Americans spend nearly $22 billion a year on toys, and major retailers compete for every last dime. The largest toy retailers share about 70 percent of the U.S. toy market, with small specialty shops and online catalogs claiming the remaining 30 percent. Top retailers have focused on increasing their share of the existing market with competitive pricing, innovative products and consumer-friendly environments.
Walmart stepped into the lead in the race for toy sales in 1999 and hasn't looked back. Kloster Trading, a consulting firm for investors in toys and electronics, estimates Walmart's share of the retail toy market at just under 30 percent. The mega-retailer has stayed at the head of the pack with aggressive discounting and volume sales at its more than 9,000 stores. A decision to scale back the catalog and offer a smaller selection hurt toy sales, which represent roughly 7 percent of the company's total revenue. Walmart is shifting gears and increasing inventory with an emphasis on environmentally-friendly stock.
Toys-R-Us comes in second in retails sales with more than 18 percent of the U.S. toy market. While the toy store and baby supply chain is the largest toy specialty retailer in the world, it still lags behind Walmart in sales. But Toys-R-Us is focusing more on the latest products in an attempt to get toys up on the shelves before sparring over prices and discounts begins. The company's practice of opening temporary stores in mall space during the holiday season has been successful and may become a permanent part of its sales strategy.
Target, the second largest retail chain in the United States, claims close to 17 percent of the U.S. retail market for toys. Target has been gaining ground in the battle for sales with an expanded holiday toy catalog, early holiday discounts and spruced-up toy departments. The Minneapolis-based discount chain has also focused on younger customers with sponsored ads on Facebook and Twitter.
Kmart, which merged with Sears in 2005, has been gradually downsizing, and its toy sales reflect that trend. Kmart's share of the retail toy market is about 3.4 percent, less than Amazon which has 5 percent but is usually listed in a separate online category. Kmart's aggressive preholiday toy sales have helped the chain remain profitable while it adjusts its stock to meet customer demands.