Toymakers jockey for kid envy, parent cash

LOS ANGELES — For parents, finding the right holiday toy isn't all fun and games.

After a robotic hamster became the breakout hit last Christmas, the race is on to snag this year's hot toy. But what is it?

No front-runner has emerged yet, but parents and kids have been buzzing about squishy pencil toppers, a Barbie equipped with a real video camera and toy musical instruments that can be played by lightly touching the paper surface.

"Part of what makes a toy the must-have toy is the scarcity in finding it," said Sean McGowan, a toy analyst at Needham & Co. "There's social currency attached to being the parent who can deliver it and the kid who gets it."

Toys may be a bright spot during what is predicted to be another tough holiday season for consumer spending. Compared with other retail categories such as luxury and electronics, toys weren't hit as hard during the economic downturn for one major reason: Many parents will cut back everywhere else before they deprive their children of that Buzz Lightyear action figure or the latest Bratz doll. Plus, toys are relatively cheap.

For those who haven't started shopping, prepare yourselves for bigger toy displays, more pop-up shops and better discounts as retailers boldly move into their most important time of the year. Many toys are priced around the "sweet spot" of $30.

Discount giant Wal-Mart Stores Inc. has expanded its toy assortment and inventory and added "Rollback Alley" to most stores, an aisle that features deals on toys. Toys "R" Us Inc. will operate 600 temporary holiday shops and 10 FAO Schwarz pop-up stores nationwide.

Target Corp. is featuring 10 percent more discounts and items in its annual holiday toy catalog. And Sears, which last year brought back in-store toy sections to 20 of its department stores, is opening 79 more this year.

Even though the economy has forced her family to cut expenses, stay-at-home mom Dianna Lynn, 40, said toys would still be at the top of her shopping list this Christmas.

"You still want them to have something to open and something to get excited about," Lynn said while browsing a Toys "R" Us Express store in Rolling Hills Estates, Calif. "Santa doesn't know about the recession."