Alternative Toy Distribution Channels

We in the toy business can tend to get very focused on our existing (traditional) retailers. In markets like the USA, France and the UK, just a few retail chains per market have a very significant market share and tend to demand a large degree of focus and care from our sales teams.

The German toy market is unusual when compared to these other major toy markets, in that it has a very fragmented retail base, with its preponderance of independent toy retailers and no one retailer accounting for a very large share of the market, it is somewhat unusual. This difference shifts the challenge from managing one or two highly demanding super-sized retailers to ensure you can leverage as many listings/shipments as you need, to a challenge of managing a fragmented sales network and the need for more substantial sales infrastructure.

One distribution factor that is present in mostly equal measure in all these markets though is the concept of ‘alternative distribution’. Away from much cherished toy specialists like Toys R Us, and highly valued but very demanding multi product retailers, is a different world where toys can be present but aren’t necessarily integral/essential to the retailer in question. While Toys R Us obviously must stock toys, and the mass market generalist retailers use the toy category to drive in store traffic and to ensure they capture as much ‘family’ spending as they can, why would a book store, a furniture store or a multi-media retailer stock toys – especially when toys are sold on a ‘firm sale’ basis i.e. the retailer buys them and keeps them, not like sale or return to supplier which is typical for books or multi-media for instance? Moreover, do these retailers merit focus and attention when they tend to take a narrow range of products from a limited number of suppliers?

The value to toy companies of such customers probably comes down to business strategy and place in the market. The 80/20 rule would probably suggest that such retailers are not worthy of the time of the sales departments in larger companies like Mattel, Hasbro or Lego for instance. Such non-core customers are more likely to be passed onto wholesalers by these big players. However, for smaller companies there may well be value in targeting such alternative distribution, because the value of the potential opportunity may well be more significant to a company that doesn’t have full distribution into all traditional channels. My own experience would suggest that sometimes it is easier to be one of a few suppliers in a particular category than it is to be one of many. For smaller companies, a broader base may mitigate the risk that gigantic customers pose in terms of ongoing sales/listings stability and inventory.

These alternative retailers may sometimes appear to be uncommitted to the toy category – some years they are in, some years they are not, but the reality is that they do offer incremental opportunity. Sometimes they may increase their toy line around events i.e. a major book launch, or a particular season of the year. Toys can help them broaden their offer to the consumer and draw in more families to their outlets.

While consumers may not be looking in such types of stores for toys specifically, the research I have conducted suggests that the average consumer does not think ‘I’m in a book shop, I am only here to buy books’, rather they look at and eventually purchase items which they want or even need, regardless of where they are when they buy them. Certain types of toys can fit very well with a particular retailer, i.e. the Lord of the Rings and The Hobbit film toys (& other merchandise) appear to have achieved significantly more in store space than the general line of toy products offered usually due to the clear link between the movies and the books they are derivative works of.

Toys may not seem such an obvious fit with some of these alternative distribution channels, but they still offer revenue opportunity for those willing to step outside the usual and place a sales call!

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The Endless Appeal Of Board Games

“The reports of my death are greatly exaggerated!” - so wrote author Mark Twain following a false rumour circulating alleging that he had died.

For much of the nearly twenty years I have worked in the toy & board game industries, people/colleagues/customers of mine have speculated as to the future for board games. Firstly, there was the video game console explosion offering much more immersive, much more addictive gaming experiences. Then we had the tablet & smartphone revolution which gave us anything we wanted on a device always to hand. Why (I was repeatedly asked) does anyone still need board games? Well the answer is that we apparently do still need board games, despite all the technological advances of the last few years.

This ancient form of gaming dates back thousands of years, developed further through the twentieth century and today is still standing as one of the prime pillars of the toy aisle in retail. In fact, in recent times, just as the tablet/smartphone has become ubiquitous, so the board game seems to have undergone yet another renaissance. In fact, I would argue that the board games category has not been in such a good state since board games were a genuine prime leisure activity decades back before media content became such a big part of our lives.

There are several reasons/drivers behind the current/recent renaissance of board games:

Firstly, there is a fundamental benefit of board gaming that is genuinely timeless. People are social animals, we live in/interact with other people around us. Sometimes this social interaction needs an aid or a prop to keep things fresh, to avoid any bickering or other negativity and to have fun with family and friends. This is the fundamental purpose of board games – social facilitation. Technology has not taken this benefit of board games away or delivered it any better to date. The back end of the year is the real peak season for board games sales & playing (in the major Western markets), because cold weather, increased hours of darkness outside and ritual family get togethers (like Thanksgiving or Christmas) deliver the play occasion that best suits board games.

Secondly, society and people in general are now struggling to combat the reality of excess screen time – staring at small screens all day is not such a positive thing in terms of lifestyle, social cohesion and eyesight among other things. Therefore, the toy industry as a whole and board games specifically are benefiting from their deployment as an antidote to screen time – both for our children and for ourselves! Parents nowadays struggle to get their kids off devices, in fact many children would be looking at tablets all day if left to themselves. Board games and toys in general offer play patterns which are perceived by the majority of parents to be more worthy and more positive. The more we come to rely on/be hooked on these devices, the stronger this impulse/counter reaction becomes. In reality, that doesn’t mean parents succeed in using board games to get their children off screens, but it is a definite purchase driver, even if usage doesn’t always follow purchase!

Thirdly, we have a much healthier, much broader array of board games available to us today than we did say ten years ago. The old model of product selection was all about getting past gatekeepers – from the inventor/author to the game company, from the game company to the retailer and from the retailer to the consumer. Crowdfunding has today completely revolutionised & at least at the start of the process, circumvented this old way of doing things. Today games which would have been too quirky for anyone to launch ten years ago are able to go direct to the final arbiter – the consumer. If enough consumers like the game, it can be made via crowdfunding sites like Kickstarter. Thus we have had such hit games as Cards Against Humanity and Exploding Kittens – these much more politically incorrect/less old fashioned games and game concepts have opened up board games as a relevant medium to today’s young adults, bringing in a whole new ‘forgotten’ generation to board gaming as a cool & hip activity. The glorious fact about this massively powerful trend is that it is still in the infancy stage – look forward to many more games pushing the boundaries to come – that ‘staleness’ that permeated parts of the board games industry some time back is thankfully long gone.

It would appear that all that talk of the eventual demise of the board games category are fundamentally unfounded!

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Toy Industry Value Chain

When I first entered this industry, my focus was on the fun elements of it, the lack of stiff formality, the amazing product and the glamour & gleam of big entertainment driven launches. The longer I remain part of the toy industry (sure someone will kick me out one day, but until then…!) the more success seems a matter of formula, risk management and process.

Process management. Not a very exciting topic really when there’s so much whizzy stuff to look at in our industry. However, despite the lack of glamour and shiny-ness process management is probably the most neglected business discipline in our industry, and has the potential to make the most quantifiable £ difference to so many toy companies.

Far be it from to suggest that many toy companies develop products on a whim, chuck them at the wall and see what sticks…but it’s surprising how many companies do that! It’s even more surprising how often companies roll into very expensive marketing collateral creation, or manufacturing without enough structured process. And even more importantly, it’s often shocking to see how ad-hoc management sign off processes are.

Within our industry there are some easily compartmentalised parts of our process with only so many categories of variables. For instance we would normally split by function i.e. R&D, Marketing, Sales, Sourcing, QA, Finance etc., in smaller companies some people have responsibility for several of these functions, in larger companies there are normally separate departments for each.

In scintillatingly exciting project management terms, if you look at the value chain involved with all these departments in conceiving of a toy product or range and getting finished product on and off retail shelves there are literally hundreds if not thousands of moving parts. Taking an ad hoc approach to managing this morass is not a formula for success.

You may not have ever written down all the parts of your moving jigsaw. If you haven’t you should do it now, and consider how in control you are of the overall process and the many micro parts of it.

Effective project management should include a senior management risk review & signoff process, a pitching process for potential & existing suppliers, clear process milestones i.e. concept sign offs, sales forecasting, manufacturing sign offs and more. For each area there should be a clear understanding of who is responsible for what, and what needs to be more clearly thought out/signed off further up the chain of command.

For sure you still need brilliantly persuasive sales teams and amazingly talented creatives, but above all to succeed you need to deliver via following successful formulas & managing efficiently & effectively. In the end this approach will likely be less entertaining, but significantly more lucrative.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world:

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