Leading industry journal covering the global toy industry including practical 'how to' articles, research, industry reports and insights.

01 May 2015 ~ Comments Off on How Toy Markets Differ – The Difference Between Baseball And Cricket Explains All!

How Toy Markets Differ – The Difference Between Baseball And Cricket Explains All!

How Toy Markets Differ – The Difference Between Baseball And Cricket Explains It!

Steven Reece

Regular readers of my blog posts will know of my near obsession with the importance of understanding market by market differences in order to maximise export sales potential. However, such theoretical rantings don’t always register as well as a more colloquial explanation…so here goes!

Firstly a brief bit of dry theory – the USA and UK appear to have much in common – very similiar language, cultural influences, mass market license driven toy markets etc. Yet we can see distinct and large differences between the two – while the Hollywood machine dominates kid targeted movies, the UK has it’s own distinct brand of kid targeted TV and the hugely influential BBC, the retail structure and chains are fairly different and certain product types work better in one market or the other. Now when we consider the huge historical and cultural links between these two nations, and when we add in the more or less common language, we can see that still the toy markets in the UK & USA are different…so when you change the language, the culture, the retail structure, the regulatory frameworks, the hstory and more, we can see why for instance so few UK or US toy companies manage to sell in Japan, China or Brazil for example.

Now that may all be a little dry and remote for some, or you may have stopped listening to my point on this market difference, so here’s an analogy I like to use – let’s compare cricket and baseball:

For a start, I imagine there are many people reading this who don’t know what cricket is. There will be some that don’t know what baseball is. So let me briefly explain – both are sports where one person propels a hard ball towards their opponent, and whereby the opponent must try to hit the ball far enough to allow him/his team mates to score ‘runs’ i.e. to run to certain points. With me so far? Good! The interesting part though is just how different the format and process of both games is when compared to the other, despite the overall idea being very similar…for instance, baseball scoring is driven by running between bases set out in a diamond shape, in cricket players run in straight lines back and forth. In baseball, the ‘pitcher’ throws the ball without bouncing it through a set space which is deemed hittable, in cricket the bowler runs in, and using a strictly straight armed motion (i.e. not throwing, no whip or bending of the elbow allowed) propels the ball towards three wooden ‘stumps’ with 2 wooden ‘bails’ on top. In baseball you can be out via: 3 strikes, caught or run out, in cricket you can be out bowled, caught, run out, lbw (leg before wicket when the ball hits your legs), because you hit your own wicket, because you took too long to get to the wicket etc.

Hopefully you’re still awake at this juncture…because the point is not to talk about these two venerable games, the point is how two nations can take the same idea i.e. one player propelling a ball at the other and the other trying to hit it with a bat, and create such a different execution?

The reality is that the same similarity of overall purpose can still be executed in a very different way i.e. even within the same category product formats can change – action figures in Germany for instance are more likely to be high quality fixed animal figurines than the traditional movie driven action figures we might find in the UK or USA, a Chinese board game may be very different to an American game etc.

And this doesn’t just apply to product, it also applies to retail – for instance, only the UK has ‘Argos’ – the biggest toy retailer in the UK for as long as I have worked in toys at least – imagine a catalogue driven retailer which prints over 20 million catalogues (one for each UK household roughly) as the leading toy retaiiler…it’s a bit different from Walmart, or Carrefour etc. In Germany, we have thousands of independent toy retailers, and no single dominant retailer, it’s a very fragmented market in terms of retail…whereas the mighty Walmart & Target in the USA hold a hefty market share and therefore have a much greater impact/power base with suppliers. Furthermore, while Toys R Us may offer a mostly homogenous approach to toy specialist retail on a global basis, each market tends to have its own specialist chains with different characteristics – from The Entertainer in the UK to La Grand Recre in France, things are similar but different in the same way as baseball is different from cricket!

The bottom line is this – you will often get away with selling some of the same stuff in multiple markets, but actually you will be better placed in the long term if you first take steps to understand, and then exploit market by market differences.

We work with companies in countries around the world to help them grow their export/international business, and the major finding from our experience is that companies usually need help with ‘tweaking’ their product line and changing product direction to account for the global opportunity…in actual fact in many cases where companies have struggled to establish significant international sales, it’s often because their product lines/approach is the issue. Clearly it helps if you know the right people/companies in each market (our database holds nearly 5,000 toy companies for instance, and we are regular contact with around 100-150…clearly this is advantageous), but actually most often a good product which fits the needs of a particular market will sell itself.

In terms of benchmarks, bearing in mind that the USA accounts for around a quarter of the global toy market, US companies who have domestic sales of $50m for instance should have export sales of at least $5m-10m. For European companies, a good rule of thumb would be that export sales should be at least the same as domestic sales, albeit with a different margin structure.

So if your export sales aren’t hitting these standards, perhaps it’s time you thought about the difference between baseball and cricket, and whether it’s your selling efforts which are holding you back, your product or your lack of knowledge about market by market difference

P.S. More ridiculous analogies will feature in future articles – watch this space!

 

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

01 May 2015 ~ Comments Off on Looking for Ace ideas?…they may be just a shuffle away

Looking for Ace ideas?…they may be just a shuffle away

Richard Heayes

Here is a fun fact for you. Take regular pack of 52 playing cards and give them a good Shuffle. You have just created something unique, something no one else has created! Why? because there are more permutations of cards in a 52 card deck than seconds since the big bang! (basically a very big number) so the chance that anyone else has shuffled a deck exactly the same as yours is pretty much zero!

Shuffling the cards doesn’t change what they are but as anyone knows who plays cards, getting them in certain orders and creating combinations can not only win you a lot of money, they create the very basics of most card games. This randomness means that there is always a lot of luck in getting the cards you want, but through practice you can start to strategise based on what you hold, what you have already seen and what the other players are doing, not so different from running most businesses!

Sometimes the best ideas are created just by reshuffling what we have around us to create something new or more powerful. Call this low hanging fruit or whatever these are the ideas that are at your finger tips if only you can find the right shuffle.

That for me is the most exciting part of creating ideas and inventions. The best ideas seem to be the ones that just appear by looking at a problem with a new lens. Ideas developed in this way are often easier to implement because they use skills or resources you already possess rather than trying to implement a completely new technology or process. Prove yourself capable at this and it can be a great springboard to bigger changes,

A great tip is to get hold of a blank pack of playing cards and write on each card something that could contribute to innovation for you …a technology, a consumer pattern, a person, a country..whatever makes sense to your business. Shuffling these and dealing them out in different orders can trigger combinations that can you might not have previously thought of. Of course this doesn’t make it a commercially good idea, but it can often lead to one.

If you dig into many inventions and innovations they often came about quite by accident. Turning these accidents into planned innovations is of course the goal of anyone involved in NPD. Learning how to reshuffle what you have at your fingertips to create a unique winning hand should be your first goal.

Thanks for reading, I post on design, design culture, play thinking and innovation. Follow me on Twitter @richheayes

Richard Heayes is founder of Heayes Design, a design and invention consultancy
with a playful spirit, helping the Play business innovate.
As a Designer & Design Director at Hasbro for over eighteen years Richard led creative
product development on dozens of brands from Monopoly, Scrabble, MB, Trivial Pursuit,
PlayDoh to name a few. He brings an insight and passion for blending design vision
with business insight to create breakthrough products that deliver.

17 April 2015 ~ Comments Off on Ignore The Canadian Toy Market At Your Peril!

Ignore The Canadian Toy Market At Your Peril!

Ignore The Canadian Toy Market At Your Peril!

Steven Reece

Our company works with toy companies around the world. One of our primary services is Export Sales Consultancy. Personally I’ve also worked extensively with North American companies both as an employee and as a Consultant…yet I have to admit (shamefully) that our knowledge of and commitment to the Canadian toy market does not do it justice when compared with other markets around the world where we have extensive dealings.

We are not alone on this either. Canada is often viewed as insignificant when companies look at their export sales strategy, especially when compared with the vast array of riches on offer south of the border in the mighty USA.

Yet based on both public domain and proprietary data we have access to, our estimate is that Canada’s toy market is worth in the region of $2billion USD. This puts Canada somewhere between the 8th -12th largest toy market in the world, and most probably puts it above Spain, Italy, Benelux, Scandinavia, Russia and many others which are beloved of those chasing new and emerging export markets.

Simply put – toy companies who have any interest in export sales can’t afford to ignore the Canadian opportunity. Many of our clients tell us that they cover Canada already via their US based distributors, but there is not always a guarantee that those distributors are paying any attention to the Canadian toy market beyond perhaps a loose partnership with Canadian based wholesalers/distributors. This does not guarantee you will get anywhere near maximising your revenue from the world’s (roughly) 10th biggest toy market. If your US distributor can deliver huge volume via US mass retail, then great, who wouldn’t want that…but eventually your business has to look towards under-exploited opportunities to grow. Moreover, smaller/medium sized companies supplying US mass market retail, whether directly by rep or by distributor tend to see massive swings in fortune from one season’s listings to the next. Fully exploiting the Canadian opportunity can help to offset that swinging pendulum of fortune.

For sure some of the retailers included in the Canadian toy market are US companies, or at least subsidiaries of US companies, but many are not.

We recommend to our clients that they should not be so focused on those precious US Walmart, Target (etc) listings that they ignore low hanging fruit just over the border. We quite often find companies flying around the world to try to set up business in China, India, Brazil, Russia and other difficult to crack markets when they are already leaving considerable opportunity sat unfulfilled much closer to home!

If you have problems finding the right distribution partners to fully access the Canadian toy market, we may be able to help you via our TOYEXPORTBOOSTERservice http://www.kidsbrandinsight.com/?page_id=285

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

 

10 April 2015 ~ Comments Off on 5 Reasons Why Mattel Will Bounce Back

5 Reasons Why Mattel Will Bounce Back

5 Reasons Why Mattel Will Bounce Back

 

Steven Reece

Mattel’s 2014 full year results were disappointing, with operating income down from $1.17 billion to $653.7m. Furthermore, the share price has taken a beating as would be expected based on such earnings.

The perhaps not unsurprising departure of the CEO, followed by the fairly surprising rehiring of the same CEO on a lucrative Consultancy contract, combined with a comparatively huge decline in key core brand Barbie year on year has lead to all kinds of crazy talk, negativity and doom mongering regarding one of the three global powerhouse toy companies that sit comfortably at the top of the toy industry.

The reality as I see it is far less worrying. Here’s 5 reasons why Mattel will bounce back stronger than ever.

1. Barbie was bound to be down in 2014, and is very likely to bounce back – due to the massive Frozen phenomenon at toy retail, all other girl targeted brands/products were bound to be impacted by $hundreds of millions heading in the direction of the Frozen franchise. When you look at any long term perennial brand in the toy business ove time, they all suffer from peaks and troughs dependent on how impactful the latest round of product development is and by the broader kids entertainment universe. Barbie is very likely to bounce back, at least to some degree as Frozen furore cools. And regardless of any bounce back, Barbie is still a huge global powerhouse of a toy brand, which is a huge asset and stability factor for Mattel.

2. The Mega Bloks Acquisition is yet to make full impact – while it’s over a year ago (at the time of writing) that Mattel’s purchase of Mega Brands/Mega Bloks was announced, that is no time at all in terms of toy product development and selling cycles. Mattel has a fantastic track record of brand management/brand extension, as well as a close to un-rivalled global distribution capability, which appears likely to grow the Mega Bloks business over time.

3. Toy company strategies are driven by a cyclical process – strategies only tend to have so much growth in them before they need to be rethought and refreshed, especially when the company in questions is already huge, with leading brands in most product categories of any size. New strategy often needs new management at the helm, we don’t have to look much further than the success of Mattel’s rivals Hasbro to see the impact a new CEO can make in terms of shifting strategy – Brian Goldner, Hasbro’s CEO shifted Hasbro closer to Hollywood and the kids entertainment world, leading to a greatly improved share price. For those who have been around the block a few times in the toy business it seems clear that any question mark over Mattel’s strategy can only be a short term question mark before the mighty ship sets sail in the right direction again.

4. Monster High proves Mattel can launch successful new brands – it’s my opinion that Mattel have received nowhere near the plaudits deserved for this massive new global brand launch, a paradigm smashing new brand introduction which for once does not rely on blockbuster movies or traditional TV distribution. For sure more new brand launches fail than hit, but when you establish a new perennial hit brand in a category where you already have the clear leader you will reap the benefits for many selling cycles to come.

5. Mattel generates huge amounts of cash & new acquisitions are likely – with c. $1billion cash in hand Mattel is well placed to make further acquisitions. In recent years Mattel have made numerous major acquisitions including HIT Entertainment and Mega Bloks. A historical view of the toy industry shows that the bigger companies have grown exponentially via acquisition, if I were Mattel’s CEO (we can all dream!) I would certainly be ready to open the check book and splash out again, perhaps after letting Mega Bloks bed down for 2015. I would not be surprised if another major (i.e. $hundreds of millions) acquisition materialises in 2016.

 

Disclosure – when Mattel’s shares dropped recently I bought a small amount of shares based on my feeling that the company is very likely to bounce back to bigger and better things, so readers of this article should be aware I may have a vested interest in Mattel.

 

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

 

02 April 2015 ~ Comments Off on 3 Major Reasons Why Kids Love Minecraft So Much

3 Major Reasons Why Kids Love Minecraft So Much

Steven Reece

 

3 Major Reasons Why Kids Love Minecraft So Much

For companies who spend as much time as our company engaging with/researching kids, their play habits and their media consumption, Minecraft is utterly ubiquitous in this day and age. It is THE one game/app which comes up time and time again when we ask kids what they like playing with/on. Moreover, the amount of time kids can/do spend within the Minecraft world is often surprising to those who don’t know much about it/don’t quite get it!

There are some really important fundamental drivers of the Minecraft habit that speak to the situation and world of today’s kids. For adults raised in a pre-digital age, it’s easy to presume things are still the same, and frankly they are not! Here’s some of the reasons why kids love Minecraft:

1. Freedom! – kids today have significantly less freedom than their parents or grandparents generations. Due to the perceived risk of stranger danger and because society as a whole is altogether more health and safety conscious, today’s kids don’t get to run about freely outside of/away from their homes like in past generations. So in the absence of physical freedom one of the primary drivers of Minecraft engagement for kids is virtual freedom – Minecraft offers free form play and exploration.

2. Imaginative Creation – functionally speaking one of the main drivers for Minecraft play is similar as for physical construction toys i.e. creating physical shapes, forms and structures in both a structured and free form creative way. In the same way as kids play with Lego and other similar toys in different ways e.g. some take on a more exact engineering like approach to constructing, whereas others are more engaged in fantasy and using their imaginations, so approaches to Minecraft play vary. The considerable advantage Minecraft has over physical construction toys come from the digital format i.e. considerable cost difference and less limited envirnoment/building materials featured in Minecraft versus real world physical play and the ability to save where you are upto whenever you like without mum/mom making you tidy everything away!

3. Minecraft Is More Parentally Approved Than Many Other Fun Games/Apps – kids LOVE playing on tablets. Parents on the other hand don’t like kids having excessive screen tim, even though they may welcome the peace and quiet for a while! Minecraft has the advantage of being seen as more worthy/beneficial play than pure arcade style gaming apps. In a recent study we conducted across countries for a major kids entertainment brand we found that children often manage to extend their Minecraft time by creating Minecraft scenarios, environments and buildings that relate to their school study topics, thus giving them significantly greater opportunity to play Minecraft for longer than would otherwise be the case!

 

by Steve Reece, CEO of Kids Brand Insight,  a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.

www.KidsBrandInsight.com

02 April 2015 ~ Comments Off on Playing With Toys & Your Kids

Playing With Toys & Your Kids

Peter A. Wachtel

“Of course some fortunate parents are able to enjoy their children most of the time, even in adolescence.” (Spock, 1990)

I’ve always wondered what makes kids and adults do the things they do. What was their favorite toy growing up? What instinctively told them what to do in any given situation, and does a toy influence the outcome of life? I am a toy designer/teacher, and here are some snippets of information I have collected and discovered over the years to better help you understand, as well as ideas for how to play with, toys and your kids.

Why do We Grow Up?

Why do we sometimes stop playing, learning, and experiencing new things as we reach adulthood? The background stems from childhood where creativity and play were the only things to do in a day—all through imagination, teaching, and creativity. Toys were/are a form of education for me. I believe that creativity is a part of our collective intelligence. Picasso liked to have toys throughout his studio in order to seek inspiration from them. Other less distinguished, but equally restless, adults find solace in a variety of toys, to soothe the nimble finger, or to occupy the darting mind. After all, if toys play an important part in our childhood fantasies, may we not suppose that toys can play an equally important part in our adult lives? Perhaps the father who plays for hours with his son’s toys is exercising an important therapy. Think of toys as emotional, mental, and sometimes physical therapy. You use your imagination, skills, and creativity, interact with people, and listen and grow with toys. Play with your kids, it will help you in so many ways.

“The little world of childhood, with its familiar surroundings, is a model of a greater world.” (Carl Jung)

Some adults become so involved in the delicate creative world of toy making that they bring to it a talent for creation from the normal spheres of their life. This shows the enormous and immense hold the world of toys can have over the imaginations and talents of people engaged in other occupations. Toys can be a great learning or rejuvenating experience. You can begin to see a side of life not typically seen. You begin to become competitive again, create and have a renewed sense of humor, and begin to better understand your children. Because there is no racial bias, people react and interact together and learn together because toys are a way to hide or amplify what we really are. This explains the high curiosity and imagination with unusually high logic, and why some people are just not children any more. What playing enables a person to do is to have a sense of psychological and philosophical views combined with education, which helps us use our creativity as well as our imagination. Play with your kids, go shopping with them, and discover new things about toys and learning with them.

There are three stages of both growth and life. The first stage is learning, relating, and familiarizing. The second is using and creating. The third is analysis and knowledge. They may have a little retrograde, then the cycle repeats itself. I believe as we get older our bodies both physically and mentally begin to reverse. As you get older, you have experienced a lot as a whole and will return to the points that were the most creative or where the most learning originated. Whether at school or playing, both are a learning experience. As people get older, or as the child matures, society and the environment play a greater role. Toys of childhood are replaced with their collected objects of time, where they are used as an object of security. As one cannot fit the mold of society with the maturity of a child, people become stagnant and replace toys with other items. Only when we see other adults playing with toys is it all right to join in.

Invent new ways to play with toys and games. Think differently, role-play, and experiment with all kinds of toys. Even if you don’t have kids, toys are a way of discovering who you are and may want to be. Go ahead and play, you will feel and look younger, but best of all, you will have a big smile on your face.

Toys That Grow With Kids

Why do we have to grow up and stop playing, learning and experiencing with toys as we grow older? Is it because toys serve a certain purpose, and then we out grow them? We all remember our favorite Barbie, action figure, Hot Wheels car and game. There are intrinsic things we all learn from toys at certain ages, and then we move on to another toy for our next stage of development. Toys are a form of education. Toys teach and affect us as we grow up. I played with a lot of toys as a kid, and still play with them with my kids; it is all about imagination, creativity and what children can create as they play with them. Can toys grow with us, and keep the “Playability” factor?

Toys as Life’s Starter Kits
Children are like little scientists: full of curiosity, confidence, wonder and ignorance. For them, toys are a way to learn, grow and experience life. Toys are a“starter kit for life” – models for a bigger world, that show and teach children how to draw, drive, build, act and create. Toys may be likened to three-dimensional books for the mind and body – to learn from and experiment with, while encouraging self-motivation and curiosity and providing a way to let kids be what they want to be. Thus, when designing and inventing toys, the designer should consider how that toy can evolve and grow with the child and be played with by children in multiple age groups. A designer should ask himself or herself, “What, When, Where, Who, Why and How do children play with toys?” Toy retailers should apply the same questions when evaluating new toys for their stores.

Toys of Today are Changing
Technology, the Internet and today’s fast paced lifestyles have given children the need for more sophisticated toys that really challenge their imaginations, skills and knowledge. Many new types of materials, use of recycled materials and better technology make toys even more special today, easier to make and safer as well.
Because, interactive play with its immersive role playing is one of the keys to learning and social evolution, one approach to designing and developing a new toy is to look to the past. Look beyond the nostalgia for those toys and take those basic play patterns – how children of different ages and developmental levels played with them – and combine those elements with today’s technology and the learning needs of today’s child. The outcome may result in something great at the end that is not only a good seller, but also a great learning and entertaining toy that is adaptable so that it will continue to engage a child as he or she grows. In the meantime, don’t forget to take time to play. It’s the secret of youth!

Toys of Today vs Toys of Yesterday

Toys of Today The toys of today are changing. The economy, technology and the internet, as well as people’s lives, have a great influence over toys. As a working Dad, I know this every day. Technology, the internet and today’s fast paced lifestyles has given us the need for more sophisticated toys that really challenge our kids’ imaginations, skills and knowledge. Toys have become more than just a fun thing to pass the time, but a way to learn, grow and experience life with a good, creative, fun, affordable and reliable toy. In the past, a toy would take up to two years to take to market. Now, toys are conceived, designed, manufactured and distributed within six months.

Today’s toys have changed in many ways such as safety, style, play value, manufacturing, retail distribution, cost, as well as brand awareness. The toy companies think like kids, adults, and educators. Toys of the present will soon be toys of the past. What kids can learn from the toys of today is to “learn as they play” and to take that combination into the future with them.

I often observe children playing in schoolyards, playgrounds and classrooms, and spend time at toy stores, take trips to museums, art galleries, hobby shows, antique shops and libraries. My children find that skills are learned and creativity is experienced. The toys of the present day rely on all sorts of play patterns from fantasy, language, motor-skills, thinking, perceiving and creating.

Toys of Yesterday Wouldn’t it be great to start out old and grow younger as we age? How do we compare the toys of yesterday to those of today? It is a matter of generational thinking, as well as the needs and wants of children. Not so long ago toys were simple, well built and served a purpose—then you would put them away. What we can learn from the toys of the past is play patterns and how to “learn as we play,” and to take that combination into the future. We all remember our favorite Barbie, Hot Wheels car, and board game to this day. The history of toys is made up of all sorts of contrasts and lies somewhere between the needs of the child, the interest of the historian, the desire of the collector, and last but not least, the involvement of the adult in his childhood, the magic world from which he can not bear to be excluded forever by the mere act of growing up. I know this all too well being a Dad of a 8 year and a 6 year old.

Toys of the Future The future of toys is pressing towards the combination of the past, present and future with generational thinking, philosophy and psychology. Basically all the aspects of life to teach a child what they will need later on. The technology of toys is increasing, as well as the needs and demands of the world. The character of a toy with its functions and mechanics gives the utmost variety to creativity, as well as the imagination of the child. It will teach children to be themselves and to unlock their own special ways of uniqueness, to teach them ways of manipulation and production of a theater of life, to show them options and possible solutions to problems. Are the toys of the past of actuality? Are the toys of the present of fantasy, and will the toys of the future be both? We will soon see.

Combing the past, present and future of toys with the needs and wants of children is key. Since infancy, my children have played with many different toys. They are an essential form of education for them. My children have separate needs and wants, they want to learn how to solve problems on their own, and need to. The nature of toys is compounded with pleasure, fantasy and imitation. Toys are a“starter kit for life” and learning to face what is ahead of them in life. Ask yourselfWhat, When, Where, Who, Why and How children play with toys. Who chooses the toys your children play with? Is it genetic, philosophical, psychological or the past, present and future aspects that chooses the toy? Creativity in play is a form of intelligence for children.

Ten features of a “Good Toy” that have stayed with us over the years.
Fun to use
Interesting to the child
Is safe and durable
Stimulates creativity and imagination
Encourages inquisitiveness and resourcefulness
Is a tool for learning
Is challenging yet not frustrating
Invites repeated use
Involves child interaction
Addresses developing needs

For more useful insights and advice, check out my book KID Toyology: An Understanding of Why Toys are, and how they Effect Us as We Grow (e-Book & Paperback) http://www.lulu.com/spotlight/KIDToyology

By Peter A. Wachtel

★Chief Creative KID @KIDToyology® (designer+inventor+teacher+writer=creator)

27 March 2015 ~ Comments Off on 5 Top Tips For Growing Toy Export Sales

5 Top Tips For Growing Toy Export Sales

Steve pic

Rarely does my company encounter more wasted effort, expense and opportunity than in the field of export sales. Nearly every company wants to sell overseas, but apparently fairly few actually look to build a sustainable, coherently managed business which will thrive and grow longer term.

The reality is that selling toys overseas can be comparatively easy, but the main issue is a lack of strategy, a lack of planning and a lack of analysis of whether a particular product range will work in other markets. When we help toy or board game companies set up or grow their overseas sales, the start point is not who can we sell to and how soon can we get started. The start point is product selection, collateral material production and an understanding of how future developments can be tweaked to maximise the opportunities.

For those companies with a successful domestic business who are not overly interested in selling further afield, consider these stats – the US toy market is huge by any standards, but even then the market only accounts for between 20-25% of the global toy market i.e. 75-80% of the opportunity is still outside the US. For other markets the scope of this export opportunity is even greater, if we take my home market (the UK), then there is roughly 95% of the global toy opportunity outside the domestic market!

So a good sound plan, and a willingness to devote time and resources to export sales can yield great results.

Here’s 5 top tips for how to maximise the toy export opportunity:

1. Make Sure Your Products Sell Well In Your Domestic Market – the first question any overseas customer will ask you is how well your products will sell at home. If your products don’t work particularly well in your home market, they aren’t all that likely to work elsewhere. Perhaps you could hold off from attacking the vast international opportunities until you have a proven performer to sell…because until you do you are likely to be better rewarded spending your time on building traction domestically!

2. Understand That Markets Differ – presuming that all markets are the same and that you can sell the same thing the same way anywhere in the world is setting your company up for failure. Markets differ vastly in terms of product mix, retail set up/key players, pricing, culture and many other factors. Companies who achieve success in the export business either a). create globally relevant products or b). adapt to the needs of each market opportunity as far as needed. For an example of how different markets can be, check out our article on how the European toy market is actually far from being one single homogenous market:   http://www.toyindustryjournal.com/?p=53

3. Prioritise, Prioritise, Prioritise – there are so many individual countries out there that it can be overwhelming to approach them all at the same time/during the same selling cycle. A winning approach has to be driven by prioritising by size of opportunity – for instance, if you are not located in North America, then the North American market (as the largest, most homogenous toy market in the world) should be your first priority. The next largest toy markets are China & Japan, although they aren’t all that easy to penetrate, followed by the UK, France & Germany, with Australia thrown in as it’s an English language speaking market of reasonable if not large size. If you are just starting to look at export sales, those markets should be more than enough to keep you busy and offer a very significant chunk of the global opportunity. Everything else after that is basically ‘ever decreasing circles’ i.e. smaller and smaller volumes for the same amount of work…for sure you will want to get there eventually, but that can be step 2!

4. Get Off The Seat Of Your Pants – the companies who achieve the most in terms of international toy sales tend to be those who travel! If you have the biggest, hottest product in your portfolio, or an international smash hit movie license you can probably get away without doing so until the heat dies off, but eventually you are likely to need to get on the road! Hong Kong, Spielwarenmesse-Nuremberg and New York toy fairs should be pre-requisite annual itinerary items for you to get ahead in the export game. Emails, phone calls and Skype are ok, but really you can’t beat face to face meeting to build rapport/relationships and to work out whether you trust a company to do a good job on your brands/products.

5. Take Short Cuts Via Expert 3rd Party Help – there are international sales reps out there who will cover the whole world for you via one rep/distribution deal, there are regional and market by market reps, as well as Consultancy businesses focused on helping companies significantly increase their export sales. Often these 3rd party solutions are both more effective and cheaper/less risky than hiring your own export sales staff. Reps only get paid if you make sales and get paid for them, some specialist Consultancies charge less than the wage of an inexperienced junior sales person. For instance, my company Kids Brand Insight (www.KidsBrandInsight.com) offers export sales consultancy via TOYEXPORTBOOSTER™. We find that we end up being cheaper than reps, as we charge a consultancy fee instead of % commission, and cheaper than an export sales manager…so once clients see the effects and cost effectiveness of working with us they tend to stay with us on an ongoing basis. There are other similar companies offering the same type of service also…so the bottom line is that 3rd party solutions can dramatically propel your toy export sales forward.

 

STEVE REECE – is CEO of Kids Brand Insight a leading Consultancy to toy companies specialising in playtesting research, factory finding and toy export sales Consultancy. Kids Brand Insight have a database of in excess of 4,000 toy companies, and are in regular contact with hundreds of toy companies. To find out how they can help your business, please visit their website: www.KidsBrandInsight.com 

 

 

19 March 2015 ~ Comments Off on Where Is The Innovation In Toys?

Where Is The Innovation In Toys?

Richard Heayes

I recently posted on ‘What the Toy business can teach you about innovation’. What is interesting after coming back from the International Toy-fair in Nuremberg, were comments I heard that there wasn’t much innovation on show…

Now we all have our own perspectives and even in the toy business tend to look to the areas we know most about. If you are exhibiting, you won’t get much chance to wander the halls and if you do you will likely be looking at your direct competitors.

Of course with that narrow lens you and your competitors are likely seeing the same inventors, working with similar suppliers, manufacturing in similar factories. So it is no big surprise that their perception is there is not much innovation. It is the same for pretty much any business.

Even when I was at Hasbro, I always made a point of wandering the halls for inspiration. You need to dig, different ways materials are being used, formed, printed. Interesting pack structures, novel electronic widgets. They are all there but they often don’t shout out. All the guys in the costume hall probably think there isn’t much innovation but to my eyes, there was plenty of little gems I could use in a new way on the toys and game areas I am currently working on, and plenty of innovations I could bring to the world of dress up! ( in the works! ). The hobby hall always amazes me with the level of detail and precision on display. Each hall has it’s own little treasures if you look hard enough.

It’s a very simple reason many businesses don’t innovate. They don’t look out side of their day to day business. You MUST THINK differently to innovate, you MUST DO things differently and you MUST be prepared to walk out of the safe world you know all about into a world where you can feel exposed. It’s no different to school. We all left junior school where we were top dog and into the world of senior school. We were the smallest, everything was different, but slowly we learnt new things, met new people and grew as a person. Imagine if we had stayed at Junior school and never moved on!

For me once you embrace that simple truth you can start to innovate. It is a journey of course. There will be many people telling you it isn’t a good idea. Your sales team might react negatively to finding new partners, your manufacturing team might react badly to new processes and systems. But take them on that journey to the world outside of the day to day and I am sure they will see the light.

I am working with a great European games company right now. We are exploring a range of really cool technology, materials and ideas that I am sure will make a big impact to their bottom line in the years to come. When I mentioned their name to others at the fair there was plenty of praise for their innovation strategy!

Thanks for reading, I post on design, design culture, play thinking and innovation. Follow me on Twitter: @richheayes

 

Richard Heayes is founder of Heayes Design, a design and invention consultancy
with a playful spirit, helping the Play business innovate.
As a Designer & Design Director at Hasbro for over eighteen years Richard led creative
product development on dozens of brands from Monopoly, Scrabble, MB, Trivial Pursuit,
PlayDoh to name a few. He brings an insight and passion for blending design vision
with business insight to create breakthrough products that deliver.

18 March 2015 ~ Comments Off on 5 Reasons Why Toys R Us Is A Crucial Partner To The Global Toy Industry

5 Reasons Why Toys R Us Is A Crucial Partner To The Global Toy Industry

5 Reasons Why Toys R Us Is A Crucial Partner To The International Toy Industry

It’s not uncommon in the toy industry for people to take Toys R Us for granted.

In many ways the set up of TRU makes it an easier partner for the toy industry to deal with, and the destination approach makes it a potentially powerful sales driver for toy companies and their products.

Here’s 5 reasons why TRU is so important to the toy industry:

1. Global Opportunity & Growth – at the time of writing, TRU has more than 871 stores in the USA, 730 international stores and 230 licensed stores in 36 countries. In terms of market share, we calculate that TRU has (very roughly) c. 6% of the global toy market. That puts Toys R Us in the very top bracket in terms of the biggest global players in toy retail. While the chain may not be so focused on new store openings in some mature markets, global expansion is nevertheless firmly on the cards – late in 2014 the company announced plans for the opening of 90 new stores globally.

2. The Store Format Is Immensely Helpful To The Toy Industry – we recently visited a number of TRU stores in the UK, from mid Jan to end Feb, and while there were some gaps, there was still a huge quantity of  stock on shelves. If you compare this to generalist/non specialist retailers who tend to drastically cut back their sku count for toys in the first half of the year (at least in North America & Europe that is), we can see that TRU is carrying significant quantities of inventory into Q1 and taking in new inventory across the board. This leads to less pressure on brand trashing price cuts towards the end of Q4, and the expansive warehouse format means shelves need to be filled regardless of time length to next peak season. This factor alone should make TRU highly cherished by toy companies in an industry where the cashflow/peak sales cycle is one of the most fundamental business challenges to manage.

3. Specialism = Focus On Toys – TRU is focused on our industry and has a great vested interest in it. Whereas many generalist retailers use their toy offering opportunistically to drive in-store/online traffic, regardless of the effect on the health of the industry, TRU is structurally set up to support it.

4. Broader SKU Count – to the best of our knowledge TRU stocks more toy SKUs than any other major ‘bricks and mortar’ toy retailer. This is an operational challenge of some scale for TRU to manage, but it works to the benefit of toy companies as a whole, acting as a facilitator of greater product diversity and supporting more toy company initiatives/developments. As an example, the 2nd area you come to in most TRU stores is the board games aisle. You don’t find such an extensive range of games in many specialist games independents, and you certainly don’t in other (physical world) major toy retailers. In many markets, the TRU listing alone is likely to add up to enough to amortise a significant amount of development and inventory expense.

5. POS Marketing – TRU offers unrivaled opportunity for major brands to make a statement in store. For sure there are showpiece opportunities with some other stores/chains, but not to the same extent as TRU can offer. Whether it’s the latest mega hit movie or a classic brand, TRU’s flexible branding at the main entry point to the toy aisles offers a huge impact statement, combined with strong branded bays throughout the store and in store TV.

So there you have it, Toys R Us is a critically important retail partner to the global toy industry – let’s not take it for granted!

 

 

13 March 2015 ~ Comments Off on The European Toy Market – Large But Fragmented!

The European Toy Market – Large But Fragmented!

The European Toy Market – Large But Fragmented!

The European market might appear exotic and potentially lucrative at first glance. With the 2nd and 3rd biggest retailers in the world based in Europe (Carrefour & Tesco), with a population of c. 730m and a combined economy ranked by the IMF as the largest in the world, it is an opportunity too big to ignore.

Those wandering over there bright eyed with $$$ signs in their eyes however,  should beware, because while Europe combined is huge commercially speaking, it’s also highly fragmented, and very easy to bite off more than you can chew. There is a large degree of homogeneity (in practical terms) about the US market for instance, but Europe doesn’t work like that.

While Europe may be of a similar(ish!) size geographically speaking to the USA, there are 44 sovereign states with their capitals in Europe, and 50 who have some territory within Europe. And for every one of those there are local customs, laws, retail differences, and in general bucketloads of cultural, legal and commercial diversity.

Furthermore, there’s a very significant language barrier to doing business, with 23 official languages of the European Union, and a mind blowing 230 languages and dialects in total. An English only speaker can’t always easily operate in every market as a sales person. To illustrate this – imagine you want to sell to retail in France or Spain, but you don’t speak French or Spanish. What can you do? You can dial head office anyway and speak English, but as we all know, it’s often fruitless calling retail switchboards in markets where you can speak the language, it doesn’t get any easier when they don’t speak the same language as you!

You can engage a distributor, which generally would be recommended to begin with, but there are market dynamics at play which complicate matters. For instance, if you sell to 2 distributors, with one in France, and one in Benelux (Belgium, Holland and Luxembourg), then their retailers might overlap territories, and generally pricing is lower in Benelux, so grey market shipment by retailers could destroy your French business and leave you with an irate, alienated distributor.

Of course product localisations are needed, with some markets needing 3 languages per product or more, and in the same way as a typo would look outrageous on English language packaging, so an error in any one of those 23 official languages will also.

Our journey to securing European distribution has yet another hurdle to over come yet, in terms of customs regulations and movement of goods. Now the good thing is thanks to the European Union, trading is harmonised across EU member states, with a mostly effective ‘free’ market in operation. The challenge comes when trying to ship in Europe outside of the European Union, which at the time of writing means Iceland, Liechtenstein, Norway and Switzerland (the EFTA countries – don’t ask!), Russia, the Ukraine, Croatia, Bosnia, Macedonia, Turkey & Belarus. Now frankly, the majority of the opportunity is within the EU countries, especially UK, France, Germany, Spain & Italy, but every extra roadblock laid reduces the low hanging fruit.

As if this wasn’t all complicated enough so far, currency is another major factor. The UK has the £pound, the other EU states mostly have the €Euro, stock is bought from China in $USD, and there are a litany of other local currencies to boot (most notably in Sweden, Denmark, Poland and Switzerland)! Currency management is a vital part of trading in Europe, if you don’t want to deal with that complexity, you’d be wise to trade $USD FOB only!

Staffing is even more complicated with different employment laws in each country, as well as European wide legislation which tends to be more employee friendly than in North America. Commercial agents have guaranteed residual commissions owing to them across the European Union, so beware on that front. And if you considered hiring staff in France, my advice would be don’t do it lightly without due diligence. There is a disgusting but perhaps not inaccurate saying that it’s easier to chop off your own hand than to fire a French employee!

There are numerous other significant barriers to doing business which I don’t have space to go into here, but nevertheless, we can clearly see that while the opportunity is large in Europe, it’s not that straightforward, and ‘gung ho’ megalomania should be tempered with a harsh dose of practical reality!

Having emphasised the difficulties, there are some clear forward paths we can look at now. The first and most prevalent of which is to utilise distributors, at least in the first instance, who understand the local nuances, have the retail relationships and take legal responsibility for trading in each market. This may not be a long term strategy you are very comfortable with, but it took even the Hasbros & Mattels of this world decades to set up an office in every decent sized market in Europe.

The second option is the ‘beach head’ strategy, whereby you pick one market to trade direct to retail in, thus establishing your beach head and branch out from there over time. For English speaking companies e.g. from North America or Australia, in most instances the beach head market would be the UK, as we tea drinkers speak (nearly!) the same language, the Licenses tend to convert as well here as anywhere (although we don’t play the same kind of football, so sports doesn’t tend to cut it), and this is one of the three biggest individual toy markets in Europe. Latin American companies may head to Spain first as their beach head market due to language similarities.

The third option is to sell to distributors and retailers on an FOB basis meaning only outlaying the cost of two sets of air fares and hotels at risk, versus everything that comes with setting up offices.

And in case you’re already established in one or more EU markets, here’s my rough list of priority for your distribution efforts and why (although this will depend to some degree on your product category, as category strength per market varies, it’s not a bad starting point):

The UK, as mentioned is one of the three biggest markets. France of similar size as a toy market, although with significant local challenges & diversity factors. Germany would be next on my list, it’s a large market, but very decentralised, and retail is massively fragmented – in fact Germany is home to the largest specialty market in Europe, plus the product mix tends to differ in Germany versus many other markets. Spain would be next, although expect to TV advertise everything, closely followed by Italy. Then the next tier would include the Nordic countries, Holland, Poland, the Czech Republic and other markets East of Germany!

Rolling out all those markets would keep most businesses busy for a decade or more, so I’ll write another article in 2022 with some suggestions on where to go to next!

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