Is Toy Retail Dead In Manhattan? (No It’s Alive & Kicking!)

IS TOY RETAIL DEAD IN MANHATTAN (NO IT’S ALIVE & KICKING)

 

Once upon a time there were two major Toy retail landmarks in Manhattan – FAO Schwarz and the Toys R Us store on Broadway. In fact, one of my first memories of the toy industry is being shown round these two outlets by my first boss at Hasbro. And for me (and for many international visitors) a major part of our annual pilgrimage to New York for the Toy Industry Association’s American International Toy Fair each year in February was a trip to these showcase retail outlets. It’s not necessarily that these were the best merchandised two toy stores or that their often very crowded shopping experience was entirely pleasant…instead the point was it was an easy way to see what was on sale, what the major brands were focusing on and was a quick reference point to a broad cross section of the US toy industry.

While Walmart and Target may drive significantly higher volumes for numerous products and for many toy companies, their store format (and arguably their demographic) doesn’t appear to be best suited to Manhattan’s real estate/consumer base, and also their range of toys is not usually so broad as could be found in the TRU on Broadway, so as a reference point these two now absent specialist toy superstores will be sorely missed!

However, there is a reality outside of these two flagship locations – that there remains today dozens of retail outlets on Manhattan where you can purchase toys, and even have a ‘retail theatre’ experience. In and around this years New York toy fair we visited an absolutely splendid example of the Disney Store in Manhattan, which in this day and age features a vast array of top toy brands inc. Star Wars, Marvel, Disney, Frozen etc. We also perused a Lego store and an American Girl store each of which is clearly targeting both the c. 1.6million Manhattan residents and tourists alike. There are also numerous specialty toy retail outlets in Manhattan, as well as a number of generalist retailers who also sell at least some toys (drug chains, kiosks, department stores) etc.

So the reality is that while we may have lost a couple of high visibility toy stores toy retail in Manhattan is still alive & kicking, in fact appearances suggest it is thriving, just in different formats!

The following images reflect just a few of the outlets we viewed, and needless to say all logos, trademarks and intellectual property featured belong to the rightful owners.

                   

 

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

2016 New York Toy Fair – A Success Despite Near Arctic Conditions

2016 New York Toy Fair – A Success Despite Near Arctic Conditions

The 2016 TIA Toy Fair in New York hit all the right notes, despite severely cold weather! The first two days of the show saw outdoor temperatures as low as minus 18 Celsius (around zero degrees Fahrenheit!). Such frosty conditions didn’t appear to affect visitor numbers though. In fact, the showcase Play Fair event next door (featuring god forbid large numbers of children interacting with toys as an add on to a trade show, and due to the cold conditions, the queue of excited kids was re-routed inside. Fortunately the huge Javits Center foyer/entrance hall easily swallowed up the extra traffic without unduly congesting things.

Bearing in mind the huge snow storm a few weeks before the show, which would have undoubtedly had a greater impact, perhaps a few shivers is a small price to pay for a trade show which offers a simple opportunity to access the world’s largest toy market by far. For those used to the highly fragmented European toy market, North America offers potentially huge volumes with a fraction of the complexity. Businesses with comparable infrastructure can do even greater volumes in North America than they would be likely to do in Europe, or in fact nearly any other region.

Overall, most of the people we spoke to are optimistic about the state of the toy market, so here’s hoping that optimism is fulfilled in 2016!

 

MERGERS GALORE: The Toy Industry Goes Merger Crazy!

MERGERS GALORE: The Toy Industry Goes Merger Crazy!

There has been some BIG news in the world of toys this week, with Bloomberg letting the cat out of the bag in terms of a Hasbro and Mattel merger, plus the announcement concerning VTech acquiring Leapfrog for the perhaps surprising amount of $72m (reported amount).

So wow, there’s some impactful headlines, but what is the reality? Has the toy industry gone merger/acquisition crazy?

Well actually, no – it certainly hasn’t just suddenly ‘gone’ crazy – in fact the history of the toy business is littered with acquisitions, mergers and however else you might technically describe two companies turning into one! The most obvious example of this would be my ex-employers Hasbro, who have been (historically speaking) magnificently successful in growing by acquisition including Wizards of the Coast (Magic: The Gathering), Waddingtons, Coleco Industries, Tonka Corp. (inc Parker Bros), Cranium, Trivial Pursuit etc…and that’s just one company with only the transactions I can remember off the top of my head mentioned!

The toy industry is in a sense structurally set up for acquisition with it’s preponderance of family founded and owned companies (Hasbro, Mattel & Lego all started as family companies). What often happens with family cmpanies is that not all generations want to take on/are offered the chance to take up the reins to the family business. Somewhere down the line one elder statesman or another decides either his or her offspring aren’t up to it or aren’t interested and reaches for the golden parachute!

So now we’ve established that all this talk is part of an ongoing cyclical process, let’s consider each of this week’s announcements:

Firstly Hasbro/Mattel merger, or Mattel/Hasbro merger to avoid favouritism! Firstly I can state very clearly as an ex-Hasbro employee that there was no love for Mattel within Hasbro corporate culture in my day, which I’m guessing hasn’t changed and I presume (although don’t know for sure) that the same applies back the other way. So why would they consider a merger? Frankly, I don’t know if there’s a legal/fiduciary obligation to make a documented effort to engage or not, but a merger between these two toy industry behemoths would certainly create a monstrously powerful machine, as well as significant ‘synergies’ – that cold hearted overly positively worded way to describe the misery of mass layoffs. The leading player in Girls/Fashion dolls and the leading player in Boys/action figures would make quite a combination…but I can’t see how it’s a likely move bearing in mind the East/West coast locations and the likely resistance to the change. In actual fact I would speculate that a takeover bid would be more likely, as from what my limited understanding of corporate finance suggests, that doesn’t need to be compliant/mutually agreed transaction and both companies could presumably access sufficient funds to make such a deal happen. Yet if that were likely, surely it would have happened when Mattel’s share price was languishing lower than it is now a fw months back? Anyway, I’m sure there will be more rumour to come on that one, but I’d bet against it happening any time soon if I were a betting man!

Onto VTech & Leapfrog…that is one very exciting transaction for VTech, because they both bring their biggest competitor under their own control, but also have an opportunity to significantly leverage up in the North American market where Leapfrog is so strong in terms of trade presence and consumer recognition/affinity. There is no doubt that the explosion in kids tablets presented both companies with a huge sales opportunity, but the question with all technology is always how do you manage the lull between technology waves…seemingly with kids tablet sales appearing to peak/level off, VTech may have managed the waves better. Either way expect to see VTech’s already highly influential position ramp up to new levels in the kids electronics/ELA categories!

PUBLISHERS CAVEAT: Please note any discussion above is not based on any knowledge or insight, is just speculation/opinion and should not be used in any way to influence financial investment decisions…such decisions should only be taken with the advice of qualified experts of which Steve is not one!

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

Knock Offs In The Toy Industry…Is Imitation The Sincerest Form Of Flattery?

Knock Offs In The Toy Industry…Is Imitation The Sincerest Form Of Flattery?

The toy industry (like many brand dominated consumer products industries) has a significant problem with knock offs i.e. people ripping off a product. Recent high profile cases have shown that even retailers are not immune to looking for an easy win/quick buck using someone else’s brand without necessarily paying for it!

The reality is that branded products command a premium versus generic products, and so they will tend to sell more than generic products. The challenge for toy companies is to find an effective way to robustly protect brands/properties.

While trademarks and ‘passing off’ legislation offer some protection, they need to be actively managed and enforced, often at some cost/legal risk.

There appears to be a difference between ‘me too’ products and an actual rip off/knock off product. For instance let’s say you are active in the creative play category and you create a new play pattern, you launch a product and it’s a huge success…the outcome is likely to be a). good sales initially and b). after one or two selling cycles, your competitors will have cottoned on & will have similar products. This would be regarded by most as pure competition, and the only way to beat it is to keep on innovating, leverage customer relationships and deliver cost effectively/with good marketing.

At the furthest end of the spectrum the other way though is the blatant knock off, either an illegal copy of the product using the same brand name but not manufactured/supplied by the brand owner, or the blatant knock off with just the tiniest (often hilariously bad/ill thought out) amendments to make a token but presumably legally insignificant change!

While walking between show rooms in Hong Kong we noticed a street toy stall selling something called “Deformers” which looked almost entirely like a Transformer toys. While such names and bad copies can be amusing at first view, actually they are symptomatic of a problem which costs toy companies and brand owners fortunes.

This is obviously not a new issue, one of my first memories of the toy industry is seeing Hasbro’s Legal Counsel striding around the Nuremberg toy fair (in the late ’90s) issuing cease & desist notices to Far East vendors of products he deemed to be infringing Hasbro’s intellectual property.

So new or old issue, the problem of knock offs is not going away…the reality is that the more successful you are the more likely your products/brands are to be knocked off, so from one perspective it is a problem of success, not that this makes it any less frustrating!

 

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

2016 Nuremberg – Spielwarenmesse International Toy Fair Review

2016 Nuremberg – Spielwarenmesse International Toy Fair Review

While the show still rumbles on, my own time here for the 2016 Spielwarenmesse is coming to an end. One more morning of frantic dashing around labyrinthine halls, and of meetings with old friends, potential new friends and anywhere in between.

According to my gadget, I’ve walked 36 miles in 3 days, and physically speaking it seems like more! For those of us from the UK contingent who have ‘done’ Nuremberg back to back with the BTHA UK toy fair, there is an even greater air of fatigue and dishevelledness (if that’s even a word) than usually at the end of this great vast show in Bavaria! There have been times this week when I felt like I lived in a permanent world of trade show madness, and the thought of my own bed begins to loom large in my mind.

Such self pitying grumblings aside, both shows have been very good in terms of quality of product and innovation on display, in terms of powerful new and existing licenses and in terms of the level and breadth of people in attendance. Although it’s entirely subjective, I saw/met with everyone I would expect to and found less people ‘missing’ from the UK show than expected.

The buzz around both shows, and the general atmosphere seems overwhelmingly positive in a trade where it’s usually made quite clear if things are tough! In general (as I’ve written elsewhere we do seem to be in a golden age where unbelievably strong movie slates featuring toyetic blockbuster after toyetic blockbuster just keep rolling in wave after wave. So as the saying goes, when the sun shines make hay!

As usual the level of detailed organisation at the Spielwarenmesse has been amazing. This year I accidentally stumbled upon yet another example of this. I inadvertently found myself in the first aid bay, where no less than 5 upstanding medical professionals oversaw my highly trivial treatment (a Paracetamol for raging headache, I’m unwilling to reveal the cause of the headache but you can probably guess). Despite the medical ‘overkill’ involved, it is nevertheless very reassuring to know so much preparation and attention to detail is in evidence throughout the toy industry’s biggest showcase.

So thank you Germany, thank you Spielwarenmesse, another great year, and let’s all hope the listings and sell through resulting are as good as the show!

BTHA UK Toy Fair 2016: A Success For Sure!

BTHA UK Toy Fair 2016 A Success For Sure!

Despite the regrettable clash/proximity between the Spielwarenmesse-Nuremberg toy fair and the BTHA UK Toy Fair, The 2016 UK show was a resounding success by all accounts. Despite the unusual absence of the likes of Hasbro and Leapfrog, and despite the usual absence of Mattel, plus an arguably risky Sunday opening, the UK show seems to have gone well.

Hats off to those retail buyers who attended on Sunday, flying in the face of concerns that Sunday might be a dead day from that perspective!

NPD announced a strong 2016 in terms of UK toy market sales with year on year growth of 5.9%, albeit with much of that growth seemingly dependent on the massive movie slate of 2015 versus organic growth or ever green growth.

In terms of standout products, I saw too many to highlight, but greatly enjoyed the innovation on show while being toured round the stands (English vernacular for ‘booth’) of Lego, Vivid (inc. Drumond Park), Flair, Casdon, Epoch (Sylvanian Families) re:creation and others.

So on now to the vast expanse of Nuremberg, perhaps a few too many weissbiers and another stacked meeting schedule!

Star Wars Episode VIII Delayed – Impact On The Toy Industry?

Star Wars Episode VIII Delayed – Impact On The Toy Industry?

The news that Episode VIII of the Star Wars series of movies has been delayed and release date pushed back to December 15th 2017 might have been expected to set hearts a fluttering in the toy business…

…however, Episode 7 has already rewritten the rules to an extent.

Usually toy companies hate a movie launch in December, as it’s perceived to be too late to drive high enough retail stock intake/maximal consumer sell through. But Episode 7 appears to have broken that paradigm in a way only massively anticipated super blockbuster sequels can.

So the news today that the 2017 release is slated for a similar launch timing in 2017 is far less concerning than it would be for a lesser property/movie franchise. Moreover, with 2017 set to be yet another massive year for blockbuster toyetic movies (Lego Batman movie, a Wolverine sequel, Beauty & The Beast, Guardians of the Galaxy 2, Barbie, Cars 3 etc), Star Wars Ep. 8 is likely to have a huge impact on both Q4 2017 and Q1 2018 toy sales, with the Q1 impact being perhaps the most important for an industry usually very quiet in the first few months of the year.

Rather than being a disaster, I see this delay as being mostly beneficial to the toy industry, and a move that is likely to support momentum in an industry that has seen a very strong 2015, seems set to enjoy a strong 2016 and after today’s news seems likely to keep rolling until 2018 at least…

Could this be a golden age for the toy business? Quite possibly!

Why Indian Toy Factories Are Very Audit/Ethically Friendly…

Why Indian Toy Factories Tend To Be Manufacturing Audit/Ethical Working Friendly…

 

The toy industry is fast discovering India as a powerful manufacturing hub. In this first of a series of articles on Indian Toy Manufacturing we look at a practical factor which is encouraging/offers potential for much less bureaucratic hassle for companies looking to manufacture in the sub continent.

Toy manufacturers in India have numerous innate advantages, not least of which is comparatively low labor costs. Perhaps more importantly, one of the most practically important areas where toy manufacturers in India are well set to supply the global toy industry is ethical standards, employment conditions and many of the other factors that go into achieving important audit passes/certifications i.e. ICTI Seal, Walmart’s FCCA program & others.

Indian labor tends to be better protected in terms of legal and regulatory framework than many other Asian toy manufacturing countries. Workers in Chinese factories tend (nowadays) to be from further West, and therefore often need to live on site/at low cost, and when so far away from home may be more inclined/incentivised to work over time which can lead to issues with audits/working hour limitations etc. This doesn’t tend to happen in India (based on what we have discovered/been told), with most manufacturing workers being from within a reasonable distance of the manufacturing plants. Shift times and working conditions are heavily regulated, and so the kind of working practise transgression which may lead to ICTI ‘on probation’ status are less ingrained into the setup/working culture.

We spoke to the company regarded by many as the leading toy factory in India, and they told us that they are tending to exceed ICTI standards because they are legally obliged to do more by their state and national legal framework. In fact they appear to have achieved ICTI & other certifications faster than nearly any other toy factory we have spoken to!

This is one of many factors that leads us to predict exponential growth in Indian toy manufacturing in the next few years…more to come on this topic!

For more information on how to access Indian Toy Manufacturing, please visit our Toy Industry Consultancy company website: http://www.kidsbrandinsight.com/?page_id=332

Toy Manufacturing In Bulgaria: Klimbo Eco Toys Profile

Toy Manufacturing In Bulgaria: Klimbo Eco Toys Profile

We recently caught up with Pancho Panev, CEO and co founder of Klimbo Eco Toys Ltd, a Bulgarian manufacturer of high quality wooden products:

 

  1. Tell us more about your company Klimbo Eco Toys Ltd?

We firmly believe that our world will be a much better place, if children are growing up free in environment, full of beauty and opportunities to create.

This is how we decided to establish a company for design and manufacturing of ecological toys with high educational value. Thus, our first product, Klimbo portable theatre was created with emotion and attention to every detail, and it is distinguished by its enhanced functionality.

  1. What makes Klimbo Portable Theatre so special and unique?

First of all this is an entirely new playing platform, not just a single toy product. Famous tale stories like Red Riding Hood might be presented and narrated accordingly to kids’ individual perception for those stories. The kids also have a chance to create and present in an artistic environment their own stories with their own characters. As we know there are no yet boundaries set for creativity and imagination, and Klimbo Portable Theatre is helping kids to unveil and develop further their potential.

Second, Klimbo Portable Theatre is unique with its lovely design and the integration of all components of a real theater, starting from dimmable LED front and top stage illumination, mechanical music box, rolling curtains, rotating stage, etc. Klimbo Portable Theatre is made also of high quality natural materials.

Last but not least, Klimbo Portable Theatre can be easily assembled/dismantled and comes with very trendy, high quality cardboard packaging box. It has also built-in 3.7v Li-Ion accumulator batteries for the LED illumination.

OLYMPUS DIGITAL CAMERA OLYMPUS DIGITAL CAMERA

  1. Is this product already available on the market?

Assembling facility in Bulgaria is in full operation already, and we are working now on closing our first distribution contracts.

We’ve provided already a couple of samples to several customers, and the feedback is very positive.

But what makes us also confident in the success of the product is a consumer research conducted by reputable marketing agency in Germany, which showed us very high level of acceptance. The product was liked by 63% of the respondents, with 41% positive on buying it.

  1. And what about pricing?

The complexity and the enhanced functionality of this product puts it in the high-end segment of wooden toys. However, our strong intention is Klimbo Portable Theatre to be price competitive when compared to similar products in this segment, and we are continuously working in this direction.

  1. Finally, where we can find Klimbo Portable Theatre?

We intend to start from biggest toy markets around Europe (Germany, UK, France), and then expand further, if all goes well.

Besides with selected distributors/retailers, the product will be very soon available for direct purchase through our online store on www.klimboecotoys.com.

One of the key market segments, we intend to focus on are kindergartens around Europe, as Klimbo Portable Тheatre might be used also as educational and pedagogical tool.

Klimbo Portable Theatre will be also presented at forthcoming Spielwarenmesse in Nuremberg, hence I use this opportunity to invite cordially all interested participants to visit us at our booth   B35 in Hall3.

 

Klimbo Eco Toys

The Not So Secret Success Factor For Tech Driven Toys…

The Not So Secret Success Factor For Tech Driven Toys…

When you look at the top 10 selling toys in nearly every toy market in the world, technology driven toys will usually feature strongly. In fact THE top selling toy is very often a high price point tech toy.

But over time I’ve found that sometimes toy companies can get carried away by a nifty piece of technology, and miss the point – which is to create a compelling toy which a child finds exciting and magical. I’ve worked on dozens of tech products personally, and some of them featured good tech but a crappy experience for the consumer…some of the best experiences were created using basic or even old technology, because a child is not conducting a technical analysis of what’s making the toy work, they are are merely judging a toy by the end result.

The toy industry has proven long term hat it is expert in downspeccing/dumbing down high end tech functionality to hit a viable toy price. And what seems to have happened in the last 5 years or so is that price points have been pushed upwards as new technology creates products with have sufficient to bust traditional pricing paradigms.

We just need to ensure our adaptation of an exciting new toys delivers an exciting play experience, not a cool tech delivering a ho hum play experience!

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