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Zhu Zhu Pets playing the disappearing game: Will they be around for Black Friday?

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Filed under: Shopping, Consumer Ally

The elusive Zhu Zhu Pets faux hamsters showed up at major retailers on Sunday and disappeared from most shelves before the morning ended. Such is the life of the hot toy of the year -- following the likes of Furby and Tickle Me Elmo in the annals of toys whose scarcity was part of their allure.

Zhu Zhu mania is bordering on the absurd -- creating a secondary market where the tantalizingly inexpensive toys ($8 at Walmart) become, well, expensive toys ($35.88 for one and $98 for a three-pack on Amazon.com).When the shipments came in this past weekend at some Walmart stores and were spotted on shelves, customers were denied the right to purchase them at the register. The sales were blocked.




Here's Walmart's statement posted under news on the Zhu Zhu Pets website after wannabe buyers were turned away:

"Zhu Zhu Pets hamsters are among the most sought after toys this holiday season and are quickly selling upon arrival in stores. Walmart stores have been receiving new shipments this week in preparation for their Sunday ad circular. Zhu Zhu Pets™ hamsters are currently 'blocked for sale' at stores to ensure the product is available on Sunday when advertised. Unfortunately, a few were mistakenly placed on the sales floor too early which caused the confusion at the registers. We apologize for the situation and any confusion. Zhu Zhu Pets hamsters will be available for sale at Walmart stores again on 11/8/2009."

Toys R Us instituted a rationing plan at several stores visited by WalletPop -- limiting purchases to one per family. Store managers said they expected more shipments of the critters and the habitats and accessories that make them amusing, but on no certain schedule.

Some retail analysts have said stores under-ordered in general as a conservative strategy in a down market. The consequence of that is not having the products people most want when they want them. Over the next month, as Black Friday comes and Christmas draws closer, it will become clear whether that was the problem or if consumers were being drawn in by a clever ploy to make desired items appear in short supply.

What is going to be on the list of most-desired toys isn't that big of a mystery to the retailing giants, who use their considerable tools and resources to figure it out.

"Select Toys R Us stores in Phoenix tested Zhu Zhu Pets earlier in the year," Toys R Us spokesman Bob Friedland told WalletPop. "The fun and interactive nature of the Zhu Zhu Pets hamster excited kids. During the test, we saw Zhu Zhu Pets selling well and knew it would be a hot toy."

Such testing is done regularly around the country, he said. Friedland said the issue of supply should be directed at manufacturers.

Mike Nakamura, CEO of the Chicago-based toy company Senario, told WalletPop the Zhu Zhu phenomenon seems legit.

"It follows the same format as the Beanie Babies or Webkinz. It's collectible," he said. "Those don't come along all the time."

Dan Fishback, CEO of DemandTec -- a company that turns consumer behavior into science, said even the idea that a toy can be hard to get can stimulate demand.

"It has to be perceived that it's hard to get," he said in an interview. "It doesn't have to be hard to get."

Thinking back at some past hits, such as Tickle Me Elmo, Fishback said it is less about the toy and more about how it is positioned.



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"The product has the least amount to do with it," he said. "The discretionary toy has more to do with marketing and more to do with understanding the market you are going after."

As for Zhu Zhu, which has done little advertising to spur its big build-up: "I think it's great marketing... They're creating the buzz without spending any money on advertising."

What has happened in the interim is the growth of a secondary market -- people who were able to get some of the toys and sell them at a significant premium.

If there really was a problem with under-ordering, toy manufacturers said being able to build back inventory from Chinese production plants is a challenge to do in short order.

"If a product takes off faster than you, as a toy company, has forecast it, your ability to replace that product is based on your supply chain," Scott Levin, CEO of U.S. toy manufacturer Step2 said in an interview. "If you don't have it in inventory to replace it immediately you have to re-order and there's longer lead times."

When you're dealing with Chinese factories, he said, it could take 90 days to retool a factory, manufacture the products and have then shipped to the U.S., Levin said. Step2, which makes molded plastic toys such as play kitchens and sandboxes, produces them in U.S. factories and can make the adjustment far quicker, he said.

Joe Battat, CEO of toy maker Battat Inc., said he tries to focus his company away from trying to develop the one-hit wonders that might light it up one holiday season. Instead, he told WalletPop, the goal is to produce toys that can remain on the shelves for years. His line of Our Generation dolls, a low-price version of Mattel's American Girl, have steadily grown their sales over the past several years, he said.

Battat said he'd rather have more of that kind of toy in his lineup than a product that flames out after a single season. He explained that it could take three years of good sales to recover all the development costs that go into a new product.
"As manufacturers, what happens with people like us, we try to come up with items that are more evergreens," Battat said. "We want to build a following with consistency...Furby lasted for one year. The guy who owned the company sold it to Hasbro. A year later it was out. Transformers went away and now it's big.

"You don't know what's going to grab the attention of kids. Kids are very hard to understand "
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