Retailers Tickled Pink Over Elmo’s Return
Elmo’s back and retailers are tickled pink over the prospects of stocking what promises to be one of the hottest selling toys of the holiday season.
T.M.X. (the X stands for extreme) Elmo, the latest in the line of Tickle Me Elmo line of toys, is breaking new ground according to toy industry watchers.
“When I originally saw a picture of how it moves, I really thought there were some sort of wires, like a puppet, moving it,” said Jim Silver, editor-in-chief of the trade publication Toy Wishes. “We’ve never seen a stuffed animal that has this type of movement.”
Executives at chains including KB Toys and Toys R Us have said preorders for the new Elmo have exceeded expectations.
Rich Ryan, a Toys R Us buyer of preschool toys, told MarketWatch, “We’ve seen a lot of success with Elmo over the years. We expect it to be one of the best sellers chain-wide.”
Mr. Silver said consumers should plan to shop early if they want to get their own extreme Elmo in time for Christmas. “If there are Elmos around December first, I will really be surprised,” he said.
Elmo is already a hot seller with consumers lined up outside of stores across the country to buy the newest version. The toy, according to a Chicago Sun-Times report, is already being sold on eBay for $200. The toy’s suggested retail price is $39.99.
Discussion Questions: Considering the demand for the product, should retailers selling T.M.X. Elmo sell the toy for a price higher than its suggested
$39.99 retail? What would happen if the item were to be sold at a premium to the $39.99 price?
A retailer certainly has the right to sell the new Elmo for more than the $39.99, however, if they’re looking to make a stupid PR move then that’s exactly what they should do. The benefit of Elmo is not the sales made at $39.99 but in the buzz that is being created in a category that has not seen a lot of excitement lately. Second is the fact the buzz being created is happening 6 weeks before the season really gets going which will undoubtedly generate a lot of incremental sales. Hats off to Mattel for staging the launch of Elmo in a manner that would create this much early season hype for the category.
No, retailers should not sell Tickle Me Elmo for more than $39.99. The toy has a certain value which equates to a price at which it should sell. Overpricing due to limited demand simply angers customers who (rightly so) believe the retailer is taking advantage of them in a situation which is the retailer’s/manufacturer’s fault (limited supply). Overpricing leads to distrust which does not encourage future business. Retailers will benefit from increased store traffic and, if the store employees execute, each Elmo purchase should be used as an opportunity to increase sales through add-on units. Overall, assuming Elmo is a big hit this will help toy retailers tremendously as they have not had a hit for a while.
Mr. Grady nailed it on the head! Maintain the $39.99 retail, and use this as an opportunity to drive additional sales from the consumer traffic they will be getting in their stores. The retailers should secure their inventory position on the T.M.X. Elmo, and pump up their customers immediately through mailers or in-store advertising that will generate buzz with their customers to get early sales. They can also prepare a “Top (10) must have toy list” that their sales staff can merchandise with the Elmo toy.
This comes down to a basic issue — the guilt created by households with 2 working parents that enables spoiled children to get whatever they want. If a retailer charges $50, the parents will pay because of possible repercussions from “all my friends got Elmo for Christmas” and subsequently more guilt. They won’t care how much it is at the Retailer, they’ll just be happy they have one in stock so they don’t have to pay $200 on eBay. So the long term negative effect on the Retailer will be minimal.
Back in the 1980’s the ad agency I worked for had a large Honda dealer group as a client. The dealerships in the group, as a matter of practice, sold Accords at that time for a minimum of $1,500 over the MSRP. It didn’t hurt the demand then and customers get coming back year after year. If the market is there for the product at a higher price, retailers should sell it for that. Retailers should also insist the manufacturer not ship packaging with a price on the box.
My advice to retailers — enjoy the success you’ll receive with the new T.M.X. Elmo this holiday season and sell it at the suggested $39.99 price, or even on sale for a period of time. Make the customers happy. Build up supply now and remember, Elmo shouldn’t be the only hot toy this year for this age group and beyond.
Raise the price and people will still buy it. Gouge the public and they’re justified in boycotting you in favor of a less exploitative retailer the next time they need a little less demand sensitive item.
Retailers should be very cautious about marking up any item above the manufacturer suggested retail price. The bond of trust between a retailer and their shoppers is very important to building loyalty and shoppers take great offense when they feel “overcharged”; even on high demand/limited production items. It only takes one instance for a shopper to feel taken advantage of and to move their business elsewhere, so making a few extra dollars on Elmo would be very shortsighted by any retailer who took that approach….
Does anyone remember Cabbage Patch dolls? A $30 item selling for hundreds of dollars so parents could indulge their children. It’s all about supply and demand — and great marketing.
It appears that most are in agreement regarding the pricing; don’t gouge the customer….
Consider this angle…limiting the number of TME that a customer can purchase at one time and avoiding featuring it in any special sale events could help minimize past marketing problems.
eBay has given rise to the “power seller” and other entrepreneurs who have been enabled through technology to “scalp” the public en masse. How many of these entrepreneurs will go to their local Wal-Mart, Kmart, Target or TRU and purchase all of the TME stock and then resell it close to Christmas for huge profits? There is precedent for this type of activity; consider iPod as a most recent example.
Advertising a hot item such as TME in a circular, especially if it is advertised off price, can literally lead to riots especially when demand exceeds supply such as usually the case with hot items like these.
The smart retailers will take these into consideration before they will seriously consider taking a “market adjustment” to the product such as many unscrupulous car dealers do on hot products (i.e. FJ Cruiser, Honda S2000, etc).
No conventional branded retailer can afford to sell T.M.X. Elmo or anything else for higher than list price. The public relations damage would be awful. Using car dealer practices as a retail model is the fastest way to get commit retail suicide. Car dealers are life achievement gold star world champion Sales Prevention Institute award winners. Yes, some people might buy some T.M.X. Elmo’s and sell them for higher than list price on eBay, but any eBay seller can operate under multiple assumed names. A conventional retailer has only 1 name, and craves a positive image including fair dealing, to win return customers.