The New York Times
Business Day
Wednesday, September 1, 1999

Advertising Requiem for Beanie Babies. Or Maybe Not.

By Dana Canedy

The maker of Beanie Babies, Ty Inc., created a frenzy yesterday when it posted this announcement on its World Wide Web site: "All beanies will be retired" as of Dec. 31.

Customers, professional Beanie traders and even the company's own employees were dumbfounded.

Has Ty, led by founder Ty Warner, simply created a gimmick to pump up profits of the pint-sized stuffed animals, which toy industry experts say have begun to lose some of their appeal. Or is the company effectively resigned to the fact that Pokemon now rules and is moving on. No one knows for sure. But what is certain is that Ty, at least for now, has created a Beanie buzz that is not likely to be sorted out any time soon, as company executives remained mum.

As news seeped out, Internet chat rooms went crazy, bids flooded into on-line auction houses and parents began to fret over what to tell their children. "In the last half hour we've had a 50 percent increase in bids," said John Babina, founder of Collingnation.com which operates Beanienation.com, an on-line auction site that trades Beanie Babies. Its live chat room, "was filled this afternoon right after the announcement came out."

In Las Vegas, Nev., Pamela Coheri was trying to figure out what to tell her 10-year-old. "I think it will be sad for the kids," said Ms. Cocheri, an administrative assistant at a weekly classified newspaper, whose daughter, McKenzie, has 18 beanies.

Ty did nothing to clear up the confusion on its own Web site yesterday. Customers who turned to the company for guidance were ignored. One customer who left a message on the site, pleaded: "Ty, are you ever going to make Beanies again after the thirty-first of December. Please reply."

People who phoned the company seeking information did no better. A customer service representative reached at Ty said the staff had been told of the "retirement" only yesterday afternoon and had no further information. "We were barely informed like a half-hour ago," said the representative, who identified herself only as Laura.

A supervisor at Ty, based in Oakbrook, Ill., said she also had no idea what the announcement meant and, "We have no comment; we have nothing to say." The manager, who said her name was Denise, refused to forward requests for an interview with Mr. Warner or other senior-level executives saying, "It's not going to happen at all."

Around 3:30 P.M., Ty listed the announcement on its Web site under a listing of new Beanies, including one named "The End," a black bear. The posting came several weeks after the company said that "a very important newsflash will be made Aug. 31"

Toy industry experts said it was unlikely the message meant that Ty would cease to make toys altogether. Rather, they said, the company will probably introduce new Beanies next year or replace them with an entirely different product line.

"I just can't imagine it's a gimmick," said Chris Byrne, a consultant and editor of the Toy Report, a weekly newsletter. "The backlash from beanie collectors, people who really invested a lot to build their collections would be huge."

Youngsters, who first elevated the toys to must-have status by purchasing them with their allowances and trading them at school, would also probably throw a tantrum. "They could make more," said McKenzie the Las Vegas girl with 18 beanies, including "Chip" the cat. If the toy maker is not being honest about its intentions, McKenzie said she would be upset because the company would be lying.

The appeal of Beanie Babies initially was their price of $4 to $5 which made them affordable to youngsters from families in virtually every income level. But shortly after their 1993 introduction, parents got in on the fun, making Beanies must-have collectibles that went for tens of thousands of dollars and were off limits to their children.

But one large collector said yesterday that the speculation among dealers is that Ty simply planned to introduce dozens of new beanies next year and that the retirement was simply manufactured to help the industry.

"The secondary market has collapsed the market in the last six months," said George Papania of Georges Video Games and Collectables in Las Vegas. "What we did was retaliate for the fact that they kept these things out too long without retiring them."

Though collectibles dealers do not buy from Ty directly, their purchasing activity directly affects the company's sales because specialty retailers base their orders in large part on their resale value in the secondary market.

Ty's move yesterday was just the sort of stunt dealers had been hoping for, said Mr. Papania, who has about 13,000 Beanies at his store. "I will stock up on everything I can get now," he said.

Ty Inc., which is a private company, had a surge in revenue soar since the introduction of Beanie Babies, topping an estimated $250 million within three years.

An elusive marketing whiz known for attention-grabbing promotions, Mr. Warner rarely gives interviews. The company is also known for its insular culture. In a blatant display of its perceived omnipotence, the company last year had its phone number unlisted. Around the same time, the company angered smaller retailers by cutting back on their orders without warning and dropping them as customers if they reduced the prices of the toys.

Now, toy industry experts say, the company may momentarily drive demand but could anger its most loyal customers. After all, said Sid Good, president of Good Marketing Inc., which specializes in marketing to children, "Consumers out in the market give value to collectable lines in the first place."