the lead paint recalls. Some leaders in the industry predicted toy company sales would
plummet; however, the recalls had little effect on toy sales. The “anti-China Christmas”
did not come to pass. Many parents continue to give in to children who are yelling for the
hottest toys in the market. Sales of traditional toys were flat in 2007, while video game
sales grew $12.5 billion in 2006. Many children want DVDs, video games, and consumer
electronics.
Sales for U.S. manufactured toys rose following the recall of toys manufactured in
China. U.S. companies represent only 5–10 percent of the toy market. A survey about the
toy recalls indicated that 25 percent of consumers were concerned about toy recalls, but
31 percent said the recalls did not matter to them. Toy sales seem to be resilient to higher
Chapter 6
Page 1
gas prices and a possible recession. Parents continue to buy toys for their children in good
and bad times. Toys “R” Us has incorporated electronics into its product line and the
Internet provides social-networking with sites that include Barbiegirls.com or BeBratz.com. Video games and game systems have allowed Toys “R” Us to maintain high
sales.
Think Critically
1. Why is it important for a major company such as Mattel to recall a popular toy?
2. What can toy manufacturers do to regain consumer confidence?
3. Why must toy manufacturers carry liability insurance?
Chapter 6
Page 2