Category Archives: Uncategorized

Amazon – The Challenging Powerhouse Of Toy Retailing

Amazon – The Challenging Powerhouse Of Toy Retailing

We all knew for a long time that Amazon was going to massively disrupt toy retailing and with disruption comes both opportunity and challenge. During the lockdowns around the world resulting from the pandemic, Amazon played a critically important role for the toy industry. While physical stores were closed (to varying degrees) in many major toy markets, Amazon remained mostly open for business barring a few short-term closures of their warehouse for anything other than ‘critical’ products.

Amazon’s being open for business at a time when global society was most challenged and when demand for many categories of toys and games soared was a major positive in a tough time. Without Amazon things would have been so much worse for the toy business. In a number of ways the pandemic has accelerated Amazon’s influence and growth, but in particular the deeper engraining in many more people of a search, click and receive shopping habit is going to pay dividends for Amazon on an ongoing basis regardless of how long it takes for the pandemic to end.

Amazon does though present some rather strong challenges for toy companies and for the toy industry as a whole. Firstly, Amazon’s pricing strategies and algorithms can cause carnage in a retail environment which has long been cutthroat with regards to pricing of both hot toy lines and evergreen toy brands. An army of people trading on an ad hoc basis from home with little overheads can buy toys at wholesale pricing and sell via Amazon’s platform on tiny margins to make some money on the side while causing large scale disruption to pricing across the internet.

Amazon also represents a technical challenge for toy companies. Essentially Amazon is a search engine for products, which means a different strategy and success formula versus traditional retail. Basically, you need to manage the algorithm and in-built advertising opportunities to get ahead of your competitors. This is not so much about building strong relationships with all powerful buyers, but more about understanding and managing an algorithm you don’t control. For all of us in the toy business who have bemoaned the power and subjectivity of all-powerful Buyers at our customers, this is a fairer and more objective distribution opportunity, but that doesn’t make it easy.

In Europe, Amazon offers another very significant challenges for toy businesses to manage – that being the Treaty of Rome dating back to 1957, under which freedom of movement of goods between members of the European Economic Community (now European Union) was legally mandated. Basically, if you sell a product in one country in the European Union, you can’t prevent that product being shipped across borders by agents, wholesalers, distributors or retailers. There are some infamous examples of this ‘grey market’ shipping of goods which we will not detail here for legal reasons, but let’s just understand that the European Union is supposed to be just one market. The challenge with that when it comes to Amazon is that different countries often have different pricing norms, and so if you have an online platform which can almost automatically sell from one country to another it can again disrupt the market.

As a practical example of this, in 2020 our company has worked on 7 projects helping toy companies find export distribution for their products. When you speak to distributors across Europe, in any country where Amazon is present, the second question they usually ask (after asking about pricing!) is how are you managing Amazon. So, if you want to appoint a distributor in Spain for example, their level of interest in the product may depend on how your distributor in France or Germany is managing Amazon supply.

In conclusion, Amazon has revolutionised shopping and offers big opportunities for toy companies big and small, but this giant global retailer also brings several practical challenges for toy companies to manage. Effectively managing Amazon and the disruption it can cause for the market in general and your other retail customers across markets is already one of the major challenges and success factors for toy businesses, and the importance of effectively meeting this challenge is only likely to grow.

 

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: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

 

 

How To Find & Secure Effective Distributors For Toys & Games

How To Find & Secure Effective Distributors For Toys & Games

The area where we are asked for help most often from toy & game companies is to help them speak to & close distribution deals with toy & game distributors in more markets outside their home markets. Over time we have developed several ways of increasing the chances of success for our clients in finding productive and mutually beneficial relationships with distributors:

  1. Trade Show attendance is the best & biggest way to meet new distributors

Virtual connections can lead to good results, but you can never meet face to face meeting. For this trade shows are a critical part of the process of finding and building relationships with toy distributors or board game distributors. Clearly this approach is not as viable during the Covid pandemic, but nevertheless the moment it is viable again it will come back to the fore as a primary method of meeting and recruiting new distributors.

  1. Understand the business model of the distributor

Being a distributor is a tough business. Distributors take significant inventory risk to run their business, and a few bad product line selections can seriously constrain cashflow, therefore distributors are equally if not more risk averse than the retailers they sell to. In order to reduce the risk of anyone product line failing, they tend to have a broad and diversified product line, and that brings in the biggest challenges with using distributors to get your product to market – FOCUS, if they put little focus into selling and pushing your product line your sales will disappoint. It is really important to understand this, because having a distributor and having a focused and effective distributor for your product line can be different things.

  1. Understand the marketplace

There are two elements of this: firstly, there is the local market situation in terms of retail structure, product culture, consumer preferences and other localised operating parameters. For instance, Germany has a very decentralised retail market, whereas France has a comparatively centralised retail buying structure. Therefore, you need to understand the differences to appreciate which distributor is going to have the best chance of being successful in the market.

Secondly, it is important to be aware of the general situation in the marketplace. In particular, product proliferation is a considerable challenge in trying to secure distribution for toys and board games. There are literally millions of products out there for distributors to chose from, and because they only have so much capacity, so much cashflow to fund stock purchases and so much time in front of each buyer, they will typically turn away many more product lines than they chose to distribute. This changes the balance of power somewhat in terms of negotiating and finalising a deal. In effect, it is a buyers’ market for distributors, they have considerable choice, and therefore the sales process and relationships should not be taken lightly.

  1. Build relationships with people

Building relationships with all your contacts at every distributor you want to work with can only assist your efforts. Aside from it being a source of great pleasure and warmth to build friendships around the world over time (and often over a beer or two!), in work terms it helps if you have god relationships with people you are working with. Sometimes difficult situations arise, and it is usually easier to work through challenges with people you already know and like.

But also, the better your relationship with your distributors the more they will share the details and challenges of selling your product in your market, which should lead to both of you having a better chance of success in each market.

  1. Distribute your distributors product into your home country

One really effective way to bind yourself closer to your distributors is to help them to sell their products into your own market. Most distributors will have at least a few product lines that they themselves have developed or have exclusive distribution for. By helping them to sell more of their products, you quite often build a stronger relationship and then their focus on your products tends to become stronger because they will feel a reciprocal obligation.

 

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: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm

The Two Fundamental Features Of Successful Tech Toys

The Two Fundamental Features Of Successful Tech Toys

Every year we see a flood of new tech driven toys come onto the market. These products are not cheap to develop – versus a basic mechanical or static toy, tech toys featuring electronics are often much more costly & risky to launch.

Commercially speaking, the key success factor in the first instance for toys featuring technology is usually the same as it always has been – that classic TV advertisable feature. Something that looks ‘Wow’ in a quick 30 or 20 second TV commercial, or YouTube video. Children are really impacted by and attracted to a highly impactful ‘WOW’ feature, and technology can help to build a compelling offer in this regard.

That can help to both sell in and sell out of retail enough stock to justify the development and launch marketing costs for this kind of toy.

The difference though between a toy with technology inside which is a big hit versus one which recoups costs is all about the experience that the product delivers. Whether the technology is driven by electronics entirely inside the toy or by additional interactive or audio-visual content via phone, tablet or computer, the key success factor is delivering a great experience where the technology has the effect of making the play experience more immersive and more compelling.

Children do not care how many patents are in a product. They don’t care if the product breaks new ground in terms of using new tech for the first time in toys. They care about whether it is fun.

Furby is a classic example of a toy bristling with technology, but it is not the technology which attracted children to Furby – it was the fact that the technology brought Furby to life, creating a seemingly real character or animal friend.

It should be obvious that technology needs to deliver an enhanced experience in toys but judging by many products out there that don’t quite get it right, somewhere between starting with a great concept and actually delivering the product and the technology within or without, the delivery of a compelling experience fades away in a world of technical complications.

Going back a few years, Skylanders was a massive success for Activision, because they managed to deliver both compelling video gameplay in conjunction with an added element (the toy) which really worked and added major value and collectability for kids.

The challenge though for Activision was that a business model which combines exceedingly high upfront development costs with high product costs is a very risky model! One bad wave which doesn’t sell can prove ruinous for this type of business model. For example, THQ the video games company were heavily hit by the failure of their uDraw product, to the tune of a $30m loss derived from this one product launch failure: https://www.gamasutra.com/view/news/129452/Just_how_badly_did_uDraw_hurt_THQ_anyway.php

And therein lies the major challenge for this type of toy, bearing in mind how many toys don’t last beyond year one in the market, and based on the far lower costs and risks of more basic toys, committing to develop and launch a full on tech driven toy can be an existential risk for a smaller company, and should be considered very carefully. It’s critical to consider, what would the implications of a launch failure be.

On a more positive note, technology is advancing at a startling pace, and much of it has potential for inclusion in some way in toy products, in ever more accessible ways in terms of investment costs.

But whether the product is cheap or expensive to develop, the critical point is to deliver genuine WOW factor and to deliver a truly compelling experience were the tech element enhances the play process and delivers more fun, more lifelike toys and/or deeper immersion.

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: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

How The World’s Biggest Toy Companies Grew Their Distribution

How The World’s Biggest Toy Companies Grew Their Distribution

The world’s biggest toy companies are $multi-billion corporate behemoths with subsidiaries and employees all around the world. They didn’t necessarily get there quickly though. In fact, the one word which could best be used to describe how these massive toy companies grew distribution in terms of a global footprint would be SLOWLY.

It takes years to build up distribution around the world via sales agents and distributors. And then it typically takes decades for toy companies to set up subsidiaries even in the major toy markets in the world.

There are several reasons why distribution growth is seemingly so slow. The first factor to consider is that we work in an industry with an annual selling cycle, so whatever momentum you can create through the course of the selling cycle can only be built on for the following year. Bearing in mind that many (most!) toy product launches flop or at least fail to succeed well enough to come back the following year, we can see why it takes time to build a compelling must list portfolio of toy products.

Aside from the slow and laborious selling cycle, the process of finding premises for a new office and hiring staff to run them is innately risky and time consuming. For this reason, many toy companies seeking to grow enter new markets via acquisition. By buying an established company with good reputation in the country they seek to enter, with existing and strong relationships with buyers and with a good understanding of the market many years of costly trial and error can be avoided. Needless to say though, while acquisition is usually less risky as you are buying an established business you do have to pay a hefty price, and sometimes things still don’t work out. And to find good companies acquire at a realistic cost is also not easy – this also takes times, often years.

So, the reality is that even the biggest toy companies in the toy business today took decades to grow their distribution capability and capacity to the current levels. Therefore, for toy companies which are far less mature, you have to expect it to take time, and that time is measured in years. There are ways to accelerate distribution growth via sales agents or consultants for instance. This can take years off the process, but even then it will still take time!

 

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: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

Toy Market News – What’s The Global Toy Business Outlook For 2021…?

TOY MARKET NEWS – WHAT’S THE GLOBAL TOY BUSINESS OUTLOOK FOR 2021…?

September is typically the time when the toy business starts to look forward & begin the process of selling in the product line for the following year. The one thing we can guarantee at this point is that this will be a selling cycle no other we have experienced before.

Who knows whether Covid is going to fade away, be vaccinated out of relevance or whether we will need to manage our lives forever more with this dreadful virus in mind. What we do know at this point is that the selling cycle for 2021 will be disrupted in a way that 2020’s wasn’t. By the time Covid went global, 2020 was  already sold in.

Looking forward to 2021, we already know that Dallas & New York toy fairs in the USA will not take place this time round (although there will be some kind of event planned for Spring 2021 in the USA). Spielwarenmesse in Nuremberg (the world’s largest toy trade show) is at this stage still set to happen, although with a revised program of events. It’s harder to know what will happen with regards to Hong Kong in January because so much of the real toy business is done on a closed door basis in the showrooms up and down Mody Road in Tsim Sha Tsui. So while toy business people do not have to make a decision about attending Dallas or New York, they will have to decide on a micro basis about whether or not they visit Hong Kong this time round, which means it is likely to go ahead in some form, but with significantly reduced international visitors.

What we can presume is that every toy company now has (surely?!) established alternative methods to preview their product ranges to buyers around the world, whether this be a virtual showroom, a video montage or a travelling (socially distanced) sales effort.

The good news for all in the toy business is that overall there is no evidence (at least not that we have seen) about any reduction in consumer demand. So far in 2020 demand has been higher than usual overall, and yet again on a macro basis the toy business on a global level has proved itself to be highly resilient.

On a category by category basis we can see tailwinds in some cases of course, but whereas we were blindsided by Covid in 2020, at least we and the major Hollywood content businesses can now plan for how to get around social distancing requirements to deliver global blockbuster movie releases again in 2021. Anecdotally we’ve seen a substantial trend towards outdoor cinema (whether drive-in or not), and this seems likely to play a big part in delivering audience numbers for 2021, alongside adapted movie theaters. We can also plan to deliver across every toy category in 2021.

Humanity has proven over millions of years to be adaptable and durable, and the massive global pivoting towards the different world we now find ourselves in shows just how resilient humankind is. We therefore expect that with the opportunity to plan for a Covid restricted world, the toy business will continue to grow in 2021, and that buyers can feel reassured that of all their product categories their toy departments deliver year after year despite massive challenges.

We don’t just offer toy market news and analysis. We run a Consultancy business to toy and game companies around the world, from Asia to America and from Sweden to South Africa, we help toy & game companies grow their businesses, build brands and achieve their goals. For more information on how our Consultancy service has delivered $tens of millions in sales and increased profitability just click here: www.KidsBrandInsight.com/services 

Plush Toys: Consumer Insights & Trends

Plush Toys: Consumer Insights & Trends

The Plush toys category is one of the most timeless and Plush toys are among the most common toys to be found in a child’s bedroom. One of the key consumer insights we have seen with children is that the younger they are the more important their sense of touch is. Whilst adults tend to use their sense of sights first, and all else comes after that, for children that isn’t necessarily the case. For sure children look at toys, but above all they want to touch them.

Plush toys are above all a tactile experience for children. The reason why children often take soft toys to bed with them is because soft toys made from soft fabrics are so cuddly, which is reassuring and calming for children.

One question we are often asked about Plush toys is why feature Plush is attractive to children since the tactile experience is often compromised by the addition of a big electronics unit. The secret to successful interactive Plush products is that the technology needs to be used to bring the toy to life, so that what is lost in terms of cuddliness is made up for by a toy which seems as close to lifelike as a toy can be. Children are often fascinated by animals, how they move and how they behave. Good feature Plush appears to bring the toy to life.

The current pandemic crisis has not been good for the Plush toy category for a number of reasons. For one thing, licensed Plush is a major segment of the overall category, with a large amount of volume driven by soft toy versions of movie characters from current or recent cinematic releases. Clearly this key driver of the category overall has been heavily disrupted by the closure of movie theatres across the world due to the need for social isolation to avoid the spreading of COVID-19.

Another issue this year has been (hopefully temporary) retail closures. This is particularly an issue for Plush toys – because children want to touch, feel and cuddle soft toys, this has been difficult with stores closed, and even when children can access Plush toys in Grocery and other essential retail channels, parents are most probably reticent to allow them to pick up products around the store for fear of coronavirus. Moreover, some stores have limited the number of family members who can go into a retail outlet, further reducing impulse purchase opportunities.

This ‘double whammy’ of a disrupted movie release schedule combined with retail closures has definitely had a negative effect on the Plush category short term. The good news though is that these should be temporary effects. There is simply too big a business behind the movie world for that not to rise again, and retail stores are already re-opened in much of the world. While the short-term impact on the soft toys business is harder than for some toy categories, the fundamental consumer drivers behind the longevity of this end of the toy business have not disappeared. Therefore, while the short-term outlook is tough, longer term we would expect the return of the Plush category to historical levels and beyond.

We run a Consultancy business advising toy companies on how to grow their business by a combination of strategic analysis and export sales facilitation. We have helped more than 100 toy and game companies grow. For more information on our process and methodology for growing toy sales: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

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Q2 2020 Results Are In – Here’s Our Analysis

Q2 2020 Results Are In – Here’s Our Analysis

Hasbro, Mattel & Jakks Pacific have all reported Q2 2020 results in the past week. The picture from all 3 of these major toy companies is clear – revenues are down for Q2 year on year. We reported last week that sales in the US toy market were actually up for the quarter overall, so how can this be if 3 of the bigger U.S. headquartered toy companies had a tough quarter?

The answer to this question is product mix. The two categories which have understandably had a really tough time this year are action figures (due to disruption in terms of movie releases) and plush (which is often a purchased driven by a child picking up and cuddling a toy, and aside from stores being closed, where stores were open parents may not have wanted the child to pick up a toy which has been touched by other people already in light of the current pandemic situation).

The categories which have performed well have been those parentally driven categories which parents will tend to ‘deploy’ to entertain locked down kids i.e. board games, arts & crafts and other ‘worthy’ categories. This makes Hasbro’s downturn all the more impactful as they in particular have a large market share in some of these categories including obviously games & puzzles as well as compounds/creative play with Play-Doh and other product lines. Hasbro & Mattel both have strategies based on entertainment franchises and content, which is going to be tougher to execute for sales growth in the short term, although it may well be reimagined in terms of home entertainment as the primary launch platform, at least for the short term.

So, what are the implications of a tough quarter for Hasbro, Mattel & Jakks? For all three it can be expected that they will seek to enhance their offerings in categories which have done well so far in 2020 – those categories named above, plus more outdoor play perhaps. The industry in general is likely to have an abundance of offerings for 2021 in those categories which have performed well this year.

The challenges aren’t over for the toy business, but in terms of quarterly results we should start to see from the next quarterly results onwards the effectiveness of each companies’ reaction and counter measures to the pandemic.

 

We run a Consultancy business advising toy companies on how to grow their business by a combination of strategic analysis and export sales facilitation. We have helped more than 100 toy and game companies grow. For more information on our process and methodology for growing toy sales: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

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An Interview With RubyRed Fashion Friends

An Interview With RubyRed Fashion Friends

so720ab9 fashion friends - soymocano54.com

We recently spent some time with Fred Yuan & the team from RubyRed Fashion Friends. The following interview outlines the philosophy and work of the company in the fashion doll category:

TOY INDUSTRY JOURNAL: Fred, it was a pleasure to spend time with you recently and to see your beautiful range of premium, ultra high-quality fashion dolls under the Ruby Red brand. My first question for you is why you decided to launch Ruby Red Fashion Friends, and how has the product been performing in retail so far?

FRED: Our founder Ruby, had been in the doll business for 50 years. She had created many beautiful collectible dolls for doll collectors around the world. Early last year (in 2019), she met with her grand-niece Maleah in USA, and was pleasantly surprised on how young girls are so attentive to current fashion trends. Maleah would frequently go through fashion magazines and websites with her friends and her mother and discuss, imagine and purchase various things to make themselves look great.

Inspired by this, Ruby envisioned that there should be a high end fashion play doll with the current trends of fashion, and consequently set the plan in motion. With help from famous sculptor Dianna Effner, and designer Melody Young, RubyRed quickly launched a new doll for kids to play in late 2019, with the hopes of providing the latest fashion trends to doll lovers.

TOY INDUSTRY JOURNAL: What do you see as the main strengths & the main competitive advantage of Ruby Red Fashion Friends?

FRED: With the vision of a high end play doll in mind, Ruby’s emphasizes 3 main values, play, quality and in trend.

For play: Our RubyRed Fashion Friends have great hair that is easy to style and restyle. Unlike many of the play dolls in the market, our hair encapsulates the wig cap manufacturing technology, and thus was able to provide hair that has a larger hair width. The larger hair width will prevent hair entanglement and easier styling. Furthermore, the wig cap manufacturing hair technology also provides a wider assortment of colour than the traditional rooted hair technology.

RubyRed Fashion Friends also includes many jointed limbs in the doll, which allows it to have many more poses than other play dolls. As her grand-niece would say to this, “It’s PICTURE time”

For Quality Our Rubyred team pays a lot of attention to quality and will strive the best to deliver the best quality out there. Many of our collectors have responded on YouTube and various other social media on how much they loved our attentiveness to quality.

For In Trend, RubyRed Fashion Friends follows the latest trends for children. Unlike most other dolls in the market, our dolls usually have not only 1 piece of clothing but 3-5 sets of in trend items. Denim jackets, hats, pink fluffy robes, handbags etc.

TOY INDUSTRY JOURNAL: Which is your personal favourite doll from the Ruby Red Fashion Friends range & why?

FRED: Hanna is Ruby’s favourite. Hanna has a very unique “innocent” look on her that really attracts Ruby.

TOY INDUSTRY JOURNAL: Can you share any exciting news for 2020? Any new products or initiatives you can share with our audience?

FRED: For 2020, we have and will design and publish 3-8 limited editions of our RubyRedFashionFriends line. All of these limited editions are unique and one-off. Our designers had a lot of fun designing them and we are quite excited to launch them.

TOY INDUSTRY JOURNAL: My understanding is that this kind of high end Fashion doll is well known in some markets especially the USA, but still growing in some other markets. Can you explain the underlying appeal of this kind of fashion doll and why you think they will roll out globally to be a permanent feature around the world?

FRED: We see two things that are happening in the toy market and around kids. Firstly, there are a plethora of low-cost dolls in the market, but many times, they sacrifice quality for price. We think that there is a consensus among some that would really see a very high-quality doll out there, and we wish to design something for them. Secondly, we see a surge of children who are quite independent in their thinking despite their early age. They would like to choose how they dress and are quite fashion-savvy. Thus we hope to offer a doll that is more in line with the current fashion trends and let kids have their fun in dressing their dolls “in style”.

TOY INDUSTRY JOURNAL: Can you give an idea of your Export plans and which markets you are working on next? Also, what kind of companies/customers are you looking to speak to?

FRED: We are currently selling in USA, Canada, United Kingdom, France, Germany and Eastern Europe. We would like to expand our presence in Europe and perhaps even look into the Middle East. One of our initiatives as we mentioned before, is to issue limited edition dolls, and we plan to make them region exclusive (A France only doll or a USA only doll etc).

TOY INDUSTRY JOURNAL: If we had this talk again in ten years’ time, where do you think Ruby Red will be/how will things have changed and what would still be the same?

FRED: We hope that in ten years we will be a brand that not only provides fashion dolls, but also be in close contact with kids who love our dolls so we can play and design new dolls together. I think with the advancement in technology, there will come a time where kids will be able to send pictures of their own designs of outfits, and we will be able to custom make individual dolls based on their designs.

TOY INDUSTRY JOURNAL: Thanks for this interview Fred. If anyone reading this wants to find out more about Ruby Red or to contact you how can they get in touch?

FRED: They can visit our website at http://www.rubyredfashionfriends.com (for North America) and www.rubyredtoys.com (for rest of the world). Furthermore they can also visit our Facebook page on https://www.facebook.com/rubyredfashionfriends/ (for North America) and https://www.facebook.com/RubyRedToys/ (for rest of the world)

How Is The Toy Business Doing During The Pandemic & Does It Matter

How Is The Toy Business Doing During The Pandemic & Does It Matter?

We’re nearly at the point when the major stock market listed toy companies share their Q2 2020 results. This period of time covers the lockdown of western societies and the period most likely to have seen supply of toy & game products impacted by Covid-19 hitting Chinese manufacturing back around Chinese New Year.

The interesting thing from an observer’s point of view is that there are some massive winners and some massive losers coming out of this pandemic. Not every business or every category has seen the same impact. Some companies and some categories have been hard hit by changes in consumer behaviour, some companies are flying and sales are significantly up for the last few months in a time which is traditionally quiet for the industry outside of a brief sales spike around Easter and any blockbuster movie related toy sales.

Anecdotally we have heard from friends and colleagues on both sides of the fence, and we feel sympathy and concern for those who have been hard hit, and obviously we are pleased for those who are doing well in the circumstances. But what is the actual total picture? This should become clearer once we get the quarterly results through from the likes of Hasbro, Spin Master, Mattel and others.

NPD Group (a leading data/market research company) has released some market data to leading trade publications The Toy Book (USA) showing how the toy business in the USA has performed during the lockdown period. You can read more about that data on their website in the news article featuring the data:

https://toybook.com/exclusive-a-look-at-the-categories-driving-the-toy-industrys-16-sales-boom/

Needless to say, the picture is mixed, but spoiler alert: overall there has certainly not been a catastrophic drop in sales for the toy business.

The issue though like always is that what we all really care about is not the total market size. In fact, while we wouldn’t go so far as to say that is irrelevant, it really doesn’t matter for most toy companies. If you are a $multi-billion toy company you may need to pay attention to what is happening with the overall market as you are effectively at that point in a market share battle with the other major players, but for the vast majority of toy companies market size is in practical terms an irrelevance! What you care about is your shipments, your orders and your future prospects. You may feel a little jealousy for a competitor who has a massive hit, but in the end as long as your busines is doing ok what does it really matter from your perspective.

Even from a retailer perspective it doesn’t really matter what the market size dynamic is if your own toy department sales are doing good.

Every single year, whether the market is up or down there is a massive churn beneath the surface of some companies on the up and some on a downward curve. Sometimes it is a good thing if topline sales for the total toy market are down – for instance when there is a strong movie year, many companies focus on the high volume movie related toys at the expense of their own brands, which can lead to higher sales for the year but not necessarily higher profit and certainly not long term stability.

In the end then, it is largely irrelevant to individual companies and toy businesspeople how the market is performing, because we are all in our own battles against our strengths and weaknesses and against our threats and opportunities.

Needless to say, this not a great year if you are a company heavily reliant on movie license toys, because movie releases have been so disrupted. Also, if you are a Plush toy company things may be tough because Plush (unless licensed, in which case see the previous point!) tend to be products which are picked up and held prior to purchase, which is a tough dynamic if a). physical stores are closed and b). people are reticent to pick things up due to fear of picking up something the virus may be on.

If you are a company in one of the categories which has been hard hit, you may benefit from our last article about toy product line diversification: https://www.toyindustryjournal.com/?p=1025

The harsh reality is that if you are in a badly affected category it’s going to be tough for a while, and if you are in one of the more parentally approved categories like games, puzzles, science kits or other area you may thrive despite the crazy times. In the final analysis though, what matters more than total market size dynamics is keeping a close watch on consumer behaviour and adapting to those changes.

 

We run a Consultancy business advising toy companies on how to grow their business by a combination of strategic analysis and export sales facilitation. We have helped more than 100 toy and game companies grow. For more information on our process and methodology for growing toy sales: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

If you haven’t already signed up for our e-newletter you can sign up here: https://forms.aweber.com/form/54/1325077854.htm

 

Toy Product Range Diversification – Risk Insurance For Tough Times

Toy Product Range Diversification – Risk Insurance For Tough Times

There are plenty of toy and game companies, as well as toy & game retailers out there having a really tough time right now. There are also some companies having a really good time in the circumstances. The question is what separates these companies out? How can some companies do well while some are really suffering?

Let’s start the answer to that question by looking at the age-old cliché in the toy business – the toy and game business has proven historically that it is recession proof or at the very least recession resistant. Even through the global financial crisis of the late noughties, the toy business performed fairly well, staying flat over that really tough period of economic stress and downturn.

The covid-19 pandemic has been so different from any other difficult time in living history in that it has rewritten rules and cut off many features of modern life and economic activity which we completely took for granted. The aviation industry for instance has been decimated by people not travelling. From the perspective of the toy business there has been supply chain disruption, but also perhaps much more critically the movie toy business has been decimated, and along with that in general licensed toys, for so long a major part of the toy business, has been hard hit.

Consumers have moved from buying across all categories to reducing purchases significantly which seem frivolous and increasing those that seem important. In particular, parentally approved toy and games products have seen sales uplift, as desperate parents seek to gainfully occupy children who have not been attending school.

None of this is news at this point, these trends are well known by now. The key finding here though should be about risk reduction via product range diversification. If you have a business which relies on just one product category, product range or retailer, then you are putting your business at major existential risk. When things eventually return to some degree of normal and the pandemic clears, those age old high performing categories will most likely be resurgent again. Collectables and movie toys will uplift once again, and maybe those less aspirational, less exciting toy categories like science kits or arts and crafts will drop down again, but the way you manage that process effectively is to be a player in both.

Currently we are all focused on the pandemic & the immediate harsh impact of that, but if this pandemic hadn’t happened, we would this year have been talking more about the risk of consumer plastic backlash. That was THE big theme coming out of toy fair season this year. The issue with this risk is that consumers won’t give you 5 years warning of their decision to drop plastic, they will just not buy it one year, and when enough of them do that in one selling season you get a major drop in sales of plastic toys. The way to mitigate this is twofold – 1. Jump on board the movement to create products which have plastic like materials based on plant-based materials.  2. If you haven’t already, launch into some categories with more sustainable materials e.g. cardboard and wood. That is how you manage risk across a company’s product portfolio.

If you are the classic ‘one trick pony’ with just one brand or product, hopefully you are getting through these tough times ok, but why wouldn’t you reduce the risk of getting smashed by the next trend, disaster or recession by broadening your product offering?

 

We run a Consultancy business advising toy companies on how to grow their business by a combination of strategic analysis and export sales facilitation. We have helped more than 100 toy and game companies grow. For more information on our process and methodology for growing toy sales: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/