Toys And Easter
In this industry, we are always very focused on Q3 for shipping in and Q4 for selling out to consumers. This is not surprising when sales are biased towards the second half of the year. Only the ignorant or foolhardy would ignore the selling opportunity that Q4 and Christmas offer.
However, there is a trap we can fall into here, and many companies clearly do fall into this trap – that being the presumption that Q4 is all that matters. Even for those companies operating in categories which are particularly biased towards Q4 will see no more than 70-80% of annual sell through in Q4. By simple deduction this means that 20-30% of sales for even the most Q4 focused companies comes outside of Q4. 20-30% of a companies sales is not a small amount. That amount would be the difference for many companies between a very successful year, and a disastrous, occasionally fatal year.
We should also bear in mind the risks and challenges of cash flowing the first half of the year when even the mighty run at a loss. We therefore need to consider very carefully the opportunity to sell outside peak season. We still have birthdays throughout the year, which is a very significant, albeit unconsolidated opportunity. More importantly however, there are several other periods offering significant opportunity. The most critical of which is Easter.
Easter is often described as the biggest retail event outside of Christmas. The challenge is though, that if you dig beneath the surface, the reality is that Easter is the second biggest retail event FOR FOOD & DRINK items, because obviously the family spends more time together, family & friends visit, children are off school and confectionery sales increase. None of which seems directly likely to help the Toy industry.
We should though consider this opportunity carefully, because as an industry we spend in excess of $5billion every single year on advertising. If the industry decided en masse to push Easter gifting via bespoke advertising, and decided to do this year after year, we would create a massive trend away from Q4. However, it would be arguable as to whether this would be incremental spend, and whether spending the money earlier in the year to try to ‘push’ consumers into purchase would be prudent and effective versus the ‘pull’ effect of steering consumers towards your particular offering when they are already shopping for your kind of product.
The reality is that Easter offers a definite sales opportunity, but one which needs a well thought out plan, prudent use of product, sales and marketing resources, and not least of which an innovative approach. When I’ve looked at Easter previously with teams of sales, marketing and product development people, it seems the barriers haven’t changed much over the years, and the solutions suggested don’t change too much either. The main suggestion seems to be ‘something with eggs’, and an ‘Easter basket’ and ‘The Easter Bunny’, but with no greater thought or strategy than that.
My perspective has always been different – my perspective is that some products which sell well at Christmas might not sell as well at Easter i.e. high end, expensive Toys. The obvious difference with Easter is price point. In most major markets, the presents given in Q4 are the largest and most expensive given all year. That clearly isn’t as likely to be the case for Easter. Nevertheless though a need is there waiting to be fulfilled, and an opportunity waiting to be exploited – namely smaller, lower price point gifts from family & friends to their nieces/nephews, grandchildren, and friend’s offspring. That is where the opportunity is strongest and easiest to approach.
So my suggestion is for companies to embrace the opportunity, but to focus on a new marketing and promotional approach. Here’s some examples of how you can do that:
1. Cross-promotional opportunities – we are not the only industry trying to sell consumer products, family entertainment or impulse purchasing at this time! Can you look for an Easter cross promotion with a leading cinema chain in your market or can you license rights to special Easter versions of your branded products i.e. Toy & chocolate Easter egg in the same pack via leading confectionery companies. The opportunities are immense when you think about it, because all we are looking for is companies with similar target consumers!
2. Retail driven – our retail partners are normally not slow to grab seasonal opportunities, but sometimes we are slow to proactively suggest how we can help them to sell more of our products. For instance, a small part of the seasonal space given over to confectionery incorporate an ‘Easter Gift’ section, and perhaps we might offer to supply the POS materials (with customers branding) to drive sales. There is of course a cost associated with such activity (retailers are not slow to ask for funding normally!), but that is the case with any activity, and marketing spend at point of sale is proven to return better ROI than just broad consumer marketing alone.
3. Consumer marketing – it is expensive to try to create need for consumers, however, it is significantly less expensive to get consumers thinking about a new solution to an existing situation i.e. your marketing could suggest you will see more of family and friends over Easter, why not take a board game to play, or a gift for their children etc. In this day and age this need not be very expensive, a viral social media message with prizes or promotional offers could conceivably drive mass awareness.
4. Product development driven – this is possible of course, but I recommend only cosmetic (and cost effective) tweaking at the warehouse to avoid obsolete inventory once Easter is finished. For instance, a bundled value pack with 2 products in a special outer pack can be taken out of the pack if needed after if sales are slow. Developing completely bespoke Easter products seems like a risk too far, but creative outer packaging seems more likely to be viable.
These are just a few ideas as examples, and by considering these and the Easter opportunity more broadly, maybe, just maybe, you can shift a few more percentage points of sales out of Q4 and into the earlier stage of the year.
We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services
We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com