Taking Chances
Rebuilding the toy biz via 'creative destruction'
By Richard Gottlieb -- Gifts and Dec, 10/1/2009 12:00:00 AM
"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair..."—Charles Dickens, "A Tale of Two Cities"
Are the best of times on the way? Maybe.
I have read close to everything Charles Dickens wrote so my mind automatically went to A Tale of Two Cities when I began looking for a quote to describe the times in which we live. This is, you have to admit, a pretty exciting, depressing and just plain weird time to be alive; particularly if you are in the toy business.
This has for many of us in the toy industry felt like the worst of times, with safety recalls resulting in draconian laws followed by a major recession.
On the other hand…Well, there really has been no "on other hand" yet, but there is an "on the other hand" on the way. Here are some signs that the "best of times" may be drawing near:
Good news in retail
The last five years have seen a steady deterioration in US retail store counts. We have seen toy chains like Zany Brainy and KB Toys close their doors, while others reduced their store counts. Currently, there are consistent rumors that Walmart plans to reduce its toy department. More quietly, and even more troubling, we have seen large numbers of small retail toy stores fall victim to financial collapse.
The result is in an ungainly mess of a retail toy industry in which with three chains, Target, Toys R Us and Walmart, control nearly 50 percent of US retail toy sales. Making matters worse is that these chains carry too many of the same products, creating a seamless mass of the expected and the ordinary.
Well, help is on the way. In the last few months, we have seen a number of major chains either expanding their toy departments or getting back into the toy business to take advantage of KB Toys' departure from the nation's shopping malls.
• I have been told that Spencer's will open temporary stores in malls in the months of November and December. They will carry branded, licensed and private label toys. They will test up to 40 stores this year and then, if successful, expand their store counts.
• We have learned that Toys R Us is opening 340 Holiday Express stores (80 free-standing pop-up stores and 260 stores-within-a-store at Babies R Us).
• Sears, once known for strong toy departments before it chose to get out of the toy business 20 years ago, is experimenting with toy departments in 20 stores for the 2009 Christmas selling season. If it is successful those will go chain wide.
• Barnes & Noble, which has carried a light mix of toys, games and puzzles for a few years, has opened a stunning new flagship store with an adult oriented puzzle and game section on one floor and a highly developed children's toy department on another.
• Borders Books has also seen the light (and it may be the light from competitor Barnes & Noble's toy departments) because they recently unveiled plans to get into the toy business in a bigger way.
Add it up and that's 2,900 new or expanded doors. After years of store count reductions, this is certainly a nice turn around.
Manufacturers spin the dice
Following a Toy Fair full of cautious and low risk product plans, some toymakers seem ready to get back to innovation. Case in point: Just when it looked like the doll aisle couldn't get more boring, MGA and Spin Master unwrap new lines.
MGA is down but obviously not out after losing the rights to Bratz to Mattel, introducing a doll property, Moxie Girlz, described by some as "Bratz Light," and an even more wholesome line, BFC Inc. (pictured) Spin Master is entering the doll aisle for the first time with its Liv line, which is competitively priced and crafted to look like real girls. Spin Master is betting that in economic times like these, girls still just want to have fun—but maybe not as overtly as the Bratz dolls do. And it appears that major retailers are climbing on board. Why? Probably because they are willing to bet on dependable suppliers and at the same time looking to prevent Mattel from regaining too much dominance over their doll businesses.
Seeing these signs of growth in recently moribund areas of the toy business, it looks like creative destruction is at work. New growth is starting to sprout and with it a new toy industry is coming into being.
We may be entering "the best of times" after all.
We would love your feedback!
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