Demand soars for Skylanders

But narrow margins cause some retailers to steer clear of the successful video game toy.
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Sell-through of Activision’s toy/video games hybrid Skylanders is being classed as phenomenal by many in the trade, although some retailers have raised concerns over the lower than usual margins for the toy business.

In excess of 30 million Skylanders figurines have been sold worldwide, and Toys R Us has likened it to the frenzy which surrounded the Tamagotchi virtual pet in the 1990s.

However, Stuart Grant, buying director at The Entertainer, said: “The problem is, they built the margin models and the retail price around the expectations of a games retailer, which has meant they have completely locked themselves out of trade with the likes of us.

“Within a games environment it’s an acceptable margin but within a toy environment it isn’t.”

Toymaster is also not offering Skylanders to its members as the figurines do not meet the buying group’s margin requirements.

But David Middleton, managing director of Toymaster member Toy Planet, Derby, doesn't mind the low margins. He said “If Skylanders is the hottest thing, we’ve got to have it.

“As long as the toy industry gets supplied. That’s the biggest issue, because we all missed out on 12 months of Skylanders, when only the video game industry was getting supplied.”

Collectable toy specialist The In Thing recently signed an exclusive deal to supply Skylanders to the independent trade. Managing director Paul Jackson believes the low margins are worth it.

“Although the margins are low for the toy industry, the sell-through is phenomenal,” he said. “In effect, as Skylanders sells so quickly retailers can actually make more cash from the same space they afford to a higher margin line. Activision has a superbly run allocation system that gives me weekly deliveries, so I am hopeful of always being able to give retailers stock.”

The In Thing: 0845 365 3030

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