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 19, 2008 under Economics |
Sometimes in the toy business we actually make a good decision on what to bet on for the Christmas season. Sometimes it’s a well informed, well researched choice of product that sells like crazy. Other times it’s just a good guess or a hunch that pays off. Of course, the flip side of this (that happens far too often) is the calculated risk that flops, or the educated guess that collects dust in the warehouse for two years.
Iron Man Mighty Mugg by Hasbro
As a speciality toy retailer, we have always believed in the importance of providing unique product that distinguishes us from “Big Box”. So, much of our focus has often been on educational games, made in America product, small innovative manufacturers and award winning toys. But, we have also always believed strongly in the consumer’s right of choice. Relative to toys, customers often have brand preference, and rightfully so. As a result, we have always tried to make sure we carried the brands that people wanted, especially at Christmas time, in addition to the rest of our sometimes eclectic offerings.
From the beginning, we chose to feature Hasbro toys prominently at Christmas time. While Mattel is the largest toy manufacturer in the world with Hasbro the second, we have always felt more strongly about the brands and selection from Hasbro. We have placed a couple of small orders with Mattel over the last couple of years but have not been enamored with their selection or with their customer service. While we have had our issues with Hasbro, we have found their brands stronger, products more inventive and enjoyed the fact that many of their board games are still made in the USA.
In any event, it turns out that we are not alone. While Mattel’s stock has plummetted this year along with the rest of Wall Street, Hasbro is one of less than 30 companies in the S&P 500 that has actually seen their stock rise in 2008.
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.
Posted by jim on September 3, 2008 under Toy Trends |
If you have a child between the ages of 4 and 12, are related to one, know one, or even have seen one in the last several years, you probably know what a Webkinz pet is. I have two daughters and own a toy store, so I certainly am well aware. According to Ganz, the company that makes Webkinz, “Webkinz pets are lovable plush pets that each come with a unique Secret Code. With it, you enter Webkinz World where you care for your virtual pet, answer trivia, earn KinzCash, and play the best kids games on the net!”
In any event, our store is concentrating on the Webkinz alternatives this year. A lot of other major players have gotten involved in the interactive pet/doll arena, and we have chosen a few alternatives to offer our customers. Of course, I am quite bitter towards Ganz because they didn’t want to sell to me because I’m an “e-tailer”. “E-tailer” has become a dirty word in the toy industry. In fact, I had to talk two manufacturers into letting me buy their stuff this year (one of them a very major, USA manufacturer). As a business owner, it can be very agravating “begging” manufacturers to sell their product. Shouldn’t they be begging me to carry it?
In any event, Ganz has a brick and morder policy. So, because I don’t have an official looking, walk in toy store, they won’t sell their product to me. Although, I have a building, I employ over 30 people, we take walk in business from customers, we sell toys through local home parties, we deliver toys to local schools, we sell on site for local charities to raise money and we have a catalog business. Still, Ganz will not sell to me. Don’t think this is to protect the speciality toy retailers from the evil e-tailer though. You’ll find Webkinz all over the place – Hallmark stores, makeup stores, wherever…. Certainly don’t have to be a toy store. I suppose if I owned an auto parts store I would have no problem.
Luckily, there are some great alternatives to Webkinz. If it wasn’t for Ganz giving me the brush off, I may have never found them. First up is Neopets. It may come as a surprise, but Neopets pre-date Webkinz. They didn’t start selling their plushes until early this year, but their web site has been around longer than Webkinz, is considered to be grander in scale, and allows you to create an account for free, without any purchase.
Hasbro got into the game last year as well with Littlest Pet Shop VIPs. These are great because if your child is already hooked on the Littlest Pet Shop characters or board game, now you can purchase a plush with a code and go online.
Bella Sara is an interesting choice, especially if your child is into horses. Plushes are available as well as trading cards. Also, you can access this site without any purchase necessary.
Karito Kids are another great alternative.
And, we wrap it up with Groovy Girls. We are banking on this line for Christmas 2008. Manhattan Toys already has a strong brand with their Groovy Girls and their RSVP line of dolls and pets with online codes should do very well this year – and make many a young girl happy on Christmas morning.
