When it comes to “going green,” the first thing that comes to mind probably isn’t children’s toys. But Wal-Mart Stores (WMT) and Warren Buffett’s Berkshire Hathaway (BRK-B) want to change that. According to a recent report by Bloomberg News, sales of green toys may balloon to $1 billion, which represents about 5% of the total toy sales over the next five years.
That’s a whole lot of real cash green spent on green toys, but what do Wal-Mart and Warren Buffett have to do with the potential boom in green toy sales?
First off, Wal-Mart accounts for approximately one fourth of all U.S. toy sales. The company’s also the nation’s biggest toy seller, and some estimates peg Wal-Mart’s toy sales at about 7% of its $258.2 billion in 2009 revenue. So, when Wal-Mart devotes precious shelf space to green toys, you can bet they’re backing them all the way.
One of Wal-Mart’s featured green toy products are Garanimals toys, which are made by Garan, a unit of Buffett’s Berkshire Hathaway. The Garanimals line of blocks and puzzles are made with wood from renewable forests. The combination of the biggest toy seller with the world’s greatest investor certainly has the potential for setting a green tone within the toy industry.
Until recently, the cost of green toys has been an obstacle to their wider adoption by economically challenged consumers. But now that the economy is widely seen as being on the mend, green-conscious shoppers are once again starting to embrace sustainable products. And though green toys account for only about 1% of the total toy market, their growing presence at the world’s largest retailer certainly bodes well for their continued growth.
Of course, the rest of the toy industry has taken note of the Wal-Mart/Buffett green toy combination. Toy makers Hasbro Inc. (HAS) and Mattel Inc. (MAT) and may also soon produce eco-friendly green toys to make sure they don’t miss out on the shelf space retailers like Wal-Mart and Target (TGT) have already devoted to green toys.
The bottom line here is that when big corporate kids like Wal-Mart and Warren Buffett decide to play with green toys, you can bet the rest of the kids on the toy-making and retail playgrounds will soon follow—and that could be a nice boom for both the retail and toy making sectors.
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