NEWS
11/24/2016 23:00 EST | Updated 11/25/2017 00:12 EST

The time-sensitive art of producing and selling Hatchimals, the latest hot toy

TORONTO — The overwhelming popularity of this season's hottest toy, Hatchimals, has taken many by surprise — including its Toronto-based toymaker, Spin Master.

The furry, robotic bird-like toy animals that hatch from an egg when rubbed have been selling out at stores across North America, Europe and Japan since its launch on Oct. 7.

Some experts say this is a common risk that companies encounter when available stock can't meet high demand, because perceived value — especially in toys — can be time-sensitive.

"These toys tend to be trends and fads. What's hot this Christmas probably won't be hot next summer," says June Cotte, a consumer behaviour researcher and marketing professor at the Ivey Business School at Western University.

"The risk is basically what we call money left on the table. If they had them in stock, they would've sold more."

But Cotte notes that the scarcity of Hatchimals is also helping to fuel its popularity, with some of the toys relisted on websites like Craigslist, Kijiji an Ebay at three to four times the original price. The toys sell for $69.99 in stores.

That occurred in the 1980s with the mania over the Cabbage Patch Dolls and in the mid-1990s with the Tamagotchi and Tickle Me Elmo. In these cases, it was reported that shoppers caused stampedes and even broke into fist fights inside stores over the sought-after toys.

Scarcity marketing, when manufacturers produce a limited number of products or only offer them for a small window of time, also helps drive hype and the fear of missing out for toys like Hatchimals.

According to retail consultancy NPD Group, Hatchimals was the top selling toy in Canada in October.

But it's difficult for toymakers to look into a crystal ball and predict whether their toy will be the hot trend of the year, notes Michelle Liem, the group's toys industry analyst.

The toys that do make it top status also don't always have similar characteristics. Last year, she Liem, small, plastic collectibles based on grocery store items like apples and cookie were the big hit.

These days the popularity of toys can grow exponentially through word of mouth and social media.

"There's a new toy that comes out and word gets around about how cool the toy is," says Liem.

"The faster it starts going off the shelf, the more people are talking about it and talking about how hard it is to get... It almost perpetuates more demand."

Spin Master co-CEO Ronnen Harary says part of the appeal of Hatchimals, which took the company two years to create, is the element of surprise that comes with each toy.

Hatchimals come in 12 different species once hatched, and children must nurture and hold them to help them grow through various stages.

"They want to play, that's the magic of this. There's something in there," he says.

Spin Master has even credited YouTube videos of children unboxing, caring and interacting with their Hatchimals for the company's success.

Harary says the company has ramped up production overseas and are bringing the toys over by plane, train and freight in the hopes that store shelves will see some stock through to the end of the holiday season.

"In a situation like this, it's very difficult to anticipate exactly what the right amount is (to manufacture)," he says.

"If the product didn't resonate with the kids then we would be left over with a lot of inventory and a lot of stock. That's very costly for the company. So anticipating the right amount of inventory to bring in is part science and part art."

 

Follow @LindaNguyenTO on Twitter.

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