This story in the Washington Post is purportedly about the trouble small, independent toystores are having competing with Wal-Mart, but it seems to say a lot more about declining standards at the Post than anything else.

The independent toy sellers profiled in the story all seem to be incredibly incompetent when it comes to business, but this never really pointed out as possibly contributing to their woes.

In 1997, Tree Top Toys Inc., an independent retailer with stores in the District and McLean, began carrying a nifty children’s toy called Chunky Farm. At $32, the collection of large plastic farm items, including a barn, a rig and a cow, sold briskly and earned Tree Top a nice profit because each cost Tree Top only $16. About 18 months ago, however, the store dropped Chunky Farm from its lineup, not because it sold poorly but because it had suddenly begun flying off the shelves at a nearby Wal-Mart. Tree Top’s toy buyer spotted it there for about $14. “I can’t compete with that,” said the buyer, Susan Hancuff-Sellers.

So the Little Guy here, the downtrodden, is the store that was selling a toy at a 100% retail markup for at least six years. Tsk, tsk. And then Wal-Mart just bullies its way in and cuts into the business of theose proud community servants.

[In the independent toy store] There is no Barbie, Hokey Pokey Elmo or Monopoly, three of the industry’s best-selling toys. There are no realistic-looking guns, no blood-spattering video games or weapon-wielding military action figures. “We want toys that spark the imagination,” Waterstreet said.

They — the people running the small toy stores — want toys that spark the imagination. The public, as indicated by what they buy in the free market, appear to want Barbie, Elmo, and Monopoly. The independent toy stores don’t sell these in-demand items; Wal-Mart does. Certainly that can’t be part of the problem?

When Tree Top employees believe the stores must keep a more expensive product on the shelves, they often cut back on quantity, leaving just enough inventory to satisfy demand.

Because their normal practice would be to stock way more of the item than is needed. But this isn’t why these people are struggling — it’s clearly that evil Wal-Mart!

Because of its size, Wal-Mart has the flexibility to break even or even lose money on toys, making up the revenue with sales in other departments. The tactic builds customer loyalty and helps steals market share from competitors, said Jim Silver, publisher of ToyBook, a trade publication.

This is actually the only bit of sense in the article; almost all of the year’s toy sales come between Thanksgiving and Christmas anyway, so selling just toys — even if you’re just trying to make money from this, and not on some Quixotic social-engineering experiment — is in the end a losing proposition as you have to pay rent, salaries, etc. all year.

While it slashes costs on some toys, Wal-Mart earns a substantial profit on others, according to a toy executive who has sold products to the chain for 10 years. To save money, Wal-Mart contracts with manufacturers to make several private label toys, which are sold under names such as Wal-Mart’s Kid Connection. Profit margins on these products, many of which are manufactured outside the United States, are often twice those of brand-name toys, said the executive, who spoke on condition of anonymity because he continues to do business with the retailer.

Gasp! Greater profit margins! Doesn’t Wal-Mart know it’s about sparking the imagination? Apparently not, which is why you don’t see any stories in the Washington Post about how tough things are for Wal-Mart.

That’s an interesting non-sequitur, the mention that Wal-Mart’s house-brand toys are manufactured outside the United States. Nearly all toys are manufactured outside the United States, something that isn’t touched upon anywhere else in the article.

For example, a Kid Connection light and sound robot with matching action figures and helicopter cost $3.11 to manufacture in China, said the toy executive, who has visited the factory in Shenzhen where it was made. Last week, it cost $9.88 at an Oklahoma City Wal-Mart Supercenter, giving the chain a profit of $6.77 per toy.

And they get that ‘profit’ of $6.77 because, of course, Wal-Mart has the ability to teleport goods around without cost, their buildings and land are given to them by anonymous benefactors, their employees work for nothing, and electricity is free.

It is worth noting that Wal-Mart’s retail profit on this toy is almost certainly less than 100%; compare this with the first paragraph I quoted, about the Chunky Farm at Tree Top Toys.

But the real idiocy of the ‘independent’ toy industry is yet to come:

But manufacturers who take their toys from specialty stores into Wal-Mart face some risks. In 1994, Hands on Toys Inc., a small toymaker in Wilmington, Mass., launched Toobers & Zots, a foam construction kit, in the specialty store market. It was an overnight success, earning the company $4 million in its first year, the company’s president, Andy Farrar, said. Hands on Toys declined an offer from Sam’s Club, a unit of Wal-Mart, to stock its products. Soon after, Farrar said, Sam’s Club introduced a line of toys strikingly similar to Toobers & Zots, which began eating into his sales. To regain ground, Farrar licensed the toy to Hasbro, one of the nation’s biggest toymakers, which in turn sold it to Wal-Mart and Target Inc. In response, hundreds of independent toy stores across the country canceled their orders. “People felt that we had betrayed them,” Farrar said. “They were screaming at me at toy conferences.” To this day, he said, some independent toy stores will not carry his products.

Independent toy stores will not stock his products because he sold another product to Wal-Mart, who, had he not sold his idea, would have simply imitated him out of that business anyway. Wal-Mart is famous for cracking the whip on their suppliers, but I don’t recall ever reading anything about them wanting you to not sell to anyone else. Imagine the uproar there would be if Wal-Mart told one of their suppliers that they had to sell exclusively to Wal-Mart or do without Wal-Mart’s business entirely. It would be front-page news. In this story in the Washington Post business section, it’s not even pointed out that the same behavior is still illegal — not to mention mind-bogglingly stupid — when the ‘little guy’ does it.

Independent stores are finding other ways to compete. Earlier this year, Jeff Franklin, the owner of Be Beep A Toy in Annapolis, hired a therapist to teach his staff of 10 about the developmental benefits of play, hoping to give them an edge over their big-box counterparts. “You cannot find that kind of training at Wal-Mart,” he said.

You certainly can’t find that kind of training at Wal-Mart. And, as I pointed out above, you also can’t find stories about Wal-Mart’s financial woes in the Washington Post. Maybe there’s a connection.

The toy store people are clearly off their collective rocker. Running a toy store might be interesting work, and, I imagine, it would be great for people who like children and who are themselves still kids at heart. Like children, though, these people — at least the ones quoted in this article — don’t seem to have the first clue about how the world of business works. They are poor businesspeople, to put it very lightly.

Does the Washington Post business section point this out at any point? No. It instead talks about how Wal-Mart has their own-brand toys made in China, and how they sell them at a profit. Business, ladies and gentlemen! Step right up and see the business writing!