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For toy stores, "just in time' deliveries not soon enough

Published Oct. 10, 2005

Many parents would do almost anything right now to find a Talkboy tape recorder or one of the Mighty Morphin Power Rangers action figures.

"They're among what I call our in/out toys," said Al Kanaan, a Target assistant store manager in Clearwater. "As soon as we get some in, we're out of 'em again."

Power Ranger and Talkboy are just two of a growing number of hot toys in short supply this Christmas. But there's a big difference between these shortages and the much-hyped Cabbage Patch Doll rush of 10 years ago.

This year's critical shortages of new toys such as My Size Barbie, Biker Mice and Matchbox motorcycles are being blamed on toy retailers' growing reliance on computer-based delivery systems for advance ordering.

In the industry, it's called the "just-in-time" system because the goal is to have shipments of new goods timed to arrive just as the old ones disappear from the shelves.

Just-in-time systems have helped make mass retailers such as Target, Wal-Mart, Kmart and Toys R Us America's dominant toy purveyors. But these systems have an Achilles' heel: They keep off the shelves new toys that suddenly turn hot just before Christmas.

"This year it has aggravated the perennial problems of toys in short supply," said Paul Valentine, an industry analyst with Standard & Poor's Corp. "But it has helped keep the old established toy lines in stock all the time."

Indeed, many of the top sellers again this year are new versions of old standbys.

Barbie's handlers at Mattel have added 100 new versions of the world's most popular doll in hopes of cracking $1-billion in Barbie sales this Christmas. Erector sets are making a big comeback. Toy stores remain loaded with all manner of toy trucks, cars and construction equipment.

Toy manufacturers who have lost millions in sales because retailers missed some hot new trends aren't much happier than empty-handed shoppers.

"It's been a bummer," said Robin Plous, spokeswoman for Tiger Electronics Inc., the Vernon Hills, Ill., makers of Talkboy. "We knew we had a hit but we couldn't get it on the shelves as quickly as demand grew. We had to pull our advertising right after Thanksgiving.

"We've averaged 300 calls a day at headquarters from consumers just trying to find our product," she added. "We've even had parents try to talk us into getting them Talkboys by claiming they had a terminally ill child."

No luck. The factories where they're made in the Orient are working around the clock just to catch up with back orders.

Instead of delivering them by ship, the company is sending them by air freight. But it concedes the backlog won't ease until well after Christmas.

Just-in-time delivery is a buying strategy most big retailers have embraced in the past few years. It uses computer tracking of cash register sales to take the guesswork out of inventory forecasting. It substantially shortens the time between the ordering of a product and its delivery. It also slashes a retailer's warehouse expense.

It works beautifully in keeping the shelves fully stocked with basic items such as socks and white shirts that sell well through good times and bad.

But when it comes to new products, just-in-time delivery is slower to react to quick changes in trends.

Instead of using their merchandising intuition to lay in a big order for a new product, most retailers these days buy only a few for a test, then progressively order more and more if sales take off.

Retailers have been more cautious about new toys since many were burned with excess inventory by the bankruptcies of some celebrated toymakers in the late 1980s.

Retailers made their picks for Christmas goods this year at toy trade shows staged in February. Few placed orders for Talkboy or Power Rangers, even after hearing that both would be promoted in films. So the manufacturers didn't crank up production.

Back then, the Power Rangers' TV plot no doubt seemed pretty far-fetched to combat-hardened retail toy buyers.

The cast on the Fox show includes turtles and midget rap singers. Its teenage stars "morph," or transform themselves, into noble warriors with the aid of robotic dinosaurs. When not hanging out in a California juice bar, they battle Rita Repulsa, a shrieking witch who lives on the moon.

Nonetheless, Power Rangers became an instant kids TV hit in September.

Talkboy, a tape recorder that disguises voices by playing them at different speeds, also had a relatively recent debut.

It had a big role in the movie Home Alone 2: Lost in New York. The product was primed for a September release of the film in the home video market.

"We were on the market when the movie came out last year, but sales weren't very good because the product couldn't do everything it did in the film," said Plous, spokeswoman for the Talkboy manufacturer.

"We added the missing features to coincide with the video release," he said. "But by the time demand for Talkboy got huge in the fall and retailers were trying to increase the orders, we had no time to get ahead of demand."