What the rise of Amazon means for Target and other toy sellers seeing flat sales

Target aims to open more stores: Report

FOX Business’ Jackie DeAngelis discusses Target’s strategic move to open stores in wealthier areas to be more competitive in the market.

After Target shares fell when the retailer missed its own expectations for holiday toy sales, industry experts say companies will have to rethink their strategies if they want to compete with Amazon's convenience and toy selection.

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"Target did seem to have a lot of potential. They seemed to be doing everything right in terms of toy marketing," Jackie Breyer, editorial director of The Toy Insider, told FOX Business. "Their numbers seemed like toy sales were flat, not actually down, following along with entire toy industry being down or flat a couple of percentage points."

TARGET'S HOLIDAY COMPARABLE SALES ROSE MARGINALLY, SHARES TANK

Right now, Amazon's online toy department poses a threat to every retailer going after the market share that Toys R Us lost after filing for bankruptcy.

Amazon showed its commitment to capturing the toy market by sending out a toy catalog with 80-plus glossy pages ahead of the holidays, Breyer said.

Ticker Security Last Change Change %
TGT TARGET CORP. 115.91 -1.09 -0.94%

"Amazon continues to have record sales … and this does extend to the toy department," she said.

Amazon's next-day shipping is hard to beat when it comes to making shopping easy, finance expert and author Craig Kirsner told FOX Business.

"Target definitely is in a tough position with the ease and comfort of shopping on Amazon," Kirsner said. "At just the touch of a button, you can quickly view millions of available toys, shop for the best price, and usually have that item in your house the next day! … It seems the future will only continue in this direction."

A customer carries a stuffed toy at a Target store in Queens, New York, on Thursday, Nov. 28, 2019. (Bess Adler/Bloomberg via Getty Images)

"We are all so busy in our lives, it's harder than ever to make the time to drive to a store when you don't even know if they'll have what you want in stock," he said.

Retailers like Target will have to rethink how they can tap into impulse buying as e-commerce grows and shopping in-store shrinks, Breyer said.

"You know all the jokes about how you go to Target for one thing and end up spending $500? That doesn’t happen if you order online," Breyer said. "You’re not going to, say, throw a couple extra Barbies or L.O.L.s or Hot Wheels in my cart."

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Millennial parents are less inclined to purchase so-called tech toys in the age of smartphones, Breyer added. Those toys, like drones or robotic pets, are often more expensive than their non-digital counterparts and boost retailers' numbers.

"[The Toy Insider] did away with our tech toy list and replaced it with a budget-friendly list," Breyer said. "Tech toys aren’t popular the way they used to be. Kids are spending time playing video games and on tablets … Parents are very interested in giving their children traditional-type play to counterbalance all of the tech that kids are consuming."

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