Cute and cheap to rule holiday toy shopping

(Reuters) - The hottest toy of the 2010 holiday season could be a cheap, small, squishy character packaged in a plastic bubble reminiscent of grocery store toy machines, said toy experts Jim Silver and Christopher Byrne.

“Never underestimate the power of cute,” Byrne said, in explaining why he thinks “Squinkies,” the $7 collectible capsule toys which double as pencil-toppers, can emulate the success of last year’s runaway hit Zhu-Zhu pets.

Blip Toys’ “Squinkies,” Spin Master’s colorful collectible Zoobles and Mattel Inc’s plush Sing-A-Ma-Jig harmonizing dolls are among the 16 toys on the 2010 “Most Wanted” list compiled annually by the two veterans for their website www.TimetoPlayMag.com.

While the U.S. recession may be officially over, Silver and Byrne expect most U.S. shoppers to keep an eagle-eye focus on prices when they shop for toys this holiday season.

That explains why 11 of their 16 top holiday picks cost less than $30.

“Toy companies have realized that price points are important,” said Silver, who with Byrne has compiled a hot toy list for about a decade.

Their picks come ahead of what is shaping up to be a highly competitive holiday season, which is by far the toy industry’s most important period.

Last week, retailer Sears Holdings Corp told Reuters it planned to launch toy shops inside 85 of its namesake stores, just weeks after specialty retailer Toys R Us Inc said it would open about 600 Toys R Us Express temporary stores and 10 FAO Schwarz “pop-up” stores this year.

Meanwhile, industry behemoth Wal-Mart Stores Inc said it is “absolutely committed” to winning on price in the area of toys.

U.S. retail toy sales are up just 0.4 percent from a year earlier for the 12 months ending August, according to market research firm NPD Group.