Toys R' Scarce

German parents typically spend oodles on their kids for Christmas.

But with the buoyant economy this season, they're spending even more. So much more, in fact, that retailers are scrambling to stock hot products, like Playmobil's "Robo-Gangster" toy car with figures or Lego's "Stars Wars" spaceship.

Some manufacturers now warn they may no longer be able to fulfill everyone's Christmas wish.

"We know that from now until Christmas demand will be growing daily (so) we can't guarantee 100 percent that every product will be available right up to December 24," said Dirk Engehausen, the Lego Deutschland managing director, in an interview with the German news station N-TV.

Other German and European manufacturers have a similar holiday message to convey: they haven't run out of any products yet, but supplies are depleting fast and finding the one or other popular product a few days before Christmas could prove to be a real treasure hunt.

Hurry while the supply lasts

"None of our products have completely sold out in Germany but some stores have run out of select products," Playmobil spokeswoman Judith Schweinitz told Deutsche Welle.

"If you're really determined to find these, you will but you might have to look around."

While manufacturers had projected stronger holiday sales, few if any thought they would so strong.

"We anticipated more demand this Christmas but we're surprised nevertheless by how huge the demand has been," said Heinrich Huentelsmann, a Ravensburger spokesperson. "Our TipToi product, for instance, is still available but is becoming hard to find."

That toy is one of the few that the German maker of games, puzzle and toys manufacturers in China. More than 85 percent of its products are made in Europe.

"We can react very quickly to demand in Europe because most of our production is here," Huentelsmann told Deutsche Welle. "We don't have long logistics paths."

Ravensburger expects it will be able to deliver all products right up to Christmas, he said. But the company isn't making any guarantees.

Anticipating greater demand this year, Lego delivered 10 percent more products to retailers in advance of the holiday shopping season, according to company spokeswoman Helena Seppelfricke.

But with some products, like the company's classic fire department set and "Technik" series, in huge demand, she admits the company could easily have delivered more.

"Same procedure"

Most European traditional toymakers including Lego, which is based in Denmark with additional production sites in Hungary, the Czech Republic and Mexico, show their new products at trade events early in the year and begin talks with its buyer at the same time.

However, their ability to boost production to meet unexpected Christmas demand generally decreases the closer the holiday shopping season approaches.

"It's pretty much the same procedure every year," said Steffen Kahnt, deputy director of Germany's federal association of toy retailer (BVS). "Retailers need to decide how many products to order and manufacturers how many to make. But no one really knows what the demand will be, especially for new products. So you hope you make the right call."

Stockpiling products isn't a viable option in the competitive toy sector, according to Kahnt. Both manufacturers and retailers, he says, strive to have only as much stock as they see necessary to better control their operating costs.

That said, the industry may want to up production for the 2011 gift season, if the past 24 months are any indication.

Record-breaking sales

"More products were actually sold last year than the year before," Kahnt said. "That surprised us. But no one really thought that sales this year would be so good."

The German Toy Industry Association (DVSI) expects sales to increase six percent this to 2.52 billion euros, compared to 2.38 billion euros the year. If that mark is reached, the holiday sales will be a huge factor. Retailers generate more than 40 percent of their annual revenue during the holiday shopping season.

For sure, numbers like these will make manufacturers and retailers happy. Their big challenge now is to deliver enough toys to make kids – and their parents – just as happy.

Author: John Blau
Editor: Cyrus Farivar