Cowabunga, dude! Retro toys are hot this holiday season

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Remember Teenage Mutant Ninja Turtles? They're back, and retailers are betting they'll be big this holiday season.

Nostalgia sells. 

At least that's what toy manufacturers and retailers are hoping this holiday season. Former Generation Y hit toys like Teenage Mutant Ninja Turtles, Power Rangers and Furby are surging in popularity this year, contrary to the assumption that all kids care about today are toys with screens.

On Monday, the Toy Industry Association released its nominees for its 2013 Toy of the Year Awards. In the running for “e-connected toy of the year” is Hasbro’s Furby, a robotic critter that first debuted nine years before the iPhone was invented. This year’s iteration has an iOS app.

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Hasbro's Furby, a robotic critter that first debuted nine years before the iPhone was invented, is on top toy lists this holiday season.

Furby also landed on both the girls’ and boys’ lists in the National Retail Federation’s 2012 Top Toys survey at number three and number nine, respectively.

Slideshow: Hot holiday toys for 2012

Teenage Mutant Ninja Turtles make multiple appearances on the Toy Industry Association’s list, nominated in the categories of top toy for boys and most successful brand growth for the year.

Experts say there are a few reasons why these blasts from the past are suddenly hot again.

Retro toys “tend to be more popular in times of economic difficulty,” said Gerrick Johnson, equity research analyst at BMO Capital Markets. “On both the supply and demand side, they’re safe,” he said. “You know it worked for one generation of kids.”

Parents with tight holiday shopping budgets might gravitate toward toys they remember enjoying a generation earlier. ”This year’s top toys... have some staying power, meaning children won’t get bored with them within a few weeks,” NRF President and CEO Matthew Shay said in a statement.

Toys typically resurface in 20- to 25-year cycles, Johnson said. Companies calculate that adults who see familiar characters or games on store shelves will be in the right age range to have kids that can discover them for the first time.

“There’s no doubt that shelf recognition helps,” said Russ Crupnick, senior vice president of industry analysis for the NPD Group. “It’s equally a familiarity factor."

And although parents remember them, old-school toys are new and exciting for today’s kids, said Toy Industry Association trend specialist Adrienne Appell. “Sometimes the nostalgia and the back-to-basics factor is a 'wow' factor for the kids because they’re so used to the technology,” she said. “It’s what parents are comfortable with.”

They’re also cheaper to produce. “A lot of these toy companies that bring back retro toys, it’ll be less expensive for them to do so,” Johnson said, because the R&D investment has already been made.

Although brands are counting on the nostalgia of Gen Y parents to fuel demand, they’re not relying on it entirely. Earlier this year, Nickelodeon released a new "Teenage Mutant Ninja Turtles" television series. The Power Ranger franchise is reintroducing many of its classic characters in a new season on Nickelodeon timed to coincide with its 20th anniversary early next year. In a release last month, owner Saban Brands said the launch would be supported by “a robust global consumer products campaign, character appearances, retail promotions and advertising.”

Classic toys are filling a vacuum in the market. Thanks to the economy, there just aren’t as many potential new breakout hits this year. "Innovation has been somewhat lacking," Johnson said.

Toys take a long time to go from an inventor’s sketchbook to store shelves. Development, manufacturing and shipping from China — where most toys are produced — adds up to an 18- to 24-month lead time. To be in people’s shopping carts now, a toy would have had to be green-lighted as early as late 2010. Back then, the NRF predicted a meager 2.3 percent increase in holiday sales over 2009, so companies shied away from big investments that might not pay off.

What’s more, manufacturers and retailers have to forecast months in advance which toys will be hot for the upcoming holiday season. Even though economic indicators are inching up, they’re unwilling to risk getting it wrong and having to slash prices when the new year rolls around.

“There’s less risk in terms of returns or not utilizing shelf space well” by sticking with proven franchises, Crupnick said.

By 2014, Johnson said new toys will probably be popping up on store shelves as toy companies regain confidence in the market and start investing in the search for the next big hit. But there’s probably still one more holiday season of retro toys ahead of us.

“We’re seeing this trend likely to continue and intensify in the coming year,” Appell said. Parents who hung onto boxes of childhood memorabilia might very well have next year’s most sought-after toy buried at the bottom.

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