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WOONSOCKET, R.I. -- CVS has teamed up with its own version of Santa Claus this holiday. After whispers this summer that the chain was gearing up for a deal with mall-based toy retailer K*B Toys, the two officially announced on Halloween day that they have entered into an agreement that makes K*B Toys the exclusive toy supplier for CVS' more than 4,000 locations.

The deal will not impact the coming holiday assortment. Come 2003, K*B Toys will provide tailor-made, year-round merchandise programs to CVS stores. The toy retailer, wearing the hat of supplier, will beef up the assortment for spring, summer and holiday with seasonal toys and exclusive products, including those developed by K*B Toys.

As part of the deal, K*B Toys will handle all aspects of fulfillment, such as supply chain management, including buying, merchandising, visual presentation, replenishment and logistics.

"Working with K*B Toys will give us the power to react more quickly to the constantly changing customer demands in the toy category," said Chris Bodine, executive vice president of merchandising and marketing for CVS.

The two companies already are familiar with each other. In the early and mid-1990s, they were both holdings of Melville Corp. Melville sold off K*B Toys, now a $1.7 billion chain, and most other operations, with the exception of its top performer, and renamed itself CVS Corp.

Teaming up with a seasoned veteran in the toy space may help CVS generate more traffic and certainly ring up incremental sales. CVS has stepped up its focus on toys and other general merchandise categories over the past year primarily in response to competition at the front end from mass market players. Understanding the typical consumer shops multiple retail outlets, CVS' goal is to take back market share by making it easy and convenient for its customers, explained chairman, president and chief executive officer Tom Ryan.

K*B Toys already has proven its prowess as a toy supplier through deals struck last year with Safeway and Sears, Roebuck & Co., and is well known in the industry for its ability to capture the impulse sales opportunity.

Last holiday, K*B Toys distributed seasonal toy displays to more than 1,000 Safeway grocery stores and will do the same this season. This fall, the toy retailer also expanded its relationship with Sears, and will roll out "K*B Toys at Sears" concepts to a total of 77 locations at select Sears stores.

K*B Toys chief executive officer Michael Glazer believes supermarket and drug retailers are seeking such supply deals as a way to gain a better understanding of the toy business, a category outside their expertise.