Tulsa World: Zhu Zhus sign of economy

MAKE US YOUR HOMEPAGE | Tuesday, February 09, 2010 | WIRELESS

Home > Business

Newspaper View Print this story

Comment

RSS

Bookmark

Zhu Zhus sign of economy
The robotic hamster and accessories are flying off shelves.

By RACHEL BECK Associated Press
Published: 11/22/2009 2:27 AM
Last Modified: 11/22/2009 1:07 PM

NEW YORK — In a world full of economic indicators, the best one during the holiday season may prove to be a furry toy hamster.

Zhu Zhu Pets are the must-have hit for the holidays. They're out of stock in lots of places, and retailers are flying in the robotic hamsters from China in a desperate attempt to replenish their store shelves.

This is about much more than the next Tickle Me Elmo. The Zhu Zhu Pets' craze tells us a lot about the state of the economy.

The Zhu Zhu Pets' cheap price — $8 to $10 at most — shows how Americans still are extremely focused on price and value. This toy mania also illustrates how stores are keeping inventory levels low — so low that a sellout of a given product doesn't necessarily mean soaring demand and a stronger economy.

Forecasts for overall spending during the all-important Christmas period are lackluster. The National Retail Federation predicts total holiday sales will drop 1 percent for the combined November and December period from last year's already weak spending. Other groups are estimating slight gains over a year ago.

Zhu Zhus' popularity appears to be a bright spot. Parents are buying out any new stock as soon as it arrives.

Some enterprising consumers are trying to capitalize on the Zhu Zhu Pets mania. More than 14,000 Zhu Zhu Pets-related items are for sale on eBay, many going for double the retail price or more.

Part of what's driving the success of the robotic hamsters has to do with the price. The cost was set deliberately low by Zhu Zhu Pets' creator, toy-industry veteran Russell Hornsby and his small company, Cepia LLC of St. Louis.

Five pet hamsters are on the market, as well as accessories like tunnels and slides, a garage and a funhouse. The hamsters move around and make sounds appropriate to where they are playing. Nothing is over $20.

At the same time, the demand for Zhu Zhu Pets might not be all that it seems.

Last Christmas, retailers found themselves with too much merchandise after consumers cut back their spending in the weeks after the financial meltdown. Stores had to slash prices to move out goods, hurting profit margins. Last year retailers suffered their worst sales declines in at least three decades.

That helps explain the Zhu Zhu Pets frenzy. Retailers were conservative in their orders, and Hornsby said he had to be, too, in what was manufactured.

There's no denying Zhu Zhu Pets are a holiday hit. But the ultra-low pricing strategy and razor-thin inventory levels that got them there actually may be signs of weakness in the economy. By RACHEL BECK Associated Press

Newspaper View Print this story

Comment

RSS

Bookmark

Reader Comments

Show: Most Recent Comment First

Add your comment

0 comments have been made on this story so far. Tell us what you think below!

Reporting Comments

If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

Add Your Comment
In order to post a comment on this article, you must sign in to Tulsaworld.com. If you do not have a site account, you can create an account for free.