Coming off one of the worst holiday shopping seasons in decades last year, many retailers across the country and the Merrimack Valley are dropping inventory in anticipation of a continuing sales slump.
"It's a big issue this year," said Kathy Grannis, spokeswoman for the National Retailers Federation in Washington, D.C. "Largely because there's no demand from consumer spending, there's no need to beef up on supplies.
"Retailers got shot between the eyes last year with the economy taking a turn so quickly," she added. "They were left with a lot of inventory they had no idea wasn't going to sell."
That wound up being a positive for consumers, though, as retailers held massive sales with huge discounts in the weeks and months following Christmas, just so they could dump all of that inventory.
But this year could be a different story. With six weeks to go before Christmas, popular toys are already hard to find.
The holiday season's early hit — the Zhu Zhu Pets hamster, an interactive mechanical rodent by Cepia Inc. that sells for $9.99 — is almost impossible to nab.
Other toys that are already becoming hard to find include Mattel's Mindflex, which measures brain activity through a helmet, a Nerf dart thrower called Nerf N Strike from Hasbro Inc., and Barbie Fashionista, who can twist her hips and strike other poses.
"Stores just under-ordered across the board," said Jim Silver, an analyst at Timetoplaymag.com, who predicts shortages of the top 100 toys by early December. In a typical year, only the top 15 are in short supply that early.
Supply and demand
At Toys R Us in Salem, N.H., lines regularly form at the front door two hours before the usual 9 a.m. opening the day after truck deliveries are made, according to store employees. The customers are waiting for Zhu Zhu pets, and might be lucky enough to find them, according to one store manager.
But Toys R Us spokeswoman Adrienne Giordano dismisses the assertion that Toys R Us might have ordered fewer Zhu Zhu Pets in an effort to save money. She said the Zhu Zhu Pets craze has been created by the popularity of the toy, not its scarcity.
"We have the same amount of inventory as last year," she said. "Shipments are received regularly. When they come in, they (Zhu Zhu Pets) are sold almost immediately. Collectibility is what's driving excitement around these products."
The Zhu Zhu craze is already being compared to popular toys from seasons past like Furby and Tickle Me Elmo. Shoppers flocked to area stores to pick up those items, often waiting days before they would show up on store shelves.
"It happens every holiday season," Grannis said. "Stores used to run out of Elmos, too. It's not unusual for stores to run out of popular merchandise."
She said stores will often issue IOUs or rain checks so shoppers can return after the Christmas rush to pick up those hard-to-find items.
Managing inventory
While some items might be hard to find, not everyone has cut back on their orders.
Chip Will, owner of the Learning Express franchises in Andover and Salem, N.H., said he is "loaded up" with games and gifts because he doesn't want to come up short for his customers.
"Stores that do it that way are afraid business will be off," he said. "But actually, that causes business to be off. If you don't have what they want, people will go elsewhere to find it."
He said he knows what his customers want, and they know what he has.
"They are looking for train sets and Lego Star Wars," he said. "And we do really well with family-type board games. Stores expecting to do well do better than those going into the season tentatively."
But many stores are taking the more cautious approach, said Bill Rennie, vice president of the Massachusetts Retailers Association.
"From what we've seen, anecdotally, they do intend to purchase less inventory," he said. His organization is in the process of compiling its annual seasonal survey, and he said many of those who have responded reported buying less in anticipation of weak sales.
"Every retailer has to make their own decision," Rennie said. "Some might be looking at limited inventory, others might want to do something different."
He said Massachusetts retailers were hit with a double-whammy — the slumping economy and the state's cancellation of the sales tax holiday.
"That is usually in August and is an opportunity for retailers to move a lot of product and clear their inventory," Rennie said. "That didn't happen this year, so there was no clearing-out effect."
He said many stores also found that because revenues were down, they had less capital to build up their usual inventory.
A few bright spots
Grannis, of the National Retailers Federation, said stores have been planning for this holiday season since January 2009.
"They knew back then it was going to be challenging," she said. "We are just hoping for some pent-up demand."
Grannis said the one bright spot is online shopping, which grew last year, while traditional shopping shrank by 3.4 percent. This year, she said, predictions are for a 1 percent drop in store shopping.
But stores are getting savvier about how to reach their market.
About 47 percent of retailers are expected to use social media outlets, like Facebook and Twitter, to tell potential customers about sales and specials.
And at discount retailer Walmart, holiday rollbacks and specials have already been announced, earlier than usual, said Steve Restivo, a company spokesman.
"We heard from customers that they needed more time to plan their holiday shopping," he said. "From now until Christmas, we will be announcing new rollbacks in electronics, toys, food and home furnishings."
And that's good for customers, he said.
"Price is driving their decision-making," Restivo said. "Customers are confident that when they come to our stores, any day, they will find low prices."
The Associated Press contributed to this report.
Five tough-to-find toys:
Zhu Zhu Pets — These are described as "furry, interactive hamsters." There are five to choose from, including Patches, the flower-lover; Chunk, a laid-back surfer; Pipsqueak, a tiny titan of power; Mr. Squiggles, who loves to explore; or Num Nums, who loves to eat. With more than 40 different sound effects (including toilet flushing and teeth-brushing) and artificial intelligence, these pets will dart around the house and play in hamster tubes and on exercise wheels. Very hard to find.
Mindflex — Put on a headset and concentrate on a ball suspended in a column of air. Think about work, and the ball goes up; think about sleep, and the ball goes down. Navigate an obstacle course with your brain. Some say it gives them a headache. Others say it's impossible to find.
Nerf N Strike — Part of the Nerf series of foam darts and dart guns. A big hit among adolescent boys, this game is good for indoor play because the darts won't destroy your favorite Ming vase. Hard to find.
Harumika Runway Showstopper — Create fantastic fashions by folding fabric over a dress mannequin and locking the swatches in place. Once a new dress is formed, kids can capture images of their garment with an included USB camera before uploading them to the Harumika Web site, where their styles can join an online fashion show. Very popular. May be hard to find.
Barbie Fashionista doll — Decked out in the best outfits, shoes and accessories, this collection of fashion-forward Barbie dolls each feature their own distinct fashion personality, including Glam, Cutie, Girly, Wild, Sassy and Artsy. Each doll comes with one stylish outfit. Hard to find.
Sources: Toys R Us, product Web sites.
