Wednesday October 13, 12:39 am Eastern Time

Retailers Predict Must-Have Toys

AP Business Writer

NEW YORK (AP) -- It's that time of year again, when parents begin their annual search for the ``hot'' toys of the upcoming holiday season, and the nation's largest toy retailers are only too happy to offer suggestions.

But shoppers be warned -- this list of must-haves wasn't done as a public service. While retailers make it their business to predict the public's desires, their choices also reflect what they have in their inventories and want to push off store shelves.

``The toy business is all about spin, and this is the retailers' spin on what will sell,'' said Eric Johnson, a professor at the Tuck School of Business at Dartmouth College who follows the toy industry. ``But I have to say that out of all the people out there picking hot toys, I'd say the retailers have a pretty good chance of knowing best what will be hot.''

Topping the retailers' list is Pokemon and anything tied to the Japanese cartoon character, from video games to plush dolls to trading cards.

While the other toys aren't ranked by number, those also expected to be popular include WWF and WCW wrestling dolls; Rock & Roll Elmo; Furby; Millennium Barbie; QX-3, an electronic microscope; computer-linked Legos and toys based on the movies ``Toy Story 2'' and ``Star Wars Episode I: The Phantom Menace.''

The list represents the latest attempt by the toy industry to shape Americans' buying habits during the important holiday season.

Every year as Christmas nears, adults choose toys for their children just like they pick trendy clothes and cars for themselves, and getting a hot toy becomes a status symbol.

Toy manufacturers are usually blamed for stirring up a buying frenzy, dumping millions of dollars into marketing and advertising. In recent years, the hype over Furby and Tickle Me Elmo was carefully orchestrated by their makers.

But there are also many would-be toy experts and toy ``tests'' run by magazines and local media that add to the must-have mentality. Many accept money from manufacturers to promote certain products, but never reveal that when releasing their hot toy lists.

``Right now, traditional television advertising isn't working like it used to, so manufacturers are using different methods to get their product out there into the public eye,'' said Chris Byrne, a toy consultant and contributing editor of Toy Wishes: The Ultimate Toy Buying Guide, a new magazine that tracks hot toys. ``But everyone has the same goal: To sell something.''

The retailers' survey may have more credibility than others. While the merchants have an obvious agenda -- to encourage people to spend -- the findings are based on the opinions of more than a dozen retailers, including giant Toys R Us, online leader eToys (NasdaqNM:ETYS - news) and the specialty chain Noodle Kidoodle.

The retailers were not charged a fee to participate. Manufacturers were prohibited from entering products and had no say in the survey. That gave smaller toymakers as good a chance to get on the list as the companies with fatter marketing budgets.

Overseeing the survey was the reputable Wall Street analyst Sean McGowan, of the investment firm Gerard Klauer & Mattison, and Jon Salisbury, publisher of the online newsletter World Toy News.

The list will be formally unveiled today at PlayDate '99 in New York, a pre-holiday gathering of toymakers and retailers. Retailers will be able to post the list in their stores or use it in advertising.

``We are not trying to say what the best toy is for every child, That's impossible to do,'' McGowan said. ``This survey is just based on what retailers are betting on what will be the best-sellers this year, and since they are the ones who really know the business, we felt confident in their choices.''

Besides the overall popularity list, other lists were also compiled, including the top computer games (led by Activision's (NasdaqNM:ATVI - news) Quake 3: Arena); video games (led by Nintendo's new Donkey Kong), and the toys expected to be top sellers online and at specialty stores.

A separate list includes 12 toys that aren't well-known, but are seen as possible winners. Included is Rumpus' Harry Hairball, a plush cat doll with a selection of fish, birds and fuzzy hairballs stuffed down his gullet.

After the holiday season, McGowan and Salisbury will compare the retailers' lists to actual sales figures tallied by The NPD Group, a Port Washington, N.Y., market research group.

``Then we will know if we are on target or not,'' McGowan said.

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