Trouble in Toyland could mean trouble for retailers

The retail industry is counting on the holiday season to boost their sales and rake in profits. Toys are a popular commodity and several major retailers have reportedly allocated more store space to toys this year, in the wake of the Toys R Us bankruptcy. However, not all seems well.

The US Public Interest Research Group, a consumer advocacy organization, published its annual report titled Trouble in Toyland, in which the group pointed out several health and safety hazards in a number of toys.

The group tested 40 toys, out of which 15 toys raised red flags in terms of safety hazards which range from risks of choking to loss of hearing and even invasion of privacy.

Several popular slime toys were found to contain borax, a boron compound, which is said to irritate the skin and eyes and if ingested, could be fatal. While the European Union follows certain criteria on the permissible level of boron, there is no such limit in the US at present.

Other hazards from these toys include the risk of choking and the loss of hearing due to excessive noise. Balloons were named as a main choking hazard. Smart internet-connected toys reportedly pose cybersecurity threats by recording and collecting personal information about children. The report states that warning labels are missing on several toys which pose risks.

Major retailers like Amazon (AMZN), Walmart (WMT) and Target (TGT) are looking to generate a meaningful portion of their sales from toys during the holiday season. Amazon has sent out a toy catalog and is providing shipping with no costs or minimum purchase conditions for all its customers on toys.

A holiday season without Toys R Us looks less cheerful

Walmart is offering a larger selection of toys at its stores this year. Target, which makes half of its annual toy sales during the holiday season, is expecting toy sales to increase during the period. However, the recent report is likely to raise concerns.

Several retailers have posted unimpressive results and provided weak outlooks for their most recent quarters while others have continued to shut down stores. This has taken a toll on their stocks too. Looking at the past one month, Amazon’s shares have dropped 12% while Walmart’s stock is down 3%. Target’s shares have plunged 15% while Kohl’s Corp.’s (KSS) stock is down 7%.

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