Congress is trying to protect children, but it's imperiling the country's mom-and-pop toy stores at the same time, shop owners say.
Following the China toy recalls, Congress passed the Consumer Product Safety Improvement Act (CPSIA) to impose stricter lead restrictions on toys for children under 12. The law, which goes into effect Feb. 10, applies to incoming and current inventory. In three months, stores and manufacturers must test their toys, provide proper documentation on lead content and remove tainted products. That may improve safety, but the law could deliver a death sentence to some small businesses.
The law targets a wide range of products: bikes, clothes, shoes, video games, even all-natural unpainted wooden toys. Enchanted Toys, a specialty toy store on the Upper East Side of Manhattan, sells only wooden toys but still rented a scanner to test for lead, which can cost up to $1,150 for two days. Gloria Mills, manager and buyer, wasn't concerned about the safety of her products but was nervous about the amount of documentation required for each toy. "Now small manufactures will get run out of business," she says.
Toy-store owners around the country face fines and jail time if they can't show proper testing documentation by the time the law goes into effect. Testing costs can range from $300 to $3,000, and manufacturers are passing those expenses on to toy stores in price increases of 10% to 30%. Big retailers like Wal-Mart (WMT) (Stock Quote: WMT), Toys R Us and Target (TGT) (Stock Quote:TGT) (WMT) (TGT) may benefit from the law, as they can withstand those cost hikes.
Paul Nippes, owner of Kidding Around, a specialty toy store in Manhattan, has had to raise prices by 10%. "We can't absorb 10%
Leslie Bergman, store manager of West Side Kids toy store in Manhattan, says the law should have been in place a long time ago. "It will be a pain in the neck but anything worthwhile will take more effort," she says. Bergman is unconcerned about higher costs. Manufactures have already raised prices by 30% since the fall, she says. West Side Kids will discontinue a product if its price erodes profits, she says.
Ali Wing, CEO of Giggle Toy Store, which has shops throughout the country, says stores already have been battling higher prices for the past year. The weaker dollar, energy costs and the recession have forced manufactures to cut production and raise unit costs. The new law is just the latest burden, she says.
Scott Wolfson, a spokesman for the Consumer Product Safety Commission, says the agency will help small businesses by looking at potential changes to the law. There are five comment periods where people are allowed to log complaints and propose exemptions to lead testing. The agency is considering a proposal to exempt certain materials like cotton, untreated wool and leather, steel and precious gems.
Any changes might not come soon enough, according to Rob Wilson, an online toy wholesaler known for importing all-natural toys and baby products. The company sells 500 products, but due to the new lead restrictions, his lineup will be slashed to 50 in the coming year. "It's an outrageous law that goes far beyond what the risk originally was," he says.
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