Mattel and Wal-Mart Will Have Strong 4th Quarters; Here’s Why

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Barbie Dream House, $180 at Wal-Mart and Target

I have analyzed the 2018 hot toy lists from Wal-Mart, Target and J.C. Penney. Based upon what I am seeing, Mattel and Wal-Mart are betting on a strong economy with higher retail price points. I predict they are going to have strong fourth quarters.

Here is why: An analysis of the lists reveals that the average Mattel retail on the three hot toy lists is almost three times higher than Hasbro (MGA is right up there as well). In addition, the average retail on the Wal-Mart hot toy list is roughly 14% higher than  Target’s hot toy listings.

Here are the average hot toy price points for the five toy companies with the most listings as well as for the three retailers:

Toy Company Average Hot Toy Prices

Mattel     $121.92

MGA     $113.75

Spin Master     $50.87

Hasbro    $44.99

Moose    $33.00

Retailer Average Hot Toy Prices

Wal-Mart    $77.90

Target     $66.71

J.C. Penney     $39.44 

What this tells me is:

  1. Both Mattel and Wal-Mart are best positioned to benefit from a strong economy.

  2. Both Mattel and Wal-Mart will perform strongly in markets with older, more affluent parents. Coastal cities like New York, Atlanta, Los Angeles, San Francisco, Seattle and Portland. (For more on this see my article: “The Toy Industry and the Rising Wealth Gap Between Older and Younger Parents”.)
  3. Lower income shoppers are more inclined to have spent their entire Christmas budget on Toys R Us closeouts than more affluent consumers. This gives an advantage to Wal-Mart and Mattel.

The hot toy lists are extremely important to follow because they are self-fulfilling prophecies. They are heavily invested in these items both in terms of inventory and space allocation. They have also wrung strong commitments from the toy companies supplying the products to run heavy advertising on all screens. In short, if Wal-Mart says a toy is hot it will be hot simply because they will make it so

We’ll find out in a few months, but as of right now, I think Mattel and Wal-Mart have the right idea.

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