TOY STORY OF '97 TO TELL A TALE OF MODEST GROWTH

PETER MALBIN

NEW YORK -- With another Tickle Me Elmo, this could be a smiling year for the toy industry.

In any event, projections for 1997 are that toys should continue to sell at the modest level set last year.

"I anticipate that traditional toy and game shipments for 1997 will continue to grow in the 3% to 4% range, and that retail sales next year will top $21 billion," said George B. Volanakis, chairman of the Toy Manufacturers of America, the industry's trade association, based here. He spoke Feb. 10 at the opening address of the 94th American International Toy Fair held here, Feb. 10 to 17.

Volanakis said toy trends will continue to be influenced by the entertainment industry and new technology.

"In recent years, major films have provided the perfect vehicle for toy products. Whether it's huggable, spotted animals or action figures, once again in 1996 the potential of this partnership was revealed, both at home and abroad," he said.

"Traditional toys -- like classic and action games, and Barbie's CD-ROM clothing designer and V Tech's precomputer line -- are forging new territory for the toy industry by incorporating classic hits with technological components," he said.

More than 20,000 buyers were expected to attend Toy Fair, which consists of two categories: permanent showrooms and temporary exhibits. About 425 exhibitors showcased their toy wares in Manhattan showroom locations Feb. 10 to 17. From Feb. 14 to 17, Toy Fair also played in the Jacob Javits Conference Center, where some 1,100 manufacturers, distributors, importers and sales agents from 30 countries exhibited their wares.

The toy products on display will include action figures, dolls, games, puzzles, bicycles, puppets, plush, audio and videocassettes, computers, playground equipment, Halloween and Christmas merchandise and party supplies.

Toy industry sales have increased consistently -- albeit modestly -- over the past 10 years, Volanakis said. In spite of a fluctuating economic environment, the industry has achieved a compound average growth rate of 5.2% by using creative and innovative product development and marketing, he said.

Retail sales of toys and games reached $20.7 billion last year, with unit sales rising 2.3%. Supermarkets account for less than 1% of retail toy sales.

"We closed 1996 with a great deal of fanfare, with many thanks to that cuddly, giggling stuffed toy, Tickle Me Elmo," Volanakis noted. "The public and the media went crazy over Elmo, which helped generate a burst of excitement during the holiday season.

"Adding to the excitement was the introduction of Nintendo 64, which, combined with innovative video games by Sega and Sony, boosted the video game category in 1996, bringing it out of a two-year decline," Volanakis said.

But last year's shortened selling season between Thanksgiving and Christmas contributed to relatively poor holiday sales, he said. While the Christmas season was still better than 1995, it was among the worst in more than a decade, he noted.

The strongest categories in 1996 were video games, dolls, vehicles and plush toys, which increased 20.8%, 8.6%, 8.3% and 8.2%, respectively.

Among popular toys in 1996 were Barbie Pet Doctor, Melanie's Mall, Easy Bake Oven Snack Center, Take Care of Me Twins, Space Jam Tune Squad, Hot Wheels, Matchbox cars, Crayola Crayons, Monopoly, Tyco's VideoCam, sports activity toys, Lego sets and preschool games.

"Our research indicates that parents and caregivers continue to look to the toy industry to supply their children with toys that stimulate a child's development, including social skills, learning capabilities, creative enrichment and just plain fun," Volanakis said.