SIC 3944 Games, Toys, and Children's Vehicles
SIC 3944
This entry consists of establishments primarily engaged in manufacturing games and game sets for adults and children and mechanical and non-mechanical toys. Important industry products include games; toy furniture; doll carriages and carts; construction sets; mechanical trains; toy guns and rifles; baby carriages and strollers; children's tricycles, coaster wagons, play cars, sleds, and other children's outdoor wheeled goods and vehicles, except bicycles. Also included are establishments primarily engaged in manufacturing electronic board games; electronic toys; and electronic game machines, except coin-operated. Establishments primarily involved in manufacturing dolls and stuffed toys are included in SIC 3942: Dolls and Stuffed Toys.
336991
Motorcycle, Bicycle, and Parts Manufacturing
339932
Game, Toy, and Children's Vehicle Manufacturing
The U.S. toy industry, a $20.1 billion business in 2004, is a fast-paced industry that showed slow overall growth during the first years of the twenty-first century. Product-driven, it rides the crest of a fad until the next fad happens through a combination of product merit, marketing, and luck. Although the classics such as Barbie, Monopoly, Scrabble, and Slinky have demonstrated strong, long-term sales performance, few toys or games stay on the shelves for more than a year or two. Several factors make the toy industry a risky business, including boom-or-bust sales patterns, short product life, and only one major selling season, Christmas, which historically has accounted for 50 to 60 percent of annual sales.
Although toy sales are likely to continue to be affected by fads that come to center stage but quickly lose their appeal, toy manufacturers are constantly working to develop long-lasting brands that hold value for years and sometimes decades. Companies also continue to build on well-established brands, such as Hasbro's G.I. Joe, Mr. Potato Head, and Tonka lines and Mattel's Barbie, Tickle Me Elmo, and Hot Wheels. While the toy industry embarks on its unending search for the must-have items that will fly off shelves, the industry must also develop creative ways to address the increasing competition coming from video and computer games.
Because the industry is heavily dependent on capricious trends, miscalculation or misjudgment at times can result in enormous losses. The life span of even the most successful toys is often brief, with sales dropping as quickly as they rise. Typically, companies count themselves among the fortunate if they have one product that sells well for a year. Even if a product remains popular after its debut year, it is likely to be copied, since toy manufacturers often attempt to replicate each other's successful products.
The Toy Manufacturers of America (TMA), the industry's trade organization, was founded shortly after the United States entered World War I, when toy makers faced severe shortages of materials, and Congress was considering an embargo on the buying and selling of Christmas presents to conserve materials needed for the war. TMA was formed and successfully lobbied Congress to continue producing toys for America's children despite the war. A few years later, TMA convinced representatives to impose large tariffs on toy imports to protect the American toy industry. TMA continued to lobby and compile information and statistics for the toy industry in the 1990s.
Ideas for games and toys may originate in-house, but the industry also relies heavily on the ideas of freelance inventors. A company may pour thousands, even hundreds of thousands, of dollars into market testing before committing to production. Toy development is risky and speculative. During the course of its development, a concept may change drastically. Most toy manufacturers also subscribe to Toy Retail Sales Tracing Service for quantitative market research that reveals trends, product performance, and competition. Qualitative market research involves product testing, usually with small focus groups of children. Until it is officially previewed at the annual American International Toy Fair, a project can be aborted at any stage if it does not meet expectations or if buyers do not express much interest.
Historically, distributors and wholesalers were the toy manufacturers' biggest customers, but in the early 1990s large retail chains began ordering directly from the toy makers. Smaller toy stores looked to regional distributors, but for the most part distributors were a dying breed.
While the big box merchandiser Toys "R" Us accounted for as much as 25 percent of the retail toy market in the United States in 1994, by 1998 Wal-Mart, with 17.4 percent of the market share, held a narrow edge as the top toy retailer. The rest of the toy market was comprised of national and regional toy store chains, mass merchandisers, wholesalers, catalog showrooms, warehouse clubs, variety stores, discount stores, department stores, drugstores, local chains, and independent toy stores. There were also "jobbers" who bought closeout merchandise from toy makers to sell to retailers. Mass merchandisers, such as Kmart Corp. and Target, did not carry as wide a range of merchandise as the large toy stores, but these retailers had tremendous clout with toy makers. The national distribution and volume buying that these stores and others, such as Sears, Roebuck & Co. and J.C. Penney, offered helped them negotiate beneficial deals with toy makers. Although the warehouse clubs mostly sold toy products during the holiday season, in 1997 a federal court ruled Toys "R" Us pressured manufacturers not to sell popular toys to the clubs. In the late 1990s, catalog and Internet shopping increased. In 1998 Toys "R" Us started selling on the Internet, and the e Toys company acquired Toys.com, while other companies also developed sites on the Web to sell toys.
Although the law prohibits manufacturers from selling merchandise to different customers at different prices, in reality, the larger the customer, the larger the volume discount. The purchasing power of the customer also affects many other negotiable terms, including credit against future sales...
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