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Retailers like Target ( TGT ) expand blind box offerings

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Blind box toys appeal due to affordability and addictive

shopping experience

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Blind box toys may not significantly boost overall holiday

spending

By Jessica DiNapoli

NEW YORK, Nov 14 (Reuters) - While U.S. consumers keep

searching for an authentic Pop Mart Labubu, rivals are

introducing their own cheaper, easier-to-find "blind box"

products for the key holiday shopping season to capitalize on

the craze sparked by the fuzzy mini monsters.

Hot gift lists from retailers like Walmart ( WMT ) feature a new

crop of blind box figurines and trading cards, and U.S.

companies including Hasbro ( HAS ) and Mattel ( MAT ) are

selling versions of toys like Furby and Barbie in mystery

packaging, incorporating the trend.

A blind box toy - like Spin Master's ( SNMSF ) popular

CrystaLynx dragons - generally has packaging that hides the

specific product inside so shoppers keep buying until they find

the one they want or collect the whole series.

Labubus stoked excitement for the trend this summer, spiking

in popularity as retailers finalized their holiday plans. The

"ugly-cute" dolls with toothy grins aren't widely available.

They sell out in minutes and later turn up on resale sites like

eBay ( EBAY ) for hundreds or thousands of dollars. Because of their cost

and scarcity, they aren't on top toy lists published by major

retailers and trade magazines.

But now toy aisles in holiday shopping destinations like Target ( TGT )

are crammed with goods wrapped in mystery packaging.

Retailers, manufacturers and analysts expect they will be big

sellers this holiday season because they're low-cost, inspire

addictive shopping and appeal to adults and kids.

A Target ( TGT ) spokesperson said the retailer doubled its assortment

of blind box products for the holidays, adding items from brands

including Baby Three, MGA Entertainment's Miniverse, Zuru's

Minibrands and Aphmau.

"It's bigger this year, and it's been getting bigger,"

said Juli Lennett, U.S. toy industry advisor at market research

provider Circana.

Lennett added that toy makers love it because when "people buy

it, they don't buy one, they buy 10, and 30. There's the chase,"

she said.

Toy prices have been going up month by month, Lennett said,

in part because of tariffs on China, where many of the goods are

made.

But many blind box toys remain affordable, adding to their

appeal as stocking stuffers or gifts.

Ashley Harseim, 29, of New York, is asking for a gift card to

blind box retailer Miniso ( MNSO ) for the holidays. The China-based

chain, which has more than 200 U.S. stores, offers figurines

with characters from Peanuts, Care Bears and Disney Pixar, among

others, in mystery packaging.

"The surprise is cool, it's a nice little dopamine boost and

who doesn't need that now?" she said.

To treat herself, she added, she purchases blind boxes with

cats inside that cost between $6 and $10. She puts them on a

shelf at home.

"I look at my phone, I look at the news and then I look at

my little cat, and I'm like 'aw,'" she said.

Collectibles overall, including trading cards like Pokemon,

drove growth in toys in the first nine months of this year after

the sector stagnated the past two, according to Circana.

Circana's data, which mainly covers major retailers, does not

include sales of Labubus.

But despite their popularity, the blind box toys may have a

limited impact on driving overall holiday spending.

Manufacturers previously marketed them year round as trinkets

and impulse buys, meaning holiday sales were less important to

their overall annual revenue. The last three months of the year

otherwise make up 40% of the toy industry's sales, Lennett said.

Circana anticipates that unit sales for overall holiday

spending - a measure of volume - may fall by as much as 2.5%

during the peak shopping months of November and December.

Still, this holiday is set to be significant for specialty

retailers like Miniso ( MNSO ), rival Ohku, and Canada-based Showcase,

which sells authentic Labubus, and is expanding in malls and

other strip centers across the country.

Ohku introduced a new blind box series for the holidays, a

spokesperson said, and is planning for its products to soon be

available on Amazon.com ( AMZN ).

Showcase, which has 41 U.S. locations, has blind boxes from

Sonny Angel, a competitor to Labubu, scheduled to arrive in its

stores by December, said CEO Samir Kulkarni.

"Blind boxes are going to be very big," he said. "It's certainly

going to be the biggest category for us in toys and collectibles

that we sell.

"Last year it was a small fraction of the sales. This

Christmas will be a record Christmas for that reason," Kulkarni

added.