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As toys get pricier, grown-ups pay up

From a $40 Elmo and a $55 Barbie to a $300 pony, tech-tweaked hot products have been flying off store shelves.

December 24, 2006|Abigail Goldman | Times Staff Writer

Michelle Chavez wanted her daughter to open the perfect gift Christmas morning, one that would add a bit of magic to her daughter's holiday.

So the day after Thanksgiving, she dragged her husband, a MetroLink conductor, to Wal-Mart just in time to buy the store's last FurReal Friends Butterscotch Pony -- for about $300. Just what their 2 1/2 -year- old told Santa she wanted.

"My kids are spoiled and they get what they want," said Chavez, a 36-year-old stay-at-home mother who lives in Chino. "I admit that I'm crazy," she added, laughing.

It's a good thing she shopped early. Price seemed to be no deterrent for many shoppers looking for a can't-miss Christmas gift this year. The new breed of feature-filled toys carried price tags that years ago would have scared off even the most adventurous big retailers, let alone consumers.

"It's going to be the best toy year in five years, and the ability to sell high-priced toys is one reason," said longtime industry analyst Sean McGowan of Wedbush Morgan Securities in New York. "The success of these items this year has validated the strategy of not avoiding high-priced toys."

On Toy Wishes magazine's annual Hot Dozen list, a fairly good predictor of the season's most popular toys, this year's average price was more than 66% above the average last year.

Technology seems to make the toys wow-worthy enough to pass the cost-value test that parents implicitly conduct.

"Customers are not concerned about buying a $1,000 plasma TV, so they're not going to be concerned about spending $150 or $200 on a toy with electronics in it," said Gerald Storch, Toys R Us Inc.'s chief executive and a former Target Corp. executive. "If it's worth it, the customer will pay for it, and if it's not, she won't."

Many shoppers indicated that the expensive playthings were worth it.

Butterscotch, the 3-foot-high neighing, chomping, tail-swishing pony from Hasbro Inc. that can hold an 80-pound child, quickly sold out across the country. Ditto the Kid-Tough Digital Camera, a working point-and-shoot device for toddlers, priced at $70, from Mattel Inc.'s Fisher-Price division.

And if you haven't gotten one already, give up any hope for a $249 Zoombox, a projector for DVDs and video games from Hasbro's Tiger Electronics, because it's also long gone from most store shelves.

Toys that do more and cost more aren't just at the upper end of the price scale.

Products costing less than $20 still take up most of the space on retail toy shelves. But middle-tier playthings have more features and technology and are priced higher than their predecessors.

That's led to toys such as Mattel's $55 Dance With Me Barbie, which pirouettes to match a girl's turns, and Fisher-Price's $40 T.M.X. Elmo, which repeatedly falls down laughing and gets back up.

Not that long ago, the season's featured Barbie didn't cost more than $39.99; for the last 10 years, Elmo listed at $29.99.

Expensive video game systems probably paved the way for parents to throw down a lot of holiday cash for more-traditional toys. But that's an older phenomenon, McGowan said. What's happened over the last two years is that parents have been softened up by spending $80 and up on the real must-have item: Apple Computer Inc.'s iPod music player.

What did Chavez's husband buy for their 9-year-old daughter? A $156 iPod Nano.

"The toy industry has been so obsessed with saying, 'Eighty percent of my product line is available for under $20," McGowan said.

"They've watched consumers lay out tons of money for other products that are not toys -- iPods, digital cameras, video cameras, and they finally said, 'Our problem isn't the price, it's the fun," he said. "If we can't deliver the fun at $20, let's deliver it at $30 or $40."

There's also the gift-card factor. Parents and children add their own money to the value of a gift card -- anywhere from 5% to 75%, experts say -- which enables them to trade up from what they would have spent on a single item.

In other cases, they combine cards from birthdays and holidays to buy a more expensive item.

Still, manufacturers said they thought long and hard before presenting their highest-priced products.

That $300 pony?

"That was a stretch even for me," said Sharon John, a Hasbro general manager. "But we did a lot of testing on it to ensure not only that the product was robust but that from a parental perspective it was within reason."

The decline in technology costs, oddly enough, fueled the rise in toy prices. That's because many toys that would have cost several hundred dollars a few years ago -- and therefore would have been impractical for most retailers even now -- sell for just over $100 today.

Theresa Gonsalez, 52, and Antonieta Ventura, 57, a janitor and a housekeeper, respectively, split the $150 cost of a shiny red TV/DVD combination system styled like Lightning McQueen of the animated film "Cars."

It was a gift the Los Angeles residents bought at Target and planned to give their 2-year-old grandson.

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