There’s nothing quite like this magical time of year. The spirit of giving is in the air. Stores are festooned with lights. Parking-lot campers are brawling over PlayStation 3’s.
Yes, now that Thanksgiving is over, we’re in the heart of the annual hot-toy shortage season.
I’m not one to grant much credence to grassy-knoll theorists and others who see Grand Conspiracies. But I suspect many of the annual shortages of hot toys are contrived.
One clue: It’s all so predictable. Each step could come straight from the Cabbage Patch marketing playbook.
It starts in the late summer when we start hearing hype about this year’s crop of “must-have gifts.” (Last year it was the Xbox 360. This year, besides the aforementioned PlayStation 3 game consoles, there’s a pinch in supplies of the latest version of Tickle Me Elmo at least a local company, Mattel Inc., is cashing in on Elmo.)
The next step: Hints, usually leaked to the trade press, that supplies may be unable to keep pace with demand. Next: Retailers get paltry shipments of the purported hot gift. Sell-outs are quick. After that, manufacturers issue press releases that factories are working overtime to try to meet the “incredible demand.”
If all goes according to the playbook, a buying frenzy unfolds exactly as it has this season. Shoppers camp in parking lots. Fisticuffs occasionally ensue as the moment of the besieged retailer’s opening becomes imminent. And, of course, TV cameras will be there because, well, because it’s human drama. The phenomenon will be parsed in newspaper and magazine articles.
The final step: Denials that the shortages are contrived. Manufacturers, backed up by stock analysts and the like, somberly point out the details of long lead times and the impracticality of gearing up whole manufacturing plants for a one-time burst of sales. (As if Microsoft can’t convince a factory in Asia to put on an extra shift.)
Besides, they argue, why would they intentionally create shortages and give up on all those sales?
Here’s why: The buzz of having a hot toy one that adults fight over and magazines put on the cover is far more valuable than a few lost short-term sales. Besides, those “lost sales” aren’t lost at all. They will be made up later and in greater numbers.
I said that the predictable marketing steps give us one clue that the shortages are contrived. Here’s another: The manufacturers of hot items could eliminate shortages overnight. All they need to do is borrow a page from Adam Smith and do what capitalists always do when there’s a shortage: jack up prices.
Instead of selling the base Xbox 360 for $299 or the base PlayStation 3 for $499, all they need to do is boost the price to, say, $700 or $800 or so. Lines would disappear. Retailers would be happy with the greater markup. And the manufacturers would make more money.
Instead, manufacturers are getting something far more valuable than some extra money now. They’re getting incredible news coverage, lines of people and the irreplaceable cachet of owning a hot franchise.
No, I don’t believe there was a second shooter in Dallas, and I don’t believe dark, unseen forces are conspiring to set oil prices. But the annual shortage of must-have toys? Now, there’s a real contrivance.
Charles Crumpley is editor of the Business Journal. He can be reached at
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