Posted by jim on October 22, 2008 under Consumer Experience, Economics | 
For those who didn’t grow up watching Happy Days, the Malachi brothers were two demolition derby drivers whose infamous move was the Malachi Crunch. Well, this year it’s not Fonzie who’s getting the squeeze, it’s the toy retailers.
Over the past year, manufacturers have seen rising costs due to the increasing prices of raw materials and labor as well as safety concerns. But don’t feel bad for Mattel and Hasbro, the two largest toy manufacturers in the world. They just pass the costs onto the retailers. Normally, I would say don’t feel bad for the retailers, because we’ll just pass the costs onto the consumers. But, not this time. Consumers are scared. The extortion of the American people on Wall Street and the lack of hope relative to the election of either presidential character, I mean candidate, is causing parents to panic and plan to cut back this year for Christmas.
So who really loses? Again, poor Mattel, in the face of rising costs, “profits grew by a sluggish 1 percent, to $238 million“. How about Wal-Mart or Toys “R” Us? They are playing the same game as usual, loss leader items to lure you into the store and then charge more on other products. This leaves two losers this year, the independent retailer and the consumer.
The independent retailer now has to shrink margins in response to low price demands and the increased costs from manufacturers. As a result, retailers cannot take as many chances, so they do not buy as many “risky” items from smaller manufacturers.
The consumer loses big because they now have less choices. Going to Wal-Mart and Target, the consumer is limited to only the toys that these stores carry – the “top sellers”. In the interest of saving money, they settle for lower priced toys that their kids didn’t want. Even when the consumer goes to speciality retail stores, there is not as much alternative product because of the risk factor for the retailer this year. Certainly, this will put some small, independent retailers out of business this year, which will mean even less choice for the consumer in 2009.
Tags: buy local, economy, hasbro, independent, malachi crunch, mattel, retailer, small business, target, toys, toysrus, wal-mart
Posted by jim on October 10, 2008 under Economics |
As if the consumer wasn’t scared enough already, now we have to fear that the world’s largest toy manufacturer and the world’s largest toy retailers might not make all the money they had hoped for on yet another version of Elmo. It appears that Tickle Me Elmo, TMX Elmo, Stretch and Fun Elmo, Ba Ba Baby Elmo, Up Up Elmo and Elmo Knows Your Name have not completely satisfied the public’s appetite for all things Elmo. This Christmas, Mattel thought the answer was Elmo Live.
Elmo Live is Scary!
But wait, Mattel (Fisher Price), had to cut some corners to keep the price point at $60. Mattel “made several concessions. Its final version sacrificed some movement to reduce the toy’s complexity. It also eliminated, for example, the ability to swivel at the hip. Elmo Live blows kisses, but other gestures were ruled out.”
And now, with the DJIA devastation plaguing the US economy, Wal-Mart and Toys R Us may not sell enough Elmos. Wouldn’t that be terrible? Forget the speciality toy store that can’t just “always invest heavily on Elmo” like Chief Executive Officer of Toys R Us Gerald L. Storch does. The independent retailer actually has to take risks on unique products, by innovative manufacturers. Products that the speciality retailer knows are exceptional because they have played with them and researched them. The only problem is that they haven’t been shoved down the public’s throats like Elmo – often in the name of “education” by PBS’s Sesame Street.
In any event, as consumers we should not fear for Mattel (who just one a monstrous lawsuit against MGA, makers of Bratz), as if spending $60 on Elmo Live at Wal-Mart might some how stabilize the economy and thrill the child that only currently owns a meager 4 out of 400 versions of Elmos. If Big Box toy companies can’t move enough Elmos at $60, they will just drop the price to $55. If that doesn’t work, $49.99 sounds about right.
Tags: big box, bratz, buy local, consumer fear, DJIA, educational toys, elmo, elmo live, mattel, mga, speciality toys, toys, WalMart
Posted by jim on September 11, 2008 under Toy Trends |
It appears our Christmas catalog is just about set for this year. I have to admit, it was a bit of a struggle to put together, but I am really pleased how it is coming out. We went with an eight page format: cover with a few select items (Bakugan and Groovy Girls RSVP among them), page 2 Boys, Page 3 Girls, Page 4 and 5 are for LeapFrog, 6 is Infants and Toddlers, 7 is Games (and a few books and CDs) and the back cover is plush toys.
Gile Toys 2008 Christmas Catalog
One of my big challenges this year was placing our Hasbro order. As a specialty toy store owner, I have come to believe that it is important to carry some mainstream items and brands. While most specialty toy stores stay away from such items, I give in to the fact that some kids want Transformers this year. And how can you have a toy store that appeals to girls without anything from Hannah Montana?
We usually carry a lot of Hasbro board games, but had to choose not to this year. For some reason, many of the Hasbro games are being sold well below market value already this season. We can’t put them in the catalog, in fear of losing credibility. We are printing up 20,000 this year and do not want to be stuck with an item that appears non-competitive in our catalog. The consumer usually has no concept of what an item costs us – nor should they. So, we just can’t take the chance. Furthermore, I don’t want to be stuck with a couple of pallets of games I can’t sell above our own cost – we’ve been through that before with Monopoly Here and Now – the 2006 release.
The good news is Hasbro toy assortments like VIPs, Transformers, Might Muggs, Star Wars action figures, etc. do very well. Assortments work for us because it is not usually very easy to find the most popular items in local stores. For instance, a Transformers assortment may only include 1 Bumblebee (the most popular Movie Deluxe Transformer last year) in 8. These are the first to sell in the local retail store. We have a large warehouse space to store many assortments and can make that same Bumblebee more available to the Gile Toys customer.
So, if you are looking for that unique plush or action figure this Christmas and all you can find is a bunch of Chewbaccas that nobody wants, look to the on-line, independent toy store. It is most likely your best chance to find that Bakugan your nephew can’t live without.
