Trying to predict the next hot toy

NEW YORK - It's Goldilocks time for the nation's toy merchants: Not too pricey, but not too cheap. Innovative, but still fun to play with.

For the thousands of retail buyers at this week's American International Toy Fair, nation's largest toy fair this week, the challenge is to find toys that are just right - and will stay that way by the time the holiday season rolls around.

Barbie, Beanie Babies and last year's breakout toy Zhu-Zhu Pets are here, featuring new looks or new gimmicks. Monopoly, which turns 75 this year, is celebrating with a new circular board and credit cards.

And on the hot list? An iPod-like electronic toy for preschoolers called the iXL from Fisher-Price.

Every winter, retailers are tasked with the notoriously difficult job of predicting consumer spending patterns months in advance as they look for the hottest toys for the all-important holiday season that accounts for 40 percent of annual sales.

This year, after a good-but-not-great Christmas for the industry and with shoppers still spending frugally, toy buyers said they were anticipating another cutthroat holiday season.

"The objective is to not have the most inventory, but the right inventory," said Jerry Storch, chief executive of Toys R Us. "What we're trying to do now is understand what products we like most and where to place our bets."

Industry watchers say they expect slightly better spending on toys this year but doubt there will be a huge resurgence. U.S. retail sales of toys totaled $21.47 billion in 2009, a decline of less than 1 percent compared with $21.65 billion in 2008, according to market research firm NPD Group.

"The trend in 2010 is going to be on value, but I think we're going to see a little more willingness to spend than we did last year," said Sean McGowan, a toy analyst at Needham & Co. "Caution will still be the guiding principle."

Savvy kids are still looking for creativity and newness in the market, he said, so retailers have to find the right intersection of product innovation and value.

One of the products creating the most buzz at the fair was the iXL, the portable electronic device for preschoolers. It features six applications including a game player, art studio and story book. The toy, made by Mattel Inc.'s Fisher-Price division, is scheduled to be released in July for $79.99.

Other hot toys expanded on classic brands, such as Barbie Video Girl, which features a live video camera in Barbie's chest that broadcasts footage to a screen on her back; an expanded line of last year's breakout toy, Zhu Zhu Pets, and eight new characters to the Ugly Dolls brand; and updated versions of classic games such as Monopoly and Twister.