NEW YORK — Next holiday, that toy that was supposed to talk for a minute will talk for 40 seconds, and that portable electronic quiz game will ask fewer questions.
The nation’s toymakers — faced with soaring energy and raw material prices and rising labor costs in China — are tweaking their new product lines and scaling back their offerings.
Parents will have to do more work too — they’ll be spending more time downloading content online into high-tech toys as companies such as iToys Inc. focus on creating online material instead of using a bigger, more costly memory chip inside a toy.
Despite those changes, consumers could face anywhere from a 5 percent to 10 percent price increase on many toys later this year, said Eric Johnson, professor of operations management at Dartmouth’s Tuck School of Business. That ends a decade of deflation at a time when the U.S. economy may be heading into a recession.
“You are going to see more $7.99 toys at the bottom instead of $2.99,” said Michael Greenberg, the former chief executive of toymaker Shelcore Inc. and now a toy-industry consultant.
Kathleen Waugh, a spokeswoman at Toys “R” Us Inc., the nation’s second- largest toy seller behind Wal-Mart Stores Inc., acknowledged that consumers will see price increases in single- digit percentages across the board starting this summer. She declined to be more specific.
Melissa O’Brien, a spokeswoman at Wal-Mart, declined to comment specifically on price increases but said that the retailer will work with suppliers to maintain affordable prices.
The falling U.S. dollar against the Chinese yuan, higher energy costs and a new business code in China are forcing Chinese factories to raise prices for exports. The U.S. toy industry, which imports about 80 percent of its products from there, is among the hardest hit. Toys are mostly made of plastic and are under increased regulatory scrutiny after last year’s recalls due to lead and other hazards.
Then there are the surging costs of raw materials. Plastics — a key component of toys — has risen by up to 25 percent industrywide over the past two years because of higher petroleum prices, Johnson said. Copper has skyrocketed 17 percent so far this year.
Across the board, toy companies are scrutinizing their lines, even eliminating some perennials if price increases are not justified.
Isaac Larian, president and CEO of MGA Entertainment Inc., the maker of Bratz dolls and Little Tikes, said he’s cutting the number of toys for his holiday collection to 1,200 from 1,500. He estimates that Bratz dolls, priced at $20, will retail for $22, while a $55 Little Tikes toy car, which relies heavily on plastic, will see up to a 15 percent price increase at stores.
