Global Toy News

J.C. Penney moves away from “Fake Pricing”

J.C. Penney made news in the fall when it hired Ron Johnson, the man who ran Apple’s retail division.  It is Johnson’s intent to change the way that J.C. Penney promotes its products and what he intends says a lot about how retailing is done, how it may be done and the costs involved. 

Stephanie Clifford in her New York Times article, “J.C. Penney to Revise Pricing Methods and Limit Promotions,” reports that “[Johnson’s] first steps as chief executive would be to get rid of the nonstop promotions at the store and move to three kinds of prices (everyday, monthly specials and clearance).”

J.C. Penney is not the first to move to fewer promotions but his stated reasoning is startling in its honesty and should be fascinating to anyone who sells or consumes.  Here is how he puts it: “Though retailers use promotional pricing to attract shoppers… the method used … “fake prices” — artificially inflated prices that are on near-constant markdowns.”

Johnson goes on to say that, in the case of J.C. Penney, their cost of goods has stayed roughly the same ($9 to $10) since 2002.  “During that period, though, Penney increased the average price tag to $36 from about $27. Yet even as the price tag rose, customers ended up paying less because of coupons or sales.” according to Mr. Johnson, “…72 percent of Penney’s revenue came from products sold at a discount of 50 percent or more.”

 So here is what they are going to do.  They are going to reprice all of their products to reflect the actual retail.  In the case of “…a T-shirt that was priced last year at $14, but sold closer to $6 after promotions, will now be priced at $7.”

In addition to flattening the pricing, the company will eliminate most promotions (590 last year) and will

Smurfette and Miss Piggy Adult Cosmetics Are Hot; Where’s Barbie?

Why does the toy industry market itself as a kid’s brand when there is so much potential among adults?  After all, we know that adults love to play and they love toys.  That thought hit me hard when I read the lead sentence in the Kansas City Star article, “Tablet and E-Reader Sales Soar:” “There was no must-have toy of Christmas 2011 — for youngsters, anyway. For adults, tablet computers and e-readers were the gifts of choice.”

The writer, Julie Bosman, is obviously having a little fun by calling these products toys but the reality is that…they are!  And because they are, the toy industry should be competing with them for how adults spend their money on play.

Just to show you one example of adults at play, consider a great New York Times article by Andrew Arterbery entitled “We’re Having Fun!”  Arterbery writes about a growing market in cartoon themed cosmetics for adult women.  It seems that Hello Kitty, Wonder Woman, Smurfette and Miss Piggy all have their own signature lines of cosmetics.

And adults are having fun: There is “a limited-edition Black Noir Hello Kitty eye shadow palette on Instagram” that can be found at Sephora.  There are also oversized tubes of Wonder Woman bright red lipstick and even “a Venomous Villains … (featuring some evil Disney characters like Cruella De Vil).”

Part of the appeal is definitely pulling out a Wonder Woman lipstick to create some very red lips.  The bigger picture, however,  appears to be that women like the colors and the image they associate with the products.  Steve Stoute, the CEO of the advertising firm Translation has this to say:  ““I think that anytime you find a way to incorporate the essence and glamour of the beauty business, but also find a way to touch a woman and make her still feel like a girl, is beautiful, …It creates a healthy tangent between a little girl and a sophisticated woman.”

“China Ready Limited”

In modern China, the culture, business practices, media and everything else you can think of are different from anything to which westerners are used.  It is for that reason that I have set up a new company, China Ready Limited, which will direct western companies in effectively entering the Chinese toy market.   My partner in this venture is Wai Or, a toy industry leader whose family of companies, Longshore, Richbo and Legend have been manufacturing in China for over thirty years. 

At a time when the economies in Europe and the US are flat, it’s nice to think that there are 250 million middle class Chinese ready to buy toys.  As a result, I have for some time now been writing about the opening of the Chinese consumer market and what it can mean for western toy companies. 

Should Toys R Us Only Sell Toys?

With over 800 stores in the US and 1700 stores world wide, Toys R Us is the world’s largest retailer of toys and games. They report that their core business is strong and growing - and this despite a drop in birth rates, cost increases everywhere, general economic turmoil, and competition from the iPad, iPhone, iPod, and I don't know what-all-else.               

Now, that is good news as to the health of the traditional toy and game business. Some have reported and been of the opinion that seeing non-toy baby goods in TRU signals a replacement of toys by more reliable or profitable non-toy products. But, in fact, placing Babies R Us merchandise in Toys R Us stores increases sales of both toys and baby products. It's a win- win. Those of us in the toy industry want to see - need to see - a healthy, profitable Toys R Us.            

Hot Pink, Passion and Lego

The good news and the bad news for Lego is that people care…and care deeply…about what they do.  Lego is accused by Peggy Orenstein (author of Cinderella Ate My Daughter) and others of helping create a “Pink Ghetto” in the toy department and people are signing an online petition against the new “Girls” Lego line, Lego Friends.

But why do people care so much?  It's because Lego has come to be perceived by some as a first gateway to working in the physical sciences.   Scratch an architect or a builder and you will find a child who was once a Lego enthusiast.

It is therefore no accident that Lego’s decision to produce a new line of construction toys for girls has created a whirlwind of criticism.  After all, if Lego is seen as the gateway to the physical science professions then putting a male gender orientation to the construction aisle is seen by some as the equivalent of not letting females into degree programs in the sciences.  Much of the criticism (some of it over heated) aimed at Lego therefore stems from this notion that they are limiting girls in their choice of professions.  

Will small retailers take over? Wal-Mart needs to watch out for that Internet asteroid

Circuit City, Borders, Filene’s, Syms and Sears have all, in their own way, suffered from the recession.   Are they failing and struggling due to bad business decisions or are they, like the dinosaurs, victims of a paradigm shift that is killing them off.  Matthew Yglesias writing for Slate magazine thinks big box chains are in trouble and unlike the dinosaurs who took a hit from an asteroid, this disaster is coming from the Internet. 

The article’s title, “The End of Retail,” is certainly an attention getter but it is just that, an attention getter.  Yes, Yglesias does think that big box retail era is coming to an end but it is the beginning of the end rather than the end of the end; and not the end of all retail…just big box.  Here is how Yglesias puts it:  “Some people feel sentimental about independently owned neighborhood stores, and many of them will find ways to turn those good vibes into a viable business strategy. But nobody feels sentimental about Kmart and Sears.”

Social Media Gets Bumpy for Barbie

Bald Barbie conversations are happening all over the Internet. Michelle Spelman suggested I write about it for GTN, but since has already written about it in her Cincinnati Examiner blog, I asked if she would like to share the story and how it has grown even since she wrote about it. If Michelle’s name is familiar, it is because I recently wrote about the Cincinnati’s Game & Toy Industry’s Holiday Gift Guide that she put together highlighting the products invented and produced by Cincy toy/game industry people. 

Michelle: No doubt you’ve heard about the public campaign launched recently on Facebook trying to convince Mattel Inc. to make a “Beautiful and Bald Barbie” doll for children living with hair loss induced by cancer and other diseases.  Forbes.com summarized the story beautifully earlier this week. 

This is a classic example of why large and small companies must, not only, engage in social media, but also must have strategic social media contingency plans in place for navigating public image challenges that can arise.

What started as a simple page on Facebook, grew to a crusade, in a matter of days, that is now over 135 thousand “likes” strong.  The effort has spilled over into all kinds of other social channels like Twitter, YouTube and blogs, and into the mainstream media as well.  Huffington Post, ABC News, USA Today and others have covered this growing appeal.

The initial response from Mattel to the campaign’s organizers was a canned dismissal that legions of individuals have received over the years:  ““Mattel doesn’t accept ideas from outside sources.” 

The “Beautiful and Bald Barbie” group was not dissuaded, pushing on with their efforts to spread the word and gather support.

Props to the Toys

Part of the fun of watching a movie is in being able to see how the props influence a character’s journey. Can you imagine Dorothy without her ruby red shoes? The job of film and TV property master requires a person who is passionate about aesthetics. And even more important, the job demands someone passionate about historical accuracy.

For example, I am both impressed and charmed by the way alien botanist E.T. from Steven Spielberg’s 1985 E.T.: The Extra-Terrestrial interacts with toys and children’s television. As Gertie (protagonist Elliot’s sister) imitated Sesame Street, E.T. repeated her and soon he learned to speak English. Later, E.T. read a comic strip featuring Buck Rogers, a character credited with presenting ideas about space exploration and technology to mainstream America. In the strip, Rogers used a makeshift radio to call for help. Inspired, E.T. decided to build his own device out of a Texas Instruments’ Speak and Spell to phone home. E.T.’s interaction with popular toys and media portrayed ideas about not only 1980s American consumer culture, but about generations past. 

Changing the Rules

Rob Bartel is a veteran designer and producer of video games with Electronic Arts’ BioWare studio. He joins us as a board game correspondent, however, having recently expanded into board game design with Two by Two, 2012 runner up for Best Family Game in Games Magazine's annual "Games 100" Awards. A passionate advocate for the board game industry, Rob helped found two national initiatives - the Game Artisans of Canada and the Canadian Heritage Collection. His newest endeavor is the Famous Games Company, an innovative provider of promotional card games for the sports marketing industry.

Today, Apple announced their new iBooks Author software, a pet project of the late Steve Jobs who intended it to disrupt the educational e-book market. It's interesting and powerful software, to be sure, but it also underscores some dramatic changes underway in the educational system as well as in how we absorb information and learn in broader society.

Why should we in the game industry care? Well, teaching and education lie at the core of one of the biggest hurdles our industry faces on its way to the tipping point - the need for audiences to learn the rules as a pre-requisite to play.

FedEx shipments up; 92% of internet retailers offered free shipping in December

We all know that ecommerce has been growing as a component of retailing.  It is interesting, however, to consider what is happening from the perspective of the world’s two biggest shippers:  FedEx and UPS.   

There is an interesting article by Stephanie Cliffords in The New York Times. The article, entitled   “Online Sales Buoy U.P.S. and FedEx,” tells us that “good news for shipping is usually good news for the economy as a whole.”  It then goes on to state that “FedEx...hired 20,000 holiday workers to deal with extra e-commerce purchases, an 18 percent leap from 2010, while U.P.S. hired 55,000 workers, an increase of 10 percent.”

It’s no accident that these shippers are benefiting as many ecommerce retailers offered free shipping as an inducement to buy.  How important was it?  “Between Thanksgiving and Christmas, 92 percent of e-commerce sites offered free shipping… more than a third of shoppers surveyed … said they would spend more online during that period if shipping were free.”

Same Language, Same Product?

 

 

 

  Steve Reece is a leading Brand Management Consultant for the toy industry in the UK, working across Europe and beyond. Steve has an Honours Degree in European Politics, and holds the Market Research Society certificate with Distinction. After a period working in retail, Steve joined Hasbro’s market research department, before moving on to Brand Management for some of Hasbro’s top brands, and setting up toy distribution companies. Steve’s favorite toy as a kid was his soccer collectable cards, his favorite board game was and is Risk.

 

       “I don’t care, just make it work in your market!”

       I’ve heard that statement many times in my career.  Having often been given a global mandate to make a new product range huge in every market across the world, I often laboured uphill to make the point that the product itself needed changing from the outset to succeed in certain territories; it wasn’t me and my team failing to be good at selling!

       Frustratingly, my seemingly overwhelming and compelling counter attack along the lines of “but scantily clad fashion dolls won’t sell in Taliban held Afghanistan," often fell on deaf ears!

       Despite the globalization of brands and media, sometimes it just seems harder than it needs to be to make products work in multiple markets worldwide. The reality is though that there are some very significant cultural differences between markets, which can render even the largest of brands underexploited in many markets. This is even the case between the English speaking markets, where in theory there should be most convergence.

       Even major corporations with massive marketing budgets and trade clout have found themselves unable to assail this culture gap on notable occasions – G.I. Joe, American Girl and Candyland are all massive brands in the US, but not had anywhere near the same impact in Europe. Why?

       Well, Europeans don’t have General Infantrymen for a start, and historically at least, had Action Man where the US had G.I. Joe. American Girl seems so far to be very much an American phenomenon for obvious reasons. And whilst ‘Candy’ has meaning in the US, in the UK the reference would be ‘sweets’, in Australia ‘lollies’ and so on.

Differentiating your store against online retailers

 

 

         Unless you’ve been living under a (pet) rock, you’ve probably heard about Amazon’s recent mobile app promotion.

         In December, the online e-tailer offered a $15 incentive to consumers when they used the Amazon PriceCheck app for competitive in-store shopping. Retailers and retail organizations were up in arms over the decision, accusing Amazon of preying on small, independent retail stores and using them as showrooms for the e-tail giant.

        Many brick-and-mortar retailers, however, are structurally incapable of competing on price against online retailers. There are a few exceptions, but it’s unrealistic for most small retail shops to expect to compete with online retailers on price. Retailers’ success will not be dependent upon how they can compete against the Amazon.coms of the world, but how they can create a service and experience that is impossible to replicate online.

       There are three main strategies I believe that retailers can focus on to ensure that they are offering a high-fidelity service--one where the in-store experience is unique, memorable and really does make customers eager to return.

       1. Focus on an in-store experience that entertains and educates. Here, the store should focus on how to create an environment that cannot be duplicated online--an environment that is fun for the entire family and where customers can interact with the products and the store brand.

       2. Re-imagine the store layout and the inventory. Carrying the correct products and having a clear, effective store layout are probably more important today than they’ve ever been before. Having the ideal product mix--at multiple price points--can help stores shrink their real estate and become more cost effective.