Not long ago, the toy world was buzzing about how computers were going to change the face of the industry forever. But after a couple years of flashy toys with electronic add-ons, many innovative tech toys are now struggling for market share.

The problem is that most mass-market and toy retailers have no shelf space set aside for these types of products, which also don't tend to fit easily into existing store schemes.

Oregon Scientific executive VP Steve Jackson says he runs into this roadblock all the time when trying to place his company's computer peripheral toys in the big-box outlets. "The mass retailers can't decide if they should go in software or in computer accessories, which doesn't really include toys since it's more about mouses and things like that. They also don't want to put them in the toy aisle because they're afraid consumers will not recognize that they're computer peripherals."

So Oregon products like the WavDJ (US$120), a mixing board and DJ toy that hooks up to the PC, have been relegated to catalogues for retailers such as FAO Schwarz and JCPenney. The fact that the WavDJ has sold more than 20,000 units since its late 2001 release despite this less-than-visible retail placement is testament to the toy's coolness - and its untapped potential.

Adding to the conundrum is the fact that computer retailers haven't traditionally been interested in buying toy SKUs since their main demographic tends to be tech-savvy males in their 20s and 30s.

It's not the first time Oregon has hit this distribution wall. The company released Drive Across the Americas (a software program with a steering wheel that hooks up to the PC and allows kids to practice driving through 3-D graphics of cities like New York and L.A.) in 2000, and because it failed to sell the product into its targeted mainstream retail channels, Oregon phased out the item after two years and 20,000 units sold.

Even companies with market-leading brand recognition have run into trouble with innovative tech toys. In 2002, Lego introduced its Spybotics line of interactive robots (US$60) that can play simple games like Capture the Flag and Laser Tag. "When we had the opportunity to show the robots in action, people were very impressed," says Jeff Ardis, Lego's brand manager for tech toys. "But it's difficult to communicate on the shelf exactly what the product does. In some cases, we couldn't get around that."

When mass retailers like Wal-Mart placed the Spybotics products with other Lego SKUs, the sell-through was much lower than anticipated. Toys 'R' Us was able to find a place for Spybotics in its 'R' Zone interactive gaming section because shoppers there were already in the mood for products with a tech bent. Ardis says sell-through jumped up about 35% in Toys 'R' Us compared to stores where the Spybotics were merchandised by brand.

However, TRU recently decided to move the line back into the toy aisle, says VP of merchandising Wayne Yodzio. Because the 'R' Zone is really about video games and the margin is so much lower on tech toys, he says the space required for the Spybotics didn't justify their existence in the section.

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