Posted by jim on February 26, 2009 under Consumer Experience, Economics, eCommerce | 
Two weeks ago, Toys ‘R’ Us announced that it had acquired eToys.com (as well as BabyUniverse.com and ePregnancy.com). While Toys ‘R’ Us claims that eToys.com will continue to operate as a seperate entity from toysrus.com, this acquisition is another blow to the consumer. As smaller and mid sized toy retailers go bankrupt or get purchased, the consumer will see less and less choices. With fewer companies in control of toy retail, there is less opportunity for product variety, new manufacturers, innovation, etc. And, again, the consumer suffers.
It seems like the current situation with the American economy, coupled with the significant boost in regulations relative to the toy industry, is already resulting in, not the survival of the fittest, but the survival of the biggest. Unfortunately, small toy manufacturers and smaller independent toy retailers may be the ones who end up suffering the most. Hopefully, that is not the case in the long run. Because if it is, the end game is one or two corporations (like Wal-Mart – hint, hint) in complete control of the industry. When that happens, and it is a lot closer than you think, quality goes down, consumer choice goes down, and prices go up.
Posted by jim on January 16, 2009 under Economics |
2009. The year of change.
Maybe more likely, the year of trepidation….
Certainly, all of us small business owners, or whatever you would like to call us, are a bit shell shocked as we start the new year. The 2008 economy performed dismally and most of us think 2009 will be worse.
So, I received a phone call about a month ago from a reporter for the Capital District Business Review. She was working on an article regarding the attitudes of business owners like myself relative to the economic state of affairs. I thought the article was very good in principle, so I let her interview me. I had a couple of previous experiences with this reporter, so it seemed like a good opportunity.
As we were discussing the current state of things, I began to open up about the concern I had for our business – especially the portion which depends on the local economy. Upstate NY is certainly leading the way these days as far as this economic downturn goes….
In any event, I am always incredibly wary of talking negatively about any of our business ventures. If customers feel your business is in trouble, they will most often stop buying from you. You would like to hope the opposite would be true, that people would rush to support a local business if they thought they were struggling — but that just is not reality.
Despite this concern, I spent about 45 minutes with the reporter explaining that indeed, like all other small business owners in Upstate New York (and the rest of the country) we are very concerned about 2009. This is the worst economy that most of us have seen in our lifetimes, so we would be naive at best to not be concerned. Of course, I explained – and was sure to repeat myself 3 distinct times – that I did not want to be featured in the article if it was not also added that our technology company enjoyed actual growth in 2008 and that our diversification efforts would help us stay viable. I emphasized the fact that this needed to be part of the article, because a business experiencing any growth in 2008 in Upstate NY was quite an accomplishment. And, again, no one every wants to appear in an article that describes one’s business as struggling.
SO, the article came out and my headshot ended up on the front page of the Capital District Business Review with the headline ‘Survival mode’: businesses pessimistic about ‘09. It was explained that I was very concerned about our survival and there was absolutely NO MENTION of the growth of our technology business.
I proceeded to send a “Thank you very much” email to the reporter who immediately called and apologized. Apparently, they didn’t see it that way. They would now like to do another story on the positive sides of our business….
Finally, to the point at hand: Reputation Management. What do we do? Do we no longer talk to the press? I don’t think that is reality. While I do not agree with Brendan Behan who said, “There is no such thing as bad publicity except your own obituary”, Brendan was an author and obviously not a business owner, I do think that you have to keep putting yourself out there and talking to reporters and trying to get your message out. When you have a flattering piece written by a neutral third party there is nothing like it from a marketing standpoint. Of course, you have to be careful and a little selective. For instance, it may not be a good idea for me to speak to this particular reporter again.
But beyond that, we were able to respond to this article through our company web sites:
Gile Companies Response
WSG Response
With these type of responses, hopefully we can reach the same audience that might read the article in the Business Review. That is certainly why it is important to regularly communicate with your customers through your web site, through blogs, through other social media and, maybe most importantly, through email.
These are all things we need to get better at. We need to regularly communicate with our customers and hopefully our prospects, so if this type of thing occurs we can contact them and spin it the right way before they even see it.
Perhaps even more importantly, with these avenues established and well-trodden, we can then better distribute good press like this article in On Point – The Gile Companies: Blending Buy Local Marketing and High Tech Products and take advantage of flattering publicity.
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 9, 2008 under Consumer Experience |
In the wake of WalMart announcing dramatic price drops in the Toy category, KB announced it would drop prices on 200 toys. CEO Andy Bailen explained, “Clearly, more consumers are looking for affordably priced gifts and that is why we also just took over 200 great toys and lowered their prices to $10 or less.” What a great gesture to the consumer in this time of economic crisis!
Not so fast! Let’s look at some of the items on the list. The Are U Smarter Than a 5th Grader? game. This game came out for last Christmas. Toy sellers have been selling that at below cost all year to get rid of it. MLB action figures – it’s October. My Little Pony – it’s 2008.
Big Box toy stores are using the fear put into consumers by the DJIA dropping faster and faster every day (in the wake of any news, good or bad) to convince them to buy toys they can’t sell anyway.
Don’t fall for it. Purchasing toys that kids don’t want in order to save money is not going to help the consumer. Why not make smarter purchases from independent toys stores? Instead of buying a couple of outdated, useless, sub-$10 toys, why not purchase a product with an online component that is only $14.99 and allows children to play for months and months with other children on the web like VIPs or Groovy Girl RSVPs?
Both presidential candidates have gone on record about the importance of supporting small business and how it helps the economy. What will help the economy faster? Helping WalMart or KB unload some old stock before Christmas or supporting that local toy store in your town that can barely pay the light bill?
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