Why Amazon could win the battle for holiday toy sales
CNN/Stylemagazine.com Newswire | 11/27/2018, 3:14 p.m.
By Nathaniel Meyersohn, CNN Business
(CNN) -- Retailers are battling hard over toys, flat-screen TVs and new tech gadgets this holiday season, and Amazon appears to be in a strong position.
The company said on Tuesday that it sold 18 million toys between Thanksgiving and Cyber Monday. Amazon did not disclose toy sales from last year, but it has been stockpiling toys since Toys "R" Us' closed its stores in June.
Amazon (AMZN) expanded its toy efforts in the run-up to the holidays. It mailed out a 70-page toy catalog with top items and deals, and even began selling toys at Whole Foods. Last week, Amazon offered discounts on Barbie, Hot Wheels, Fisher-Price, and Lego.
L.O.L. Surprise was a best-selling item at its new brick-and-mortar Amazon 4-Star stores, the company said.
Amazon is far from the only company making a big push on toys this year.
Toy aisles were busy at Walmart (WMT) and Target (TGT) during the holiday weekend, Morgan Stanley analyst Simeon Gutman said in a report. Walmart US CEO Greg Foran told reporters last week that those L.O.L Surprise collectible dolls had also been "flying off the shelves."
Target said its toy sales increased 20% last quarter compared with a year ago and anticipates more growth during the holiday period, when it typically makes half of its annual toy sales.
The toy successes signal that all three of the retailers have room to grow their market share in Toys "R" Us' absence.
Yet Jefferies' analyst Stephanie Wissink noted that Amazon offered a broader assortment of toys — and more obscure items — than Walmart or Target, and may be in a stronger spot to capture sales.
"The more diversified the gift list, the better for Amazon," she said in a report on Monday.
Spending on new electronics picked up during the long weekend, too.
Consulting firm Customer Growth Partners projected consumer electronics and appliance sales rose 6.4% over the stretch, a higher clip than apparel or general merchandise spending. Gutman from Morgan Stanley said that TV and video game aisles were bustling at Walmart, Target, and Best Buy (BBY).
Not surprisingly, Amazon got a boost from its growing arsenal of tech items. The Echo Dot, the Fire TV Stick 4K with an Alexa voice remote, and the Fire 7 Tablet with Alexa were the top-selling items across the site. Amazon devices typically lead the company's sales during shopping events.
Despite some early concerns about a lackluster holiday, Amazon said its Black Friday and Cyber Monday sales broke its previous record. However, the company does not share yearly comparisons, so it's difficult to gauge how sales or profit changed from a year ago.
In a signal that Wall Street is optimistic about the holiday period, investors this week have driven up Amazon's stock.
But Amazon faces mounting pressure. Rakuten Intelligence said in report Tuesday that Amazon leads competitors with control of about 28% of online spending so far this holiday. At the same time last year, however, Amazon controlled 30%.
"The field is beginning to narrow the gap with Amazon, but there is still a long way to go," said Rakuten analyst Kenneth Cassar.