Marginal Utility

by Tom Bozzo

In a slightly belated Festivus airing of grievances (*), rather than unloading on President Big Brother Bananas like some of us, Tonya Brito wonders why Madison is losing its toy stores:

2. Can anyone explain the disappearance of Madison's toy stores? In the last few years 5 toys stores have closed in Madison, including Zany Brainy, Mindsparks, Puzzlebox, uToypia, and Whoops. I think that this is a harbinger of the apocalypse. Or at least a sign of the downturn in the economy.

Interesting question. The flyover version of toy economics is that small toy stores and department stores that did most of their toy business during the Christmas season were subject to intense competitive selection pressure from then-new big box retailers such as Toys 'R' Us, and then all the survivors (including TRU) got walloped by big discounters — notably Wal-Mart, which had little presence in the toy market within my recent memory, and Target for those of us who don't deign to shop at Wal-Mart. Since everyone else has difficulty competing with Wal-Mart on price, most other toy retailers have tried to differentiate themselves from the discounters on assortment.

Differentiating with assortment means focusing on products that, by dint of small production or manufacturer resistance to the cost and price pressures a Wal-Mart fix would entail, don't show up at the discounters. In practice, this means focusing on stuff like Brio wooden trains (and/or the compatible and at least as expensive Thomas wooden railway line, which crosses over to TRU) and educational toys esp. for very small children that say, paraphrasing Norm (or Cliff?) from an ancient 'Cheers,' "Woohoo, my parents are loaded."

In fact, since all of the independent toy retailers are doing basically the same thing, what's more remarkable is that there isn't even more shakeout than Tonya has observed. Indeed, Madison is not especially under-retailed in the toy department. The departures notwithstanding, there's still Capitol Kids on the Capitol Square, the large Playthings in Hilldale Mall, J.T. Puffins a couple miles southwest at Whitney Way and Odana Rd., and The Learning Shop a couple more miles southwest on Gammon Road across from Woodman's. My inclination is to account for their survival as a combination of high demand for toys that aren't cheap electronic noisemakers and parents with the wherewithal to satisfy the demand. That's probably a sign of a relatively strong local economy if anything.

Plus, of the losses, Utoypia (our former Friendly Neighborhood Toy Store) didn't so much fail as de-materialize into virtuality, while Whoops also has a Web presence and simply seems to have moved its bricks-and-mortar operation to a section of Middleton that's been reduced to the dark side of the moon for some of us near-west-siders by the Highway 12 bypass project. (I hadn't previously heard of Mindsparks.)

Zany Brainy did fail, but the cause of death was extreme mismanagement. Its defunct corporate parent also owned FAO Schwartz. It had been saddled with an unworkable debt load through a leveraged buy-out, as I recall, while the new owners pursued a suicidal price-and-product plan of being a more expensive TRU. (In contrast, in its heyday FAO's Fifth Avenue flagship store was notable for its focus on toys that were very hard to find anywhere else.)

So, among signs of the apocalypse, Madison's toy market is a lesser one (**). Leg godt!


(*) Some of you may notice that this is a slightly belated 1 January blog post.

(**) The main danger sign, here and many other places, is the collapse of the higher end of the local housing market, which in Madison means north of $400,000.