25 minute read

Brave New World (of Toys

Next Article
Industry Forum

Industry Forum

FEATURED CONTENT

Brave New World (of Toys)

by Nick Truss

With most facets of everyday life now stabilized, toy people would love to discuss just about anything other than Covid and its aftershocks. The trade routes and supply lines that haven’t opened back up, have been re-evaluated, re-routed, or replaced. Consumers are eager to get back into stores, continuing the massive sales boom that toy manufacturers and distributors have enjoyed as a side-effect of the pandemic. However, a big question lingers in the air; how long will this spike in sales last? We reached out to several toy executives from across the manufacturing and distribution sectors to get a pulse on the industry concerning the immediate future, and 2023 at large.

David Niggli, the Chief Merchandising Officer of world-famous toy store FAO Schwarz, corroborates reports of hightened customer foot traffic with his first-hand experience. He also offered his thoughts as to what led to this shift in the first place. “During the past two years, we have seen a significant shift in consumer behaviors. As families have spent more time at home together, parents have adopted a stronger viewpoint about the importance of play; and with that, families’ expectations around the types of toys with which they want to engage has increased. Parents are not only looking for entertaining toys, but they really want unique designs, high quality, and strong play value as well. We have seen higher average transactions in our retail stores and the strongest sellers are the toys with extended play.”

Some companies are optimistic, and think that this sales wave has a ways yet to go before breaking. Kim Boyd, Head of Global Brands and Consumer Innovation at Hasbro, said, “If the last few years taught us anything, it is to expect the unexpected. While there’s a slew of determining external factors that impact sales, we do anticipate another strong year across our unmatched portfolio of brands. We see strong retailer enthusiasm for our back half of the year innovation, and we are well positioned this year with inventory on hand to meet that demand, especially during the holiday season.”

Steve Arkeveld, United States General Manager at Moose Toys also maintains a hopeful outlook. “Moose Toys found a way through the pandemic, building price points and offerings that touch that sweet spot of giving people what they want, layered with Moose innovation and interactivity. We still are planning our sell-through to be up significantly and that’s due in part to several very well-received new product launches. All of this has Moose well positioned to break through and build topline growth.”

Aaron Muderick, Founder and Executive Chairman, of Crazy Aaron’s, offered a more measured assessment of the pandemic sales boom. “Although the toy industry overall saw significant growth during the pandemic, sales in specific toy categories were not wholly positive. While certain types of toys saw 100% growth over the pandemic period through today, others saw declines as much at 50%. As the lives of children continue to find a new normal, it is inevitable that sales in the categories that experienced the strongest growth will level. Categories most negatively impacted should see a strong sales recovery beyond those of pre-pandemic levels.”

By far, the majority of respondents expect lower sales figures going into 2023. When asked if the sales surge would continue, Zuru’s Global Marketing Director Henry Gordon remarked, “No, what we will see is conservative spending. This isn’t just in toys; across all categories, sales are down. This is for several reasons, but consumers are seeing that prices are going through the roof with inflation. This rise is substantial, we are seeing prices have increased to a third higher than they were in 2019.”

Jay Forman, CEO of Basic Fun, adds, “It’s clear the post-Covid surge in sales is over. You can see that in the economic data, as well as reported results from a wide range of retailers. There is too much inventory in the pipeline now, and demand is softening as consumers are on the road this summer spending in the service economy, given the pent up demand to get out of the house and travel. That’s clearly having an effect on retail in the spring and summer. However, kids will always want new hot products and tried and true toys they don’t have yet. As we say in this business: ‘Christmas always comes, and there are always new toys under the tree and menorah!’”

FEATURED CONTENT

Alan Dorfman, President of Super Impulse, puts a ne point on several factors that may cause a dip in sales. “Excess inventories, high gasoline prices, as well as double digit in ation, the end of government supplement monies, the overall economic slowdown, and general uncertainty are a ecting retail sales in a signi cant slowdown that is expected to continue through 2022.”

Bill Sinacore, PlayMonster’s Vice President of National Accounts, o ers, “We don’t believe the post-COVID sales surge will continue. It was an extraordinary event for two years, but things are becoming more normalized now, so sales should even out. Plus, there are economic factors a ecting consumer buying decisions, and that will have an impact on sales as well. We expect the industry to only grow in single digits, or even be at this year.”

e reactive downturn in growth may be opposite to the pandemic surge, but it need not be equal, necessarily. Playmates Toy’s Senior Vice President of Marketing Karl Aaronian sees the situation for what it is, but maintains a hopeful optimism. “ e bloom is already o the rose for many toy categories and brands. From an inventory standpoint, the pendulum has swung from a shortage of inventory making it to retail shelves, to retailers having too much in their warehouses and distribution centers, leading to markdowns and ushing of excess inventory. Hopefully, by mid-2023, we’ll return to a semblance of ‘normal’ market conditions and a reliable, predictable supply chain.”

Preparing for the Worst

Whether a dip is still far o , or right around the corner, no good thing lasts forever. Even the most optimistic companies are wisely putting contingencies in place, should a sales downturn be sudden and severe. For some, the solution is nothing new; listen to what the consumer wants, and develop engaging new product that meets that want. Mr. Sinacore remarks, “Product innovation and marketing are still very important. We plan to give consumers what they are demanding, what is trending, and get our voice out there through creative marketing to get consumers to see, and buy, PlayMonster products.”

Crazy Aaron’s is inclined to agree, as Mr. Muderick adds, “A depression in sales, for any reason, forces refactoring of the business problem. Is it channel related? Is it product? Is it marketing? We know toys are the tools for children’s development through play. But which toys are chosen by parents? Which toys are desired by children? Keeping a exible product development process and an ear towards upcoming trends is the best medicine.”

Moose Toys is relying on it’s creativity to weather any potential storms. Mr. Arkeveld remarks, “We’re not expecting a massive slowdown, but we also can’t ignore the current climate. at said, Moose is continuing to do what we do extraordinarily well: innovating. Kids will always want the best toys, and Moose always delivers that with innovation. Moose is dedicated to making the best products with the most sought-a er features, from interactivity, to engaging multi-layer play patterns, to collectibles, to licensed properties. at push for delivering the next must-have buzzedabout product is a constant driver for us.”

Con dence in one’s experience and library of franchises is key, says Hasbro’s Ms. Boyd. “With roughly 100 years in the industry, we are fully accustomed to whatever comes our way. Our teams are focused on planning ahead to continue to drive growth and meet the demands from our fans. We have con dence in our initiatives for the remainder of this year and well into 2023 with exciting new products and innovation to keep our fans interested.”

Not content to simply chalk lower sales up to any one factor, the folks at Playmates are staying on their toes, and rolling with any punch that comes their way. Mr. Aaronian explains, “Some issues can be identi ed and addressed immediately. For instance, inventory (too much, or too little), having the right mix of styles and SKUs on-shelf, etc. A major content drop (movie, series, etc.) can de nitely spike sales, especially if the content remains high-pro le for an extended period. Temporary price reductions can be very e ective in spiking sales in the short term, especially if the brand or SKU is price sensitive. Of course, sometimes there is just a natural decline in the brand, due to its phase in the life cycle. In those cases, it’s tougher to reverse the trend, unless a major development or event moves the needle and gives the brand extended life.”

Super Impulse’s Alan Dorfman adds, “We are keeping an eye on inventories, we’ve been accepting purchase order reductions and delayed ship dates from customers, and we’ll tighten our belts where necessary. As an impulsed priced product line, we are not as impacted as other companies with higher price point products, but we certainly are not immune.”

FEATURED CONTENT

Having greater control over stages of production is a boon in times of lower sales, Mr. Gordon indicates. On Zuru’s market preparedness, he says, “We are set up to survive, and even sometimes thrive against our competitors in this type of environment. We are operating with vertically integrated manufacturing, so our back-end production enables us to deliver better value with lower price points than traditional companies, who are forced to raise their RRPs to cover their production cost increases. is is great news for our consumers, as they get a great product for a lower price tag.”

Keeping consumer cost low is crucial, as indicated by Basic Fun’s Mr. Foreman. “In our business, the strategy is always new, fresh and on-trend, keeping price points a ordable or value high for higher price points. Also, we continue to look for new retail partners and to add listings with our existing accounts. We’ve seen many slowdowns over the years. As opposed to Covid and the supply chain crisis, an economic downturn is nothing new, and we have a well-worn play book for this.”

Speaking of retail partners, Mr. Niggli o ers insight on FAO Schwarz’ tried and true strategy for driving tra c to the store: new experiences. “Our strategies today are consistent with how we’ve managed the business for the past 160 Years; demonstration and experiences are part of our DNA, and will always be integral to driving sales. Now more than ever, consumers are expecting more, and are looking to engage when they visit our store. From our magicians, to our Mad Scientists in our Discovery shop, to o ering customized and interactive shopping experiences from favorite brands like Funko and Barbie, delivering on this promise has allowed us to be successful even in tough times. Our customers value quality and play value above everything else, and we are seeing average retail pricing rising as the customer is willing to pay a little more for toys that deliver on those attributes. Additionally, we, like other retailers, are bene ting from the rise of ‘kidult’ purchases. We have always been a destination for collectors and we are seeing a very positive trend in purchases by adults for adults. You’re never too old or too young to engage with FAO Schwarz.”

Hoping for the Best

An abundance of caution and a careful outlook is understandable, but whatever 2023 may have in store, the industry is ready to face it head on, and with redoubled gusto. Mr. Foreman of Basic Fun is bringing an eager energy into the new year that one can’t help but admire. “We are optimistic about 2023. For us, it’s all about our product line and how dynamic and appealing it is. Good economy or weak economy, we will be ready and red up for ’23!”

Karen Branson, Senior Vice President, Head of North America at IMC Toys says, “IMC Toys remains optimistic as we look forward to 2023! With change always comes opportunity. Companies that can shi quickly and provide solutions that appeal to consumers will win, whether that is providing stronger price-value, developing exciting and innovative new products, or delivering brands and messaging that align with what is important to parents. We pride ourselves on bringing innovation into popular categories like nurturing dolls, collectibles, and fashion dolls, as well as supporting our brands with best-in-class content to entertain kids wherever they watch, like on Net ix, or on our Kitoons channel. We’ve also been bringing IMC’s brands to new consumers as our global expansion continues, such as our newly announced introduction into the Australian market in 2023. Finally, we’ve been hard at work on our 2023 portfolio and look forward to sharing with the world a number of highly innovative new brand introductions in adjacent categories in the coming months!”

Ms. Boyd and Hasbro have a big year ahead of them with a milestone anniversary for the company. “Next year marks the 100th anniversary of Hasbro and 2023 is expected to be another huge year for us as we look to expand our already impressive footprint further in several categories in consumer products, gaming, and family entertainment. Our teams are driving focus and scale in gaming, multi-generational brands and direct to consumer. We will continue to expand on our portfolio of iconic brands as well as further capitalize on exciting new developments in the year to come.”

Mr. Sinnacore of PlayMonster o ers his thoughts, further mirroring the bright and con dent energy of his industry contemporaries.

FEATURED CONTENT

“2023 is going to be a hard-hitting and exciting year! We have one of the most powerful and innovative product lines in the history of our company, with game-changing launches that will have an impact on o erings for 2023.”

Playmates has strong IP plans on the docket for next year, which is a cause for optimism. Mr. Aaronian explains, “A lot is going on in regards to major, merchandisable motion pictures driving some of our established/ proven brands: Teenage Mutant Ninja Turtles, relaunching w/ a major Seth Rogan-produced movie, Miraculous, with its long-awaited motion picture, extensive episodic content on Net ix, Disney Channel, and Disney +, a new Star Trek movie on the horizon, and of course, lots of new fantastic Star Trek episodic content like Strange New Worlds.”

Moose Toys’ Mr. Arkeveld had this to say on Moose’s energy going into next year, “Moose’s outlook for 2023 is quite positive. We plan to build on our 2021 and 2022 successes, which will be driven by continued growth of the Magic Mixies brand bolstered by new introductions, play patterns and extensions. We also have several new innovative launches in the works that represent some our biggest, boldest launches to date and, as always, bring the signature Moose ‘superhappy’ to playtime. Beyond new products, our evergreen brands like Goo Jit Zu, Real Littles and Little Live Pets continue to perform well for us. Licensing is another strong area for us, and we are continuing to build our portfolio with licensing partnerships with some of the hottest entertainment properties. Our fantastic partners include DreamWorks Animation’s Trolls, Bluey, Octonauts and Strawberry Shortcake.”

As we move ever further beyond the lockdown, shoppers will be even more comfortable going to brick and mortar stores. Mr. Niggli comments, “I am optimistic for 2023. From a retail perspective, every day we are seeing tra c increasing and numbers rise to pre-covid levels. We have all been locked down for such a long time and people are happy to get out and experience life again. FAO Schwarz has always celebrated the theatre of toys and play, and our shoppers are thrilled to visit us again- or for the rst time! Consumers are spending hours in the store looking for fun and unique toys, which we always try to deliver! We are also very optimistic about our FAO product line. Parents are in search of great toys and activities that deliver imaginative play and counteract screen time. We are experiencing great success in categories like plush, role play, creativity, and ‘dual play’ items that spark imagination and promote engagement with others and for the whole family. ese categories have always been staples at FAO, so we feel positive that 2023 will be another great year for us.” Given the tumult of the past couple of years, one would be forgiven for not speculating too precicely. Super Impulse’s Mr. Dorfman remarks, “If I had a crystal ball, it would probably be cracked by now. In 2020, we had our best NY Toy Fair ever, and had high expectations for the year. ree weeks later we were quarantined, and 70% of our retailers were temporarily closed. In 2021, retail sales were surging, and the supply chain issues hit. e cost of containers, if you could get them, as well as overall transportation, went thru the roof. When we did get our goods to our warehouse, there was a severe labor shortage in getting the goods out the door. In 2022, we started o strong and now there are the issues mentioned earlier, clouding the balance of the year. So for 2023, I’ll say I’m cautiously optimistic, but...who knows what will hit us next? Alien invasion? If so, I hope they like toys.”

A Fair Assessment

When asked about Toy Fair 2023 and its new home in the Fall season, the concensus was generally positive, but some manufacturers are still assessing what this big change means for their opperation. Mr. Aaronian had some valuable input, with Playmates being based on the west coast. “Since we are based in Los Angeles, we have a slightly di erent perspective vs. others. ere is already an established routine of domestic retailers, international distributors, and inventors visiting Playmates Toys in our El Segundo showroom every August though October for a preview of the following Fall’s product line, and any other product or content updates. We’re in the midst of guring out a show and venue mix that works for us, our customers, and our licensing partners.”

Without knowing exactly what all the implications will be, it pays to have con dence in your company’s ability to think on its feet. Mr. Arkeveld comments, “With the new timing, there will be new opportunities as well as some traditional decision milestones that will have to be adjusted. For our part, Moose Toys is an adaptive and nimble company. We’re con dent that we can adjust to the new timing without missing a beat.”

Zuru’s Mr. Gordon says,“We are still working through what this means for our business as a whole, but we support a change if it aligns better for the industry at large and our buyers.”

FEATURED CONTENT

Based on most of the responses to our questions, Toy Fair’s move to Autumn makes sense to a lot of company executives, and will likely benefit their business. Crazy Aaron’s Mr. Muderick explains, “The timeline restructure of Toy Fair makes tremendous sense! This shift long term will make our product pitching timelines less difficult and less desultory. There was a significant discussion at the board of the Toy Association about this and there was consensus on the change for many reasons. It is important to remember that Toy Fair is not the only tradeshow where toys are presented to buyers. The movement of Toy Fair to the Fall will happen in a dynamic market of gift shows, specialty toy shows, and international shows. Each show will change to take advantage of opportunities in their time slots and geographies. As all of this shakes out, the industry will benefit.”

The new timing presents an opportunitiy to show off even more of what a company has in their product pipeline. Mr. Sinacore remarks, “The timing of Toy Fair is perfect. The retail cycle has changed, and the new timing encourages us to develop and present products sooner. Now, we can feature two lines: the current year’s products that are available now, and the new for next year, which is exciting.”

Mr. Foreman of Basic Fun adds, “Not that I’m biased, but this move is a great idea and great for our industry. To me, it’s clear that the retailers that buy over 80% of toys sold in the US and likely the world need to plan and order earlier not later. February has not been a good time for a toy fair for over 50 years. It’s just always the way it was. The supply chain has shown clearly that we all need to work further out and expand the timeline from development to production and preview to ordering product. Fall shipping now begins in March and April instead of June and July. That means Toy Fair in February is meaningless to the makers and sellers of the majority of toys sold. Those that can work on shorter timelines can do more specialty oriented shows in the first or second quarter.”

Mr. Dorfman and Super Impulse also welcome the new Toy Fair timing. “I like the new dates. For many years, we prepared for the Dallas Toy Show almost as much as we prepared for New York Toy Fair. So this will be similar effort, but without the stress of coming off a holiday season and Chinese New Year restricting our new product development. The timing will be more consistent with retail buying cycles, and will give smaller retailers the opportunity to see products for on-shelf for holiday. It will eliminate the need for two major annual shows, plus the L.A. “unofficial” show, saving significant expense. I expect it will help consolidate the industry, which is splintered in the Fall between L.A. and Dallas. And finally, Fall in New York is a beautiful time of year to be there. I’ve experienced two record breaking snowstorms in NYC in February during Toy Fair, which I will not miss.”

The move seems to be less of a consumate benefit, from the perspective of retailers. But ultimately, with how immediately and frequently announcements, virtual conferences, and general communication happen in today’s digital age, Toy Fair serves a different purpose to the industry now than it once did. FAO Schwarz’ Mr. Niggli offeres his thoughts:“Toy Fair is a great opportunity for the industry to come together and to see new companies, new toys, and overall trends. Fortunately, technology has evolved to where we are now in more frequent communication with both our vendors and our customers, so we are all a little less reliant upon Toy Fair from a perspective of seeing what’s new. As a small specialty retailer, having Toy Fair in February was helpful in that it allowed us to complete the holiday season with a strong sense of which items and brands performed. For many years now, the Toycos have been showing retailers their lines in Fall so having Toy Fair align with that makes a lot of sense.”

New Toys for a New Industry

Through it all, no one has forgotten that which unites us all: a love of toys. The drive to create the next big thing that will knock kids, adults, and kidults off their feet has kept us motivated through the most trying periods of the pandemic, and that drive isn’t going anywhere. We asked each respondent to give us an elevtor pitch on what new and exciting things we can expect from their companies in this upcoming year of opportunity and newfound possibility. As expected, there was no shortage of enthusastic responses!

Harkening back to the big IP plans of Playmates, Mr. Aaronian offers, “We love our pop culture collabs – and so do the fans. For example, the TMNT - Stranger Things and TMNT - Street Fighter crossovers have great kitschy collector appeal that attracts fans of all three franchises; Classic Star Trek warps back onto action figures shelves and we are celebrating two major anniversaries: Star Trek: The Next Generation 35th, and the original Wrath of Khan 40th. And let’s not forget Miraculous: Tales of Ladyboug and Cat Noir, which is gearing up for its blockbuster movie with some beautiful shimmery fashion dolls. Plus, we’re tapping into the evolutionary nature of the brand/show, with a vehicle that transforms from role play accessory to a fashion doll-scaled scooter.”

FEATURED CONTENT

Playing it close to the chest, Zuru’s Mr. Gordon says, “We can’t give too much away, but for fans of X-SHOT, expect to see a fun twist on the never-before-seen innovation we released in 2022. Consumers will be looking for value, they want to get more for their money as they must make it stretch further than previously. But understandably, they don’t want to compromise on quality. Our focus is on being able to keep our accessible price point while showing huge innovation for maximum play value. Children are some of the toughest critics around, and we are set up to deliver them something really special next year.”

Mr. Muderick of Crazy Aaron’s adds, “2023 is exciting for Crazy Aaron’s as well as the toy industry! Our industry attracts innovators and rewards invention. Though we don’t know exactly what the future will hold, we know it will be engaging and exciting for our customers (the children) as well as for us (our businesses). Crazy Aaron’s Thinking Putty has always provided a fabulous tactile play experience with unique, unexpected properties. Now the “poppabilities” are endless for both tactile and auditory exploration with Popp’n Thinking Putty. This putty crackles, pops, and snaps adding a new sensation to playing with Thinking Putty.”

Picking just a few things to highlight can be tough, as Mr. Foreman indicated when we asked about Basic Fun’s new offerings. “We have so many great new products it’s hard to decide which ones to talk about! We have a new micro figure range for Care Bears, a new novelty plush concept called Misfittens, a range of candy-branded soft collectibles we call S.O.S, great line extensions for Lite-Brite, and we are bringing back the classic Coca-Cola plush range featuring their CGI polar bear character. We are ecstatic about our 2023 offering, and we can’t wait for Toy Fair in NY in 2023!”

Karen Branson, likewise, is very passionate about all the plans that IMC Toys has for the new year. “While there is a ton of excitement and innovation across our portfolio, the brand the team is most excited about is our launch into Fashion Dolls with BFF by Cry Babies! Kids who have grown up with and love Cry Babies can now enjoy their favorite characters re-envisioned as teenagers! Dressed in trendy, aspirational outfits, the dolls still retain that sweet and wholesome style that is central to Cry Babies’ brand DNA. The toy line is being supported with heavy marketing activations that started earlier this year, and will drive all the way up to holiday. .”

Hasbro’s Kim Boyd comments, “We always have something new and exciting across our countless brands, but we’re really looking forward to what’s in store with our Transformers, Clue, Peppa Pig and Dungeons & Dragons franchises in the coming year. Keep a close eye on product amplifying Peppa’s 20th anniversary, a Clue game refresh and blockbuster entertainment offerings for Transformers and Dungeon & Dragons in 2023.”

Concerning PlayMonster, Mr. Sinacore remarks, “We’re excited to share it all, but one of the highlights is the transformation of My Fairy Garden; the new product is beautiful! We have some great new, unique, and innovative games. We’re relaunching the iconic Weebles line of toddler toys, and we’re bringing more innovation to the incredibly successful relaunch of the Koosh brand.”

Mr. Dorfman says, in regard to Super Impulse, “We have a few new products that we think are great coming out this year. Our line called Minis-in-Minis Sugar Buzz will take the miniature collectibles to a new tiny scale, and features the best candy brands. Our Micro Figs/Mini Comic Books are a combination pack of a 1.25 inch Action Figure and a 1.5 inch full comic book. These feature Transformers, TMNT, and Masters of the Universe and Barbie, Hello Kitty, and Care Bears. And our Poptaters line - co-branded Potato Head, with full interchangeable parts - is hilarious! The first wave includes Bob Ross, GPK’s Adam Bomb, Optimus Prime, KISS, and more.”

Moose has plenty to showcase, as Mr. Arkeveld comments, “This fall, we will introduce Magic Mixies Magical Crystal Ball as a follow up to last year’s record-breaking holiday sales hit Magic Mixies Magic Cauldron. Additionally, several of our evergreen brands are being infused with exciting extensions like Heroes of Goo Jit Zu Goo Shifters. Moose Toys’ beloved, well-established and ever-innovative Little Live Pets line continues to expand with its latest interactive offering Mama Surprise, a realistic-looking guinea pig.”

Lastly, Mr. Niggli hints that there’s never been a better time to visit FAO Schwarz. In addition to expansions to their FAO-abulous Fashion role-play line, and ride-on trains, he further remarks, “In celebration of our 160th anniversary this year, we have a collection of toys and collectibles celebrating this milestone with items from Funko, Hot Wheels, UNO, Barbie, Madame Alexander, Schleich, Bunnies By The Bay, Iron Studios, Ruby Red, and of course a collection of FAO teddy bears. We invite everyone to our ‘160 Years of Toys’ celebration on October 8th at FAO Schwarz 30 Rockefeller Center, where we will be celebrating inside the store and on the plaza.”

This article is from: