Animatronic hamsters have stores scrambling
The hamsters are fake, with a coating of fuzz over a mechanized chassis and a small sound system. But when it comes to creating intense desire among kids — and desperation among shopping parents — Zhu Zhu Pets are the real deal.
When the Post-Dispatch profiled the electronic rodents eight weeks ago, toymaker Cepia LLC of Clayton was hoping for a hit. Since then, the toy rodents have sold out in stores from Myrtle Beach, S.C., to Chicago, as well as on the websites of store chains.
Retailers such as Toys "R" Us, Target and Walmart are trying to get as many as they can for today — "Black Friday," one of the most frenzied shopping days of the year.
Analysts say the animatronic hamsters are a once-in-a-decade phenomenon, comparable to Tickle Me Elmo back in 1996.
"You don’t have to be a genius to know that cute, furry, cuddly, interactive pet hamsters would be a hit," said Sean McGowan, an analyst at Needham & Co. in New York.
Toy crazes of this magnitude are rare, he said.
The hamsters contain fairly simple technology. Little bumps on the floor of the hamster cages touch the hamsters’ underbellies as they motor along, telling the hamsters which "room" they are in. The faux pets can make teeth-brushing sounds in the bathroom and sleeping noises in the bedroom.
Among more than 40 sound effects, they squeak when petted on the nose.
The hamsters have "explore" modes for feistiness and a "nurturing" setting for maximum snuggling.
Gerrick Johnson, an analyst at BMO Capital Markets, projects Zhu Zhu sales will hit $50 million this year, according to Bloomberg News. Other projections are even higher.
The $10 hamsters are now selling on eBay.com for more than twice their recommended price, with a four-pack listed Wednesday afternoon for more than $100.
"When I looked at it, the first thing I said to myself was, ‘Why hasn’t someone done this before?’" said Jim Silver, editor in chief of timetoplaymag.com. "Pets have always done well with consumers in terms of gifts."
But with allergies and the cost of feeding, there are many reasons you wouldn’t want real hamsters in your home, said Silver.
Zhu Zhu Pets are "like having a real hamster, except you don’t have to put it in a box and bury it in the backyard."
Now parents have begun an intense hunt for these toys.
"The problem is that you can’t find these fake hamsters anywhere," said one St. Louis executive who searched for the hamsters at the Toys "R" Us in New York’s Times Square guaranteed approval payday loans.
No luck: The world’s biggest toy store didn’t have them.
"They’re being bought up as soon as they hit the shelves," said the executive, who did not want her children to know her shopping plans. "Boy, are they hot properties."
For Cepia, the intermittent toy shortages are preferable to oversupply, analysts said.
Cepia is pursuing a prudent strategy of keeping list prices affordable — at about $10 — and not overbuilding inventory, said McGowan. It would be "insane" to build to this level of demand before knowing how hot the toys would be, he said. Overestimating demand "is a good way to go bust in this business."
So Cepia is trying to keep up with demand.
Cepia, which has a small office with fewer than two dozen employees tucked near Interstate 170, has made and shipped millions of the toys (it did not give a more exact count) and says the response to Zhu Zhu Pets has been stronger than it expected. The toys are made in China.
"As quickly as we are making them, we are selling them," said Natalie Hornsby, Cepia’s director of marketing strategies and brand development.
The company is still running traditional media advertisements, but it is focusing its marketing efforts on "viral" marketing for now. The company recently hosted a party on Twitter, the microblogging site. Within one hour, there were 9,000 "tweets" about the toys and they were the fourth-most popular topic in that time frame, Hornsby said in an e-mail.
But the toy industry is notoriously faddish, the maker and breaker of hot toys. Analysts also expect competitors to come out with their own gerbils and mice to jump on the trend that Cepia helped create.
"Generally, when you have a hot toy, you usually get two years," said Silver. "The key for the manufacturer is, how do you extend your brand or your toy beyond two years? You have to do something. You can’t rest on your laurels. You’ve got to have a plan for subsequent years."
Silver said some toy makers license DVDs or other spin-offs to extend the life of the brand. "It’s important for (Cepia) to push themselves as the leader, as the first," he said.
Cepia said designs for next year are complete, and include additional accessories for the hamsters’ playhouses.
"We will continue to bring the freshness and innovation that first ignited the public’s imagination," Hornsby said.
Filed under: finance by Finance Boss