Toy stores, boutiques, and discount retailers/superstores account for approximately 90% of sales in the U.S. wood toy market according to the February, 19xx issue of Daren’s Guide to Toy Manufacturing.  

In light of these and other pertinent dynamics, W4K has broken the market into segments fed by specific distribution channels.  W4K concentrates on the following channels: toy stores, boutiques, discount retailers/superstores, and its own on-site retail shop.

Much has already been discussed regarding the importance of the discount stores.  In fact, the discount stores alone account for 45% of sales in the wood toy market according to AMDG’s Toy Review, July, 19xx.

In addition to shifts in distribution channels, the poor economy is fueling parents frugality and focusing attention on toys as education tools as well as entertainment.  The November, 19xx issue of  Retailer’s Guide to the World seems to point to this phenomena that educational toys are reported to be growing in popularity at a rapid pace.

In light of this W4K will concentrate on the discount segment and reposition its offering to be more of an educational toy.  By doing this, W4K will be poised to capitalize on the two strongest trends in the industry in the last decade.

Toy Stores

Toy Stores represent a large percentage of W4K’s current marketshare (40%) and therefore represent an important segment.  However, there are several issues that detract from this market segment’s desirability.  First, since the economy is weak in the U.S. currently many people are looking for bargains when it comes to purchasing.  Toy stores have not enjoyed the reputation of being lowest cost.  Therefore sell through of toy products at Toy stores has decreased in the last two years.  Secondly, this market segment is trying to cut its costs radically to compete with the discount retailers.  Therefore the toy stores are squeezing suppliers to reduce their wholesale prices.  This has in turn reduced margins on product flowing through the toy store channel. 

Boutiques

Boutiques have historically been an extremely important channel for W4K, but this importance has decreased over the last five years.  Currently boutiques represent a smaller slice of  W4K’s  sales (35%), and will fall precipitously in the next couple of years.

According to a 19xx  Fun and Games survey about 60% of people were turning away from boutiques when purchasing toys either as gifts or for immediate family usage.

Discount Retailers/ Superstores

Discount retailers/superstores represent a growing and extremely important segment for W4K. This channel currently represents 20% of the firm’s sales.  This channel will increase because with the economy as soft as it has been, people are flocking to discounters to help them save money on their purchases.