Hot Toy Reservations: Toys R Us starts holiday shopping early

Hot Toy Reservations from Toys R Us lets parents reserve holiday toys before Halloween. The hot toy reservations system is a great way for Toys R Us to generate early holiday shopping buzz and maximize profits. But is it good for customers?

Kids just went back to school, Halloween is a good six weeks away, and the last thing most of us are thinking about about right now is Christmas shopping.

But Toys R Us thinks you should consider it. The Wayne, N.J., based retailer unveiled its plans for the holidays in a press conference Wednesday, a full 10 days before the official start of fall. Among the offerings announced: free layaway, expanded product lines, and a “Hot Toy Reservation program,” for the ultimate plan-ahead parent.

The Hot Toy Reservation program is “a complimentary service that will enable customers to reserve the hottest toys of the holiday season, putting an end to frantic searching in the days leading up to Christmas,” according to the press release from Toys R Us. “The service will be available for the 50 items on the company’s Holiday Hot Toy list. Hot Toy Reservation will begin when the list is revealed (last year it was released in mid-October) and will continue through Halloween.

By utilizing the service, shoppers can rest assured that their ‘must have’ toy will be under the tree on Christmas morning.”

So here’s how it works: Once Toy R Us reveals its Hot Toy List, shoppers have until Oct. 31 to go to a location in person – to deter scammers – and, along with a 20 percent down payment, reserve any potentially coveted toy early, to be picked up during the holiday season in late November and December. If you can remember that you did it, that is.

The Toys R Us announcement begs the question: Is this a smart move? Do shoppers care about Christmas yet? Is this all getting out of control?

Creating incentives for customers to start their holiday shopping early gives Toys R Us a significant jump on the competition, says Dan de Grandpre, CEO and editor-in-chief of dealnews.com. “Toys R Us' hot toy list is already the de facto standard every holiday season,” Mr. de Grandpre writes via e-mail. “Now, its new reservation system more effectively monetizes its hot toy lists. By getting preorders placed before prices drop, Toys R Us maximizes profits and better manages inventory.”

But while the Hot Toy reservation may be a profit optimizer for Toys R Us, he says, the opposite is true for the consumer. The best deals on the merchandise that Toys R Us designates “hot” are more likely to be found later in the shopping season, when retailers will be anxious to clear out their holiday inventory. A Deal News study of last year’s  “Fab 15”  Toys R Us hot toy list found that waiting until after Black Friday to buy led to significantly better prices. The ideal time to pull the trigger was sometime in the two weeks right before Christmas. 2011’s popular LeapFrog Leapster Explorer gaming device, for instance, dropped 40 percent in price after Black Friday.

Still, paying a higher price in October means peace of mind leading up to the holidays. But de Grandpre warns that while unveiling the hot toy list early has been a proven strategy for Toys R Us over the years, customers may start to get weary of promotions that hit too early. There are, after all, 103 days between now and Christmas morning. “I agree that September seems too early, it's clearly working for Toys R Us,” he says. “That said, for retailers in general, while this strategy has worked in the past, it gets riskier each year. People will eventually tune it out.”