Business - US;Toy shopping in tough times

Reena Jana

American consumers may be curbing their discretionary spending, but toy manufacturers are hoping that thrifty shoppers will bargain-hunt and discover that there are affordable holiday gift options available.

"There really is something for everyone this year. The hottest toy on the market, Bakugan Battle Brawlers, is only $5," says Jim Silver, editor-in-chief of the Web site timetoplay.com, which covers the toy industry. He's referring to a series of innovative plastic, magnetized balls that, when rolled over metallic cards, pop open to reveal a small action figure. The figures are based on a popular TV show on the Cartoon Network, and their Toronto manufacturer, Spin Master, says that retailers such as Toys 'R' Us are fast selling out.

Silver, the father of three teenage daughters, adds that the toy industry is generally "recession resistant," if not recession-proof. Anecdotally, he says this is because while parents might cut back on discretionary items such as trendy electronic gadgets for themselves during tough economic times, they tend not to skimp on toys for their children. "For us, it's all about our children," says Silver. "And our relatives are the same; everyone's buying for the kids only."

$50 and Under
A new survey of 13,276 consumers conducted by global consultancy Deloitte suggests that Silver has a point. The study, released on Nov. 10, shows that while shoppers intend to cut back on clothing as gifts this year, toys and games remain a steady choice. The poll was conducted online between Sept. 26 and Oct. 7, 2008—when the economic slowdown was well under way.

Savvy shoppers who pay attention to the numerous awards for educational and inventive toys will find that many lauded items are available for less than $50. Snap Circuits Jr., for instance, which won the Toy Industry Assn.'s 2008 award for Specialty Toy of the Year, is available for only $29.95. The kit, made by Elenco of Wheeling, Ill., features electronic components that boys and girls can snap together without tools to create functioning objects such as an AM radio.

Manufacturers of popular franchises are also aiming to keep toy costs low in order to attract more buyers to their brands who might stick around post-recession.

In late October, Disney (DIS) released a series of stuffed animals based on digital characters from the company's popular online virtual world Club Penguin. The plush penguins cost less than $10. "We wanted to keep the price down," says Lane Merrifield, executive vice-president of Disney's Interactive Media Group and the co-founder and general manager of Club Penguin. "We decided this before the downturn, actually. The low prices will help [consumers]. But we also thought that making the toys affordable will allow the brand to be more accessible to more people."

Here, take a look at 25 of the coolest toys under $50. Some selections, like a 49¢ miniature stuffed animal from Swedish budget housewares chain Ikea, are even under $5. The toys reflect a number of current market trends: eco-friendly items made with recycled materials, brand extensions of classic franchises such as HotWheels and Star Wars, and even educational gadgets that involve digital and interactive technology. We've also thrown in some elegant options that look like modern sculptures—yet are still easy on the wallet. Our list suggests that even during a holiday season clouded by grim economic realities, there is something available to help both parents and kids smile.

Jana is the Innovation Dept. editor for BusinessWeek.