A quick look at America's 2007 Top 25 playthings retailers reveals one undeniable truth: video games and their related handheld and console systems, along with computer games, ruled the children's entertainment industry last year. Nintendo's Wii, first launched in the U.S. during holiday 2006, was by far the leader of the video game console pack, followed by its main competitors, Microsoft's Xbox 360 and Sony's PlayStation 3.

 

      GameStop, in the No. 3 spot on our survey for the past three years, continued to benefit from video games' widening appeal. It lead the electronic entertainment retail segment's charge, recording $5.44 billion in video game-related playthings sales last year, a gigantic 27.4 percent increase from its 2006 sales of $4.27 billion. And the popularity of Wii is only part of that story.

      GameStop has been on a store-opening rampage since acquiring rival Electronics Boutique in 2005. The retailer ended 2007 with a whopping 4,061 domestic stores, 643 more units than the mighty Wal-Mart. The video game specialist opened a net 262 U.S. stores in 2007, continuing a torrid expansion plan that saw the retailer gain a net 175 U.S. stores in 2006 and another net 272 U.S. stores in 2005.

 

      The result was nearly an upset among the industry's top 2 titans. Amazing as it may sound, GameStop trailed No. 2 Toys ’R’ Us by a mere $71 million in sales 2007. The video game retailer’s results shrunk a previously wide gap between it and Toys ’R’ Us. In 2006, the difference between the two retailers was $1.13 billion and more than $2.56 billion in 2005.

 

      Video game sales also played a large part in the positive performance of another chain on Top 25 list, No. 5 Best Buy, which experienced double-digit sales growth 2007. The consumer electronics chain garnered $1.37 billion in 2007 toy and video game sales, an increase of 13.2 percent from its 2006 sales of $1.21 billion. Helping its results was the opening of a net 101 domestic stores in 2007.

 

      Overall, the electronic/entertainment specialist channel, consisting of GameStop, Best Buy and No. 7 Circuit City, pulled in a combined $7.28 billion in 2007, a remarkable 22.7 percent sales gain, the highest gain of any distribution channel on the Top 25.

 

      Among the top 2 retailers on our list, it wasn't even close. Wal-Mart maintained its No. 1 position

      with $11.39 billion in 2007 toy and video game sales, moving a staggering $5.88 billion more in merchandise past its check-out scanners than Toys 'R' Us, the No. 2 toy retailer, did. Wal-Mart, in     the top spot on our list since 2000 and The NPD Group's toy industry retail ranking since 1998, sold toys and video games through 3,418 doors in 2007 and alone comprised more than a third      of our Top 25's total playthings sales.

      At No. 4, Target's 2006 growth curve slowed last year with 2007 sales of $3.51 billion, an increase of 1.6 percent over its 2006 toy and video game sales of $3.45 billion.

      Among the industry's deepest discounters, there was a new name on this year's Top 25 list. Dollar Tree jumped onto our ranking in the No. 25 spot this year thanks to 2007 toy sales of $142 million. The dollar store opened 192 net stores during 2007 and saw its total sales for the year in

crease 6.9 percent. 2008 is proving even more successful for Dollar Tree. Its overall sales for the first six months of 2008 were up 10.2 percent, a result attributed to cash-strapped consumers seeking solace in rock bottom prices for everything from dish deter gent to die-cast cars.

 

      Overall, the discount department store channel comprised more than half of the Top 25, bringing in $17.27 billion in 2007 toy and video game sales, an increase of 3.6 percent over the channel's 2006 combined sales of $16.67 billion.

 

      Toys ‘R’ Us held its own in 2007, posting a 2 percent increase in playing sales and turning around its 2006 decline. The privately-held retailer is also taking a bite out of the video game pie, recently attributing its 2008 second quarter gains to increases in the video game category, specifically strong demand for Nintendo’s Wii Fit accessory unit.

 

      Meanwhile, Toys 'R' Us' primary pure play toy retailing competitor, No. 11 KB Toys, experienced the greatest decline among the Top 25 in 2007, posting a 31.4 percent sales decrease and dropping four spots on the ranking.

 

      According to latest news, KB Toys filed for Chapter 11 bankruptcy protection Dec. 12 in Delaware; it’s the second time in four years the retailer has done so. It also scheduled sales discount at the end of the year so as to cash out by clearing its stocks.

 

      The privately-held company closed 140 stores during 2007 and idled one of its three distribution centers. It was the continuation of a consistent decline for the nation's largest mall-based toy store chain. It shuttered a net 70 stores during 2006 and 110 stores during 2005. To help turn the tide, KB early last fall expanded its Super Value and Extreme Value discount-priced merchandise programs, and got a jump on the holiday competition by slashing price on 200 toys from several major manufacturers to less than $10.

 

      Toys 'R' Us' sister division, No. 24 Babies ‘R’ Us, garnered a 5.7 percent increase in 2007 plaything sales, the largest percentage increase among its toy and kid specialist cohorts.

 

      As a channel, the toy and children’s product specialists collectively sold $6.83 billion worth of product in 2007, a decrease of 0.7 percent from 2006 sales of $6.88 billion.

 

      No.12 Costo experienced solid growth during 2007, posting a 6 percent increase in toy sales. The warehouse membership club opened 20 net locations during the year. Costco’s chief competitor, Sam’s Club, pulled in $220 million in 2007 playthings sales, a 0.9 percent increase over 2006.

 

      No. 16 Walgreen saw double-digit growth in 2007. The drug store giant had 2007 toy sales of $228 million, an increase of 10.7 percent from 2006 sales of $206 million.

 

      No. 14 Army & Air Force Exchange Service, provider of playing to servicemembers and their families through 174 stores both domestic and worldwide, saw its toy and video game sales decline 15 percent from 2006 to 2007.

 

R= Revised form updated information  NA=Not available

      All Playthings Top 25 Toy Retailers sales information, except for publicly held companies that break out line-of business sales for toys, are Playthings market research estimates. Al data for calendar year ending Dec. 31, 2007, fiscal year end or trailing 12 months closest to date.

Source: 2008 Playthings Market Research

 

       PLAYTHINGS' exclusive survey ranks the Top 25 playthings giants ranks the leading U.S. retailers by their estimated 2007 U.S. playthings sales. Retailers were considered for the ranking if they carry more than one toy category.

 

Retailers are ranked by their estimated U.S 2007 sales of traditional toys and electronic  interactive toys, as well as video/computer game and systems. In some cases, because of the way a number of retailers organize their departments, sales figures may include a portion of sales of sporting equipment (including scooters, skateboards, baseball bats and basketballs) , and/or bicycles and related equipments.

 

       Data is based on calendar years ending Dec.31, 2007, fiscal years or trailing 12 months closest to date. All sales figures, except those of publicly held companies that break out toy sales as a separate line of business, are PLAYTHINGS Market Research estimates.

 

      Estimates were derived using a variety of sources, including the companies themselves, public company filings with the Securities and Exchange Commission, discussions with industry analysts and suppliers, as well as published and unpublished reports, including newspaper articles in various retailing areas.