Cast your mind back to the 80s. The decade marked the birth of not only the Rubik's Cube and shoulder pads, but also Christmas-craze shopping.
In 1983, the squashed faces of the Cabbage Patch Kids captured the imagination of kids across the globe and caught retailers unawares, forcing them to order more stock when shelves emptied as soon as they were replenished.
A string of other toy crazes has followed in their wake: the Teenage Mutant Ninja Turtles, Furbys, PlayStation 2 games consoles and Tickle Me Elmo.
This year, the £10 battery-operated Go Go Hamsters are the Christmas must-have product. According to a spokeswoman for the manufacturer, The Character Group, the buzz around the product has been built by word of mouth, originating in the US, where it was launched.
'From the moment the product went on sale in the UK, it was obvious that the trend would be replicated,' she says. 'We saw this through up-to-the-minute sales data from major retailers and from enquiries on the website, so we put out more orders to meet demand. As soon as stocks arrive, they are sold, and although it is being replenished, supply will fall short.'
The furry gizmos are now selling for four or five times their purchase price on eBay.
Nevertheless, the science behind Christmas retailing has become so precise that retailers can now prevent too many children from being disappointed on Christmas morning.
'Fortunately, disaster stories of too much or too little product are few and far between now, as things are so well worked-through,' says Dave Martin, general manager of Mega Brands, which owns Battle Strikers, hotly tipped to be a Christmas bestseller. 'There's such a filtering process that huge flops are fairly rare. Quite often you'll get the buyer saying they don't see it selling; they will be studying sales data daily, or even hourly, so they wouldn't significantly overstock.'
Failures are rare, but they do happen. That's because, while Christmas marketing is a science, a certain degree of art is also necessary. Betting that a particular product will sell well is still a big gamble for retailers, particularly in the preschool market.
The flop story that most in the toy industry recall is that of Boohbah. On paper, it looked like a dead cert. Created by Ragdoll, maker of the hit TV show Teletubbies, retailers snapped up the Boohbah product - but it failed to connect with pre-schoolers, and retailers were left with piles of unsold stock. This put some retailers' toy-buyers off backing Ragdoll's next venture, which turned out to be the phenomenally successful In The Night Garden.
Buyers are under immense pressure to make the right calls, and often gravitate to tried and tested manufacturers rather than take a risk on smaller brands.
'We have ongoing relationships with retailers that span many years, but if you are coming out with a new product and trying to break into the market, that could be very challenging for a smaller company or brand,' says Martin.
Inventor Andrew Reeves, who is behind the Ramisis and Ku Ku puzzles, confirms Martin's hunch. Although his products have been featured on Friday Night with Jonathan Ross and Dragon's Den, which boosted their profile, it is still difficult to get a slot in a buyer's busy schedule. 'The PR does help, but even if you have got a really good product, it's hard,' says Reeves. 'I'd estimate that for every 30,000 products a buyer at Hasbro sees, they pick three or four, and they are looking for cheap products with huge margins. Even speaking to a buyer is a positive. If I've done that, I've had a good day.'
Online advantages
The internet as a distribution channel has helped to level the playing field. For instance, research from 2CV indicates that voucher-code sites have risen in popularity in the past six months as consumers have tightened their belts, and they are now playing an important role in consumer decision-making.
VoucherCodes.com lists discount voucher codes from thousands of brands, and sends a list of its latest deals to its database of 565,000 British consumers.
In this newsletter, brands are prioritised by the size of their discount, rather than the strength of their brand.
In a recent mailout, for example, big-name retailers such as Debenhams and Argos were listed alongside lesser-known, often online-only, outfits such as Cheap Smells and Purely Gadgets.
However, the biggest change the internet has driven is in consumers' buying behaviour. 'People have become more picky, as they have access to much more information,' says Pauline Dubuc, co-managing director of Letsbuyit.co.uk.
'They expect a lot more knowledge from the shop-hosts and they compare more, which is very easy to do online. Consumers are focusing more on window-shopping and enjoying the store environment, then going online for the second step of shopping, which is looking at the detail and comparing products and prices.'
Orit Peleg, head of shopper marketing at Ogilvy Action, commends Dixons.co.uk for being the first retailer to 'see that the path to purchase is no longer a direct one'. The online retailer's recent cheeky ads challenged stores such as John Lewis and Selfridges, which are renowned for their polished customer experience. Dixons.co.uk encourages consumers to go into the shops for advice and product demonstrations, then buy the items cheaper online.
'Many brands have been slow to realise that the path to purchase is a lot less linear now,' says Peleg. 'Just because a consumer is in-store, that doesn't guarantee he or she will buy something. They might go online and compare prices.'
Her advice is to meet this challenge head-on and have in-store computer stations, allowing consumers to compare prices while they are in the shop, rather than allowing them to go home and lose the sale.
Peleg predicts that this Christmas, consumers will seek to bring back the magic and indulgence of the season, while still comparison shopping and remaining price-savvy.
In-store luxury
2CV's research has also detected this change in the path to purchase, and the fact that many consumers are researching products more thoroughly online. How-ever, the firm has also spotted another trend: some consumers who have been reining in their spending and not visiting the shops as often as they would like, are actually looking forward to the in-store retail experience of Christmas shopping.
'Christmas provides the perfect excuse to shop - some consumers are researching online before hitting the high street,' says 2CV's group research director, Darren Hanley. 'As a result, retailers and brands should not lose sight of the retail environment's role in driving purchase decisions.'
Buyers and manufacturers alike believe the recession will affect which products make it into stockings at Christmas.
Home-brewing equipment supplier Muntons expects that the UK's reignited passion for frugality, greener living and all-things-homegrown will extend to home-brewing and boost sales of its Ibrew product. Mean-while, John Lewis predicts that this Christmas, parents will buy more traditional toys for their offspring, such as teddy bears and wooden train sets.
However, according to John Lewis toys and books buyer Elaine Whiteman, parents will not spend any less on their children, despite the bleak economic climate. 'Parents will always put their children first at Christmas, so [even] if money is tighter, the kids don't miss out,' she says. 'Families will club together to buy a bigger gift for children, or accessories to go with a main gift, rather than lots of little presents.'
Expert view Debenhams
Ali Jones, marketing director, Debenhams
There is a very fine balance between maximising buzz around products and satisfying demand. As a retailer, we want to show we have the most-wanted products, but keep replenishing them. In general, we want to make sure we have enough supply to satisfy most demand.
However, we do have limited editions in our designer fashion lines. They sell out, but not so quickly that we get queues of disappointed people, a scenario that would not fit with our brand proposition.
Nevertheless, we do run Spectaculars, which are days where the store and the website are filled with offers and amazing deals, from half price to 75% off.
We try to ensure that every store has a good quantity of product, but once these items are gone, they are gone, which can often happen by lunchtime. We stress that these are incredibly special offers and customers have to get there early to avoid disappointment.
The savvy shopper knows this, and often comes in when the store first opens, on a mission, with a note of products they have their eye on.
If a customer is disappointed that a product has run out, we explain to them that next time they need to get there earlier to ensure they can get what they want.
Expert view Mega Brands
Dave Martin, UK general manager, Mega Brands
It is important to create buzz around your product at Christmas. The fact that our Battle Strikers were included in the Toy Retailers Association's 'Dream Dozen' was great from a trade confidence point of view, because it is voted for by retailers and, obviously, retailers will listen to other retailers, so it has a halo effect on your brand. It also creates awareness among consumers, who will be buying the product.
As a result of the lists, we were all over the national papers and TV, and subsequently saw a huge uplift in sales that weekend.
While the buzz is fantastic, and having people talking about potentially selling out of product raises awareness, it's also a difficult balance to strike. The last thing you want to do is run out of stock. I would never set out to run out of stock in order to create a sense of urgency among parents to buy the toy, and I don't believe anyone in the toy industry actually sets out to run out early.
The sense of urgency has to come only from the desire of the children. When creating demand among kids, you have to be careful not to disappoint them. Obviously, it's a different matter if you've miscalculated on your forecasts, but the ideal scenario is to run out at the last minute, on Christmas Eve, although that is tricky to pull off.
