The Bugg Report Magazine — Edition 38 by thebuggreport

Edition 38

THE PERFECT FIT FOR LEE COOPER Australia’s favourite sleepwear, underwear and sock brand for men, Mitch Dowd is expanding their category footprint. Eight months after announcing that Mitch Dowd is the new home of Russell Athletic apparel, Mitch Dowd are managing denim giant, Lee Cooper in Australia and New Zealand. Consisting of a range of core denim styles and complementary co-ordinated apparel, the Lee Cooper London creative hub has been working with Mitch Dowd designers to bring the best that the international collection has to offer, with a touch of local Australian flare. The brand will be accessible initially to Men and Lee Cooper will be launched in Department Stores in time for Christmas. Dane Totham, CEO for Mitch Dowd says that “Mitch Dowd has taken bold and decisive acquisition moves in the COVID era and the 6 months it has taken to consummate this deal has been well worth the effort. The entire Mitch Dowd business is more successful, sustainable and pro-active than ever before. We have transformed our business and we are absolutely delighted to be working with Lee Cooper as the brand fits our brand management ethos and our company culture”. “What is particularly pleasing about the Lee Cooper brand is that research validates that Lee Cooper, the original British denim brand, is well-known and wanted by our consumers and this is particularly pleasing to us. We plan to tap into everything that the brand offers through international styling and sourcing”. Totham says. Daisy Laramy-Binks, Managing Director for Lee Cooper global said “Lee Cooper's decision to award Mitch Dowd the rights was an easy one given Mitch Dowd's proven capabilities in product design, development, sourcing, logistics and distribution”. “Mitch Dowd’s passion for the brand, combined with the reaction we are receiving from consumers demanding Lee Cooper in the region leaves me in no doubt that we will see great things for the brand in both Australia and New Zealand” says Laramy-Binks. If you have interest in partnering with Lee Cooper, please contact Dane Totham, Chief Executive Officer at Mitch Dowd by email at dane@mitchdowd.com.au. 02

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From The Editor Edition 38 of The Bugg Report Magazine kicks off with an update by Mitch Dowd who are now managing the original British denim brand, Lee Cooper in Australia and New Zealand. BBC Studios then provide a feature which looks at sustainability in licensing by using BBC Earth to encourage and inspire ethical and sustainable change to ensure the long-term health of our planet. The collaborations they have put into place using licensing look fantastic. Next up is an update from The Wiggles who are celebrating 30 years this year! Make sure to check out the introduction of The Grey Wiggle inside the Uber Eats commercial. I really liked this collaboration and it was received very well. IMG provide an update on their brand portfolio and outline a range of new deals and opportunities which are taking place across Australia & New Zealand. I especially like the Pepsi and Kakao Friends apparel. We hear from the team at Jasnor Australia who provide an update on their newest adventures including Miffy who recently celebrated 65 years, Barbie, Space Jam WOW! PODS and The Wiggles.

Managing Director — Tony Bugg tony@buggsolutions.com.au Editor & Designer — Matthew Bugg matt@buggsolutions.com.au Published by Bugg Marketing Solutions info@buggsolutions.com.au PO BOX 491, Berwick VIC 3806

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Steven Rhodes. Nostalgia with a Twist of Darkness! The licensing program being managed by Blue Chip Brands looks great. The retro designs, look and feel really do bring something different and refreshing to the market. Australians love the iconic Holden Ute and now for the first time, Squatter® Game Promotions have produced a special edition of the Great Australian Classic Board Game to commemorate the 70th anniversary of the Holden Ute. We also have a new writer in this edition, namely Simon Gresswell from SGLP who has put together a great perspective into this past Spring/Summer in the UK. It is well worth reading! Returning for the fourth edition of her column titled, The New Age of Digital, we have Isabel Wu, who looks at what is "normal" and the need for invention, innovation and ingenuity. And finally we have a document by A. Robert Moog, Co-Founder of University Games, who has written a paper which looks at the supply chain crisis and investigates a path for success for managers. AS ALWAYS, THANKS FOR READING!

Advertising — bookings@buggreport.com.au Feedback — editor@buggreport.com.au Media — media@buggreport.com.au

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The Bugg Report has been compiled as a guide to retail, sports, lifestyle, toys, licensing and/or other related matters. The views and opinions provided are based upon the views and opinions of our writers. In no way is The Bugg Report a factual guide to retail, sports, lifestyle, toys, licensing and/or other related matters and does not take responsibility for how the information provided is used by its consumers.

Inside this Edition The Perfect Fit for Lee Cooper

Inspiring Sustainability in Licensing

Ready, Steady, Wiggle! 30 Years and Counting!

IMG — Inside the World's Top Licensing Agency

Market Wrap by Jasnor Australia

Nostalgia with a Twist of Darkness

Squatter Holden 70th Anniversary Special Edition

A Spring/Summer Like No Other!

Hooray The End of Normal

Supply Chain Crisis (A Path to Success for Retail Managers)

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READY, STEADY, WIGGLE! 30 Years and Counting! Despite COVID interrupting the lives of so many Australian and New Zealand children over the past year, The Wiggles managed to bring much joy to nearly 200,000 children and their parents/ carers with the ‘We’re all Fruit Salad’ tour in the first half of this, their 30th year celebration. Whilst the opportunity to conduct a stadium tour in the first half of this year (when The Wiggles are normally performing to regional audiences) was a highlight, many other activities have punctuated their 30th year celebrations to date. One highlight in particular was The Wiggles rendition of Tame Impala’s ‘Elephant’ on Triple J’s, Like a Version. This cover very quickly achieved the status of being the No.1 streamed ‘Like a Version’ song ever. Excitingly, The Wiggles launched Ready, Steady, Wiggle! Series 3 on ABC TV in May of this year and Emma Series 3 is due to launch in October. An exciting community based musical production titled, ‘Fruit Salad TV’ is also slated for release on YouTube later this year and this production encourages everyone, regardless of race, gender or ability to imagine being a Wiggle and engage in the song and dance that resonates around Wiggle Town. YouTube has been a great platform for The Wiggles and over the past year, over 1 million YouTube subscribers have been added and some 5 billion impressions achieved. Most recently, The Wiggles released ‘Los Wiggles’ the Spanish speaking Wiggles on Youtube targeting that large proportion of the global population who speak Spanish. www.buggreport.com.au

READY, STEADY, WIGGLE! 30 Years and Counting!

CLICK TO PLAY THE UBER EATS COMMERCIAL

The Wiggles have also achieved over 250 million streams on Spotify, by far and away the number one pre school act on this platform and in the top three Australian artists across all genres. Most recently, two albums featuring baby relaxation and sleep music (Before Bedtime and Sweet Dreams) has been released.

For the remainder of this, their 30th celebration year, many great programs are slated including a fashion jewellery range through Erstwilder, Corduroy Caps through Hats Greatest Hits, The Wiggles Birthday Party in conjunction with Big W and a commemorative coin program through Woolworths that will include a $2 coin being released into circulation each week for four weeks.

Each month, The Wiggles have released a commemorative ‘print on demand’ tee shirt program through Myer and Twidla featuring iconic album covers and a small slice of The Wiggles history. We have also seen The Wiggles feature alongside Simon Cowell in a series of iconic Uber Eats advertisements.

Most importantly, The Wiggles are now looking toward next year and indeed, the next 30 years. In this fast changing and digital world, parents who grew up singing and dancing to The Wiggles, now have the opportunity to have their children experience what they once did as a child... this is a truly wonderful experience that transcends generations!

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INSIDE THE WORLD’S TOP LICENSING AGENCY IMG UNVEILS SLATE OF DEALS AND OPPORTUNITIES IN AUSTRALIA AND NEW ZEALAND

With more than 25 offices around the world, IMG represents some of the world’s most prestigious corporate trademarks and institutions, sports brands, teams and federations, fashion labels, lifestyle, media and entertainment properties, as well as major personalities. The Endeavor-owned agency was once again ranked the world’s leading licensing agency in License Global’s ‘Top 20 Global Licensing Agents 2020,’ and looking ahead, there will be no slowing down. Here’s a snapshot of the agency’s work and upcoming opportunities for brands and partners in the Australia and New Zealand region.

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AUTOMOTIVE

IMG represents some of the world's leading automotive brands including Volkswagen (VW), Jeep, Dodge, Ram, Chrysler, Fiat, Fiat 500, Alfa Romeo, Aston Martin, Bugatti, Chevron, Ducati, Goodyear, Lamborghini and Maserati.

With more than 70 years of heritage and its iconic Kombi, Beetle and Golf GTI, VW is the world's #1 car manufacturer selling more than 10 million cars annually. The brand has a successful ongoing apparel program in Big W and Just Jeans, with new drops every season via long term licensee, Mitch Dowd. IMG is seeking partners in complimentary categories such as gifting, stationery, home and outdoor.

For more than 80 years, the Jeep® brand has been indelibly associated with freedom, adventure, authenticity, and passion. As a global icon, in every corner of the world there are Jeep enthusiasts and those who covet it for the lifestyle attributes it represents. Locally, apparel and footwear can be found in Harris Scarfe and other independent retailers. Product opportunities exist in complementary categories focused on outdoor and bikes/e-bikes.

With great anticipation, the Ram Truck brand launched in Australia 5 years ago, bringing a new level of performance and efficiency to the Outback. The Ram consumer values hard work, reliability and commitment. The Ram brand’s DNA naturally extends to apparel, footwear, safety gear, and worksite products currently being explored to bring to the Australia and New Zealand region.

FOOD + BEVERAGE

Fast-moving consumer goods (FMCG) brands are currently trending in Australia and New Zealand and IMG is seeking apparel and accessory partners to compliment the core Pepsi brand currently launching streetwear with trend-leading designers. Opportunities exist for the wider PepsiCo portfolio including Cheetos, Doritos, 7UP and Lays.

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MEDIA + ENTERTAINMENT

The evergreen franchise, number one Netflix film and animated series, Angry Birds will be launching a socks and sleepwear range for Christmas 2021. Additionally, IMG is looking to extend the brand into food and drink categories as well as experiential programs following the international success of Angry Birds theme parks, family entertainment centres, restaurants and golf experiences.

The number one game on the planet and the Fortnite brand is still growing! Following a successful multi-year apparel license with Caprice, IMG is now looking to extend into bags, tech accessories, inflatables, skateboards and greetings cards.

Kakao Friends was first introduced in 2012 as the official characters of Kakao Talk, the number one messenger platform in Korea with more than 200 million downloads to date. Cotton On will be launching apparel and giftware in August through all their retail channels and across a number of territories.

The high-powered hybrid of arcade-style soccer and vehicular mayhem free to play game launched apparel earlier this year. IMG is focusing on gifting, stationery, wheeled and softline product extensions.

Skydance Animation appointed IMG as its global licensing representative for all animated releases, including its first two features, “Luck” and “Spellbound” earlier this year. From the iconic team behind Pixar, Skydance Animation’s movies are open for traditional kids and adult entertainment licensed product categories. 14

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RAINBOW SIX®’s ever-expanding experience and long-term content pipeline continues to excite and engage more than 76 million registered players worldwide. Ubisoft recently announced the inaugural Rainbow Six® World Cup, which will take place in 2022 with 20 countries participating, including Australia. Global licensees include Gunnar and Rhinoshield with all other categories currently available for the Australia & New Zealand region including apparel, gift and accessories.

CORPORATE + INSTITUTIONS

The number one battery brand is looking to extend into adjacent categories including e-mobility, outdoor/camping, emergency preparedness, heating & cooling, household appliances, home (smart appliances & household appliances) and health & fitness technology.

The world’s largest bedding supplier is looking to extend into sleepwear, bedding accessories and the furniture category.

PERSONALITIES

Like Nastya, also known as Anastasia, is a global YouTube phenomenon like no other. With more than 120 billion lifetime views and more than 225 million subscribers, seven-yearold Anastasia tops all leading kids YouTube channels. Jazwares has been appointed as the star’s global toy partner, with the collection being distributed in Australia and New Zealand by Banter Toys & Collectibles. IMG is finalising accessories, jewellery, and watches, with all other categories currently available for the region.

Van Gogh’s iconic artwork, bold colours, and signature styles is regularly sought after to be featured on premium products including footwear with Vans and luggage with Samsonite. Locally, IMG recently launched a hugely successful 19-piece apparel collection with Australian fashion designer, Anthea Crawford. The brand is currently seeking partners in the gift, home, stationery, and puzzles categories.

For more information on licensing opportunities with IMG in Australia & New Zealand: Nicola Franklin (Licensing Director) via Nicola.Franklin@img.com Diana De Jesus (Licensing Manager) via Diana.DeJesus@img.com www.buggreport.com.au

Build and construct awesome light displays in any pattern or conﬁguration. Display on a wall, shelf or window ledge – display your way!

CHARACTERS TO COLLECT

SWIPE TO LIGHT!

SWIPE TO LIGHT FEATURE REVEALS HIDDEN IMAGES /wowpodsanz

Available at leading toy stockists! Proudly distributed by Jasnor (Australia) Pty Ltd | www.jasnor.com | 1300 881 940 SPACE JAM: A NEW LEGACY and all related characters and elements © & ™Warner Bros. Entertainment Inc. (s21)

Market Wrap Jasnor Australia As we approach the end of 2021, things are still challenging in Australia and around the world. With all the uncertainty still lingering, we’ve chosen to look forward, to focus our attention to things we can control — the things that make a difference to our staff, community and our customers.

With that in mind, the team at Jasnor have worked tirelessly to ensure we continue to deliver an amazing line-up of hot properties, iconic brands and much-loved characters for second half. Even during this uncertain time, we know consumers are willing to spend however they are more discerning — they want quality, trusted brands, they want familiarity and they want a touch of tradition to remind them of a time that once was...

Miffy has recently celebrated 65 years of delighting fans around the world and Jasnor will soon be introducing a cute range of plush in both classic styles and on-trend themes with the view of expanding the range further in 2022.

In her 60 years, Barbie has had many careers from astronaut to aerobics instructor, from robotics engineer to music producer. We all know the mantra, with Barbie you can be anything! Now, with the new Barbie Creative Maker Kitz you can “Make Anything”. Jasnor is thrilled to present the brand new Barbie Make You Own Dreamhouse and Barbie DIY Super Camper. Both sets encourage imaginative play, role-play and storytelling. The robust designs are easy to assemble and offer endless hours of creative entertainment. For more information contact: 1300 881 940 or sales@jasnor.com

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To coincide with the movie Space Jam A New Legacy, Jasnor is pleased to bring to market the WOW! PODS Space Jam collection which includes 4 popular characters from this muchanticipated movie sequel. Fans of the cult movie and WOW! PODS have not been disappointed! WOW! PODS continue to wow fans of character brands and with so many exciting properties on offer, this collectible range continues to grow. Stay tuned for upcoming new releases from WOW! PODS including Jurassic World, Fall Guys, Sonic the Hedgehog and more. 2021 year marks an extraordinary 30th anniversary milestone for Australia’s most popular children’s ‘edu-tainment’ group, The Wiggles. To mark this special occasion, we are excited to introduce brand new additions arriving in time for a bumper Christmas season! Littles one will love learning to feed all on their own with our colourful ‘We’re All Fruit Salad’’ themed mealtime range.

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Consisting of a training mug, suction bowl and section plate, drink bottle and travel cutlery set, toddlers can feel confident learning to eat on their own with their Wiggly friends by their side! Little ones can be entertained indoors with our life size (over 1 metre tall) Colour Me in Playhouse. Decorate, paint or colour in this huge cardboard playhouse which includes a cut-out peephole, and window and door for interactive play! The perfect Wiggly cubby house will provide hours of entertainment for little ones. Toddlers can have fun learning through interactive play with brand new Wiggles Big Red Bus. This exciting interactive toy includes 8 character blocks, features realistic sounds, light up buttons, and a catchy 'The Wheels on the Bus' tune for a fun sing-along! With three modes of play — reciting the alphabet, a fun ‘Let’s Find the Letters’ game and Word Play, little ones won’t even know they are learning they’ll be having so much fun! This fantastic ELA will arrive just in time for Christmas ready to delight Wiggles fans this festive season!

Q: HOW MANY OF YOUR CUSTOMERS DRIVE? A: ABOUT 19 MILLION OF THEM.

P E E L’ N ’ S T I C K T O L A P T O P S , CARS, MOST SMOOTH S U R FA C E S

RETAIL AND PROMOTIONAL ENQUIRIES WELCOME Billy Asi P: +613 9721 4206 E: basi@fanemblems.com www.fanemblems.com

HARRY POTTER characters, names and related indicia are © & ™ Warner Bros.

PO Box 600 Bayswater VIC 3153

J.K. Rowling and Warner Bros. Entertainment Inc. Publishing Rights © JKR. (s20)

Entertainment Inc. WB SHIELD: TM & © WBEI. J.K. ROWLING’S WIZARDING WORLD ™

Nostalgia with a Twist of Darkness The consumer products program for Australian illustrator Steven Rhodes continues to gather momentum around the world. A new partnership with apparel supplier OSDM has led to retail powerhouse Zara embracing a range of T-shirts through its global store network. With designs such as ‘Let’s Summon Demons’ and ‘Pyrokinesis for Beginners’ you would be forgiven for thinking he has an affinity for the dark arts. In truth, Steven Rhodes’ illustrations are born from his dual love of retro nostalgia and pitch-black humour. Best known for his offbeat reimagining of children’s activity books from the 70s and 80s, his work pays tribute to everything from vintage horror and sci-fi, 50s pulp art, mid century modernism to 70s kitsch and 80s neon — basically anything in the realm of retro. The collection comprises 120 plus designs with new concepts added every month.

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After studying graphic design, Steven established his trademark style by combining sarcasm, retro typography, and nostalgia-heavy graphics. Licensing of Steven’s designs began through an association with Threadless, which promotes artists works to fans around the world across a variety of product categories. The partnership expanded with Threadless taking Steven’s designs to US retailer Spencers which embraced the brand across apparel, giftware and homewares to be one of, if not their biggest license to the current day. Fast forward to the beginning of 2019 and Australian licensing agent — Anthony Harvey of Blue Chip was appointed as the licensing representative for Steven Rhodes. Blue Chip Brands began to expand the program in both the Australian market and internationally. Signings include Pyramid International for wall art globally in addition to apparel, giftware & stationery for the UK and Europe. The Australasian program kicked off with support from licensees DFM Australia (apparel) and Impact Merch (giftware, stationery & wall art). The program continued to expand throughout the Covid-19 pandemic with new partners including Cryptozoic (games), Goodie Two Sleeves (online apparel), OSDM (apparel), Cotton On Group (apparel, giftware, homewares, cards) & PSD (underwear). Steven Rhodes products are now supported by a growing number of leading retailers around the world including Spencers, Hot Topic, FYE, Modcloth and Torrid (North America), Zara, TYPO and Factorie (global), HMV, Urban Outfitters and Outland (UK/Europe) and Jay Jays (Australasia). Whilst Steven’s designs are influenced by the past, the licensing vision is firmly fixed on future opportunities including the expansion of the program in existing markets via new categories and establishing a presence in territories such as South America, Asia and Eastern Europe.

SQUATTER® HOLDEN 70TH ANNIVERSARY EDITION ALMOST SOLD OUT! The popular board game Squatter® has partnered with Holden to produce a special edition of Squatter® to commemorate the 70th anniversary of the iconic Holden Ute.

Both Squatter® and the Holden Ute are Australian icons which share a common bond with Australian farms and farmers, and loved by Aussies all over. Richard Lloyd, the owner of the Squatter® brand, said today “What an exciting venture for Squatter®. This is the first time since Squatter was invented by my Dad, that there has been a new product added to the Squatter range.” Mr Lloyd went on to say “The response to the new Squatter® Holden 70th Anniversary Edition has been very, very encouraging. We almost sold out of our first container, before it even landed in our warehouse.” More Squatter® Holden 70th Anniversary Edition board games have been ordered and should arrive in late September. Visit the website to learn more about Squatter® Holden 70th Anniversary Edition, Squatter® CLASSIC and Squatter® COMPACT. www.squatter.com.au 22

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☀

FEATURE COLUMN SPORTS LICENSING BY SIMON GRESSWELL EDITION 1

A SPRING/SUMMER LIKE NO OTHER! I'm writing the morning after England bowled out India for 78 and then (uncharacteristically of late) went on to bat through to close of play, without loss. Such is the unpredictability of sport and one of the main reasons we revel in it! Unpredictability for sports licensing, merchandising and retail on the other hand, has presented much more of a challenge this year, in a spring/summer like no other... just as for all licensing and other business areas affected by the global pandemic over the last 18 months. Thankfully, social media, the staccatoed return to live sport and the great British weather, have combined to allow me to get out and keep across and even attend some sporting events this year, so I thought I'd share some snippets from the sports L&M world, viewed from a dual perspective as both punter and professional this year. In April-May, the Rajasthan Royals launched their tournament shirt, inspired by the values of their Foundation, in what became the first part of the IPL 2021. This values-based design 'story' and other associated innovations the franchise has focused on, such as female empowerment, really got me thinking about what other added value this product 'story' could bring to brand and retail partners internationally. 24

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Simon Gresswell Sports Licensing & Partnerships www.sglp.co.uk

Across roughly the same period, Primark launched their first NBA ranges in-store, in US then in UK & EU. This kind of partnership probably would not have been considered 'the right fit' between a US sports federation and the retailer only a few years ago, but is now blossoming in the high street fashion retail environment where it should be... backing up just how lifestyle sport has always been. My first encounter with SAIL GP and its merchandise, was around the first event of its 2nd season, in Bermuda. Admittedly it was a virtual encounter only, on their app for the thrilling, high-speed action and their online store where I noticed products with designs by local artist Alshante Foggo, a smart way to promote the global series to the local fans. Mid-month I couldn't resist a 'Sporting Heroes Top 10' circular with old mates on fb and highlighted two of my sporting heroes as Serge Blanco and JPR Williams. Hunting for pics, it struck me how their minimalist, retro shirt designs still appealed to me and also reminded me of the fact that JPR wearing his socks rolled down, influenced me to do the same for years as a young amateur rugby player.

In the VANS store in central London (Oxford Street), I was checking out their customisation booth with a couple of client projects in mind, when I noticed another tennis brand Penn in collaboration with VANS. This reminded me of another angle that brands and retail have used to benefit from the halo effect of certain, annual sporting events, just as Prince had done with Primark in 2020, around a similar time of year, not surprisingly. June saw the arrival of my Rugby World July issue and a front cover plastered with images of pride and hope... pride in the jersey and hope that the British & Irish Lions Tour would still go ahead as planned. It did ultimately, but without the famous 'sea of red' of spectators, this was always going to be a tough assignment for all players and all associated commercial activities. www.buggreport.com.au

☀ Whilst the UEFA Euro2020 championships unfolded and England were pipped by Italy to the trophy, merchandise was certainly less evident than sponsor beers on supermarket shelves.

Later in June, as part of my role as Ambassador for Products of Change, I hosted an online session as part of the Sustainability in Licensing Conference event, with Head of Licensing & Retail for SAIL GP, Kate Worlock and Team GB's Hannah Mills, opening ceremony flag-bearer in Tokyo and now double Olympic gold-winning 470 class sailor, after her success on the water in Japan.

Beers also seemed to dominate fan purchases at my first live cricket match of the year too, when after a couple of hours of meetings, I was able to join mates in the Hollies Stand for the last hour's play of England v New Zealand Test at Edgbaston. The BBC Sport website described it as the 'world's biggest stag do'... to say people were making up for lost time was an understatement, but all in great spirits throughout, with the singing of 'Don't Take Me Home' lasting at least 45 minutes after the close of play.

Travel restrictions at the end of June, meant I couldn't attend Le Grand Depart of the Tour de France, in Brittany, but you could tell from an eventful first few stages on and off the course, that this was going to be another classic which was quickly re-finding its feet post-pandemic, with huge crowds mostly in polka-dot Ts happy to be back lining the route.

At the end of June and into early July, Volleyball World (the new commercial arm of the FIVB) launched their world-first 'EQUAL JERSEY' to champion gender equality and D&I, as part of their Finals weekend at the Volleyball Nations League, in Italy. Players from different nations who wear the same number on court, were paired together for photoshoots and the players donned the jerseys on court during specific sections of the finals. 26

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☀ Then on to Wimbledon and of course the inevitable rain that greeted us as we sauntered through the grand gates of SW19 as bona fide paying punters for the first time in many years. Good news for brolly sales though, as all of the previous year's stock was sold and many more, a little bird told me.

The following week saw myself and other cofounders launch our first event for the Bob Willis Fund at the ODI match between England and Pakistan at Edgbaston. Thanks to Sky, ECB, Edgbaston, BBC, Prostate Cancer UK we had an amazing first fund-raiser, showering staff and fans in official caps and badges and even mixing in some unofficial merchandise with our friends from The Barmy Army, who wore #BlueForBob wigs for us in the legendary Hollies Stand, kindly donated by Smiffys. Two days later and a day at The Open in Sandwich, was the most impressive merchandise experience of the year, with the enormous on-site shop, dwarfing most other structures on the course and providing an incredible retail environment for its many branded partners and display of evocative imagery, soundbites and golf messages. Only a month later, the R&A team produced another stunning merchandise store at the Women's Open at Carnoustie... featuring the impossible to ignore Adidas range and focus on their primegreen products and massive sustainability initiative.

Two more days after that I was lucky to be a guest at SAIL GP in Plymouth and get to see their 'product' and merch first hand. As previously noted, a creative yet shrewd product mix, included event-branded, co-branded and local designer product, commensurate with this exhilarating and relatively new event series. And finally, I was again very fortunate to be at Lords for the Finals Day of The Hundred, the previously-maligned but genuinely landmark new format and event brand for English cricket. Plenty of colourful merch on show and being purchased it seems, as well as kids wearing their All Stars and Dynamos 'stash' from the ECB's penetrative youth programmes of the last couple of years.

With delays of a year in some cases and the staccatoed return of sporting events and full stadia across the world, getting products, ranges, designs, specification, pricing, logistics and retail right, has been a major challenge for and indeed a major achievement by, many sports, clubs, federations and their service providers, licensees and agents. So to finish, I'd simply like to give a major hat tip to all involved for their steely efforts to get business back up and running in 2021. www.buggreport.com.au

HOORAY TO THE END OF NORMAL After experiencing more than a year of protracted COVIDrelated or accelerated disruptions, what is “normal”?

For centuries, the question was a geometric one. Circa 1500, the scientifically minded like Leonardo Da Vinci were learning to take a technical approach to design and drafting. To say something was “normal” meant it was set at a perfect right angle. In the 1800s, mathematicians and statisticians used “normal” to describe data sets. One such statistician was Belgian Adolphe Quetelet who happened to study humans. His 1835 theory proposed an “average man”, with certain features (height, weight, colour), intelligence and morality, described the model citizen. As other anatomists and physiologists built on this work, “standard” and “normal” were used interchangeably to mean “ideal”. Another statistician, England’s Francis Galton, took things a step further. If the “normal” could be used to create a model society, then abnormal could be identified to rid the human gene pool of “undesirables”. Features such as head size, toe lengths and facial shapes were studied for their link to the “genetic flaws” of disabilities, mental illness, criminality, illegitimacy and poverty. 28

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The emerging field of social sciences burgeoned into the 1900s, behavioural applications normalised “normal” to become synonymous with “natural”. Using an intelligence scale devised by French psychologist Alfred Binet in 1909 – aka the “IQ test” – society could be divided along the lines of “normal” or “unfit”. In 1927, the U.S. Supreme Court ruled against a plaintiff, Carrie Buck, the "feeble-minded" daughter of another "daughter of a feeble minded mother”, to approve her involuntary sterilisation. “Three generations of imbeciles are enough”, the Court noted. While the case was extreme, it was not unusual and worse would yet be perpetrated by governments in the name of “normality”. It naturally followed that “normal” would apply in business to define “things as they should be”. The works of the likes of F. W. Taylor (scientific management), Henry Ford (mass production) and Elton Mayo (the Hawthorne experiments) would cement standardisation with performance.

FEATURE COLUMN: THE NEW AGE OF DIGITAL BY ISABEL WU — EDITION 4

Somewhere in the morass of statistics, novel experimentation and human & social engineering, “normal” was no longer whatever occurred naturally; it was whatever a certain group decided it should be. Many early theories may now have been discredited, but the desire for “normal” continues. So much so that even when we can identify all that is wrong with it (normal), we still yearn for it. The Age of Digital is the first real challenge to the constructs developed in the fledgling days of modern science. It’s not that “normal” has been disrupted; it’s that those early scientists failed to contemplate the world we live in today. Evolution, including rude shocks caused by man and nature, are the true states of normal. If we broaden our view, we can see that all progress came not from adherence to certain constructs, but from its opposite: invention, innovation and ingenuity. Even followers of the normalist school of thought achieved their success by defying old ideas.

We have never had the ability to generate new solutions as we do now with technology. Over the past 200 “normal” years, we have been limited by issues of cost, scalability and adaptability. Today, the accessibility of digital solutions means invention, innovation and ingenuity should be part of every enterprise’s business as usual. Or should I say, business unusual? We don’t need technology to survive disruption; we need it to survive the problem of normal. As Da Vinci’s 15th century Florentine contemporary Machiavelli said, “Never waste the opportunity offered by a good crisis.” This article is written by Isabel Wu from Meta Management and covers all things digital. Meta Management is a consultancy specialising in helping its clients with the organisational assets that drive effective digital transformation and create value in a hyper-connected, constantly changing world. www.metamanagement.net

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Supply Chain Crisis; A Path to Success for Retail Managers A Breakdown in Supply-Chain May Lead to Empty Shelves in Q4 2021

Researched and Written By A. Robert Moog

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EXECUTIVE SUMMARY The current supply chain crisis requires a resetting of the risks and responsibilities of the three major players in the supply chain: factories, suppliers and retailers. Everyone’s goal needs to be to get product on the shelves for the rest of 2021 and 2022. To maximize retail performance in the short term (2021-2022) and the long term, all three business groups need to modify how they think about the their interrelationships. This rethinking by all three groups is necessary to deliver the best result. All three groups must ﬁnd more ‘dials and knobs’ to turn to ﬁnd mutual success and achieve annual operating goals.

Without some innovative solutions and some risk adjusting by all three groups the economic consequences will likely be that consumer products will not be on shelves at reasonable prices for the 2021 and 2022 holiday seasons. 2 Supply Chain Crisis; A Path to Success

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The US and Canada are now experiencing the third consecutive year of unprecedented threats to the supply chain that brings consumer products from Chinese factories to the nation’s retail stores. In the toy industry, for example, more than 80% of the $26 billion in toys, games and puzzles that form the US toy industry are manufactured in China. These shipments are being delayed to the point of putting the Christmas selling season at risk. First, in 2019, protective tariffs increased the cost of bringing toys into the United States. While some toy makers increased costs to retailers, most suppliers absorbed the impact of the tariff and experienced margin erosion. The threat of additional tariffs on games/puzzles paired with China’s reaction to the tariffs increased anxiety and uncertainty in 2019. Then starting in March 2020 the Coronavirus pandemic delayed factory production, reduced trafﬁc ﬂow of containers and resulted in port slowdowns as the Covid 19 virus spread throughout the factories, the ships and the port personnel. Finally, in 2021, the increase in freight charges (which increased more than 300% from January 1, 2020 to July 15, 2021) have completed the trifecta of supply chain dysfunction. All of this has been hashed and rehashed, but interestingly little has been said about how companies should deal with the situation. What are the solutions? In this paper, we explore why this is happening, how various stakeholders have reacted and what retailers can do to have a successful 2021 and avoid empty shelves during the holiday season.

Container Price Analysis (Jan 2019 To Jan 2022) Container Size/ Service Level 20FT-Market 20FT-Premium 40FT-Market 40FT-Premium 40HC-Market 40HC-Premium

Jan-19 $3,450 NA $3,800 $6,500 $3,800 $6,825

Jan-20 $3,600 NA $4,000 $6,500 $4,000 $6,825

Nov-20 $5,625 NA $6,250 $8,775 $6,250 $9,100

Jan-21 $5,625 NA $6,250 $8,775 $6,250 $9,100

Forecast pricing (Oct 21) NA NA $16,000 $25,000 $16,000 $25,325

Estimate Increase (Jan-Oct 21) NA NA 156.0% 184.9% 156.0% 178.3%

Forecast Estimate pricing Increase (Jan 22) (Oct 21-Jan 22) NA NA $18,000 $28,000 $18,000 $25,325

NA NA 12.5% 12.0% 12.5% 0.0%

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IMPACT OF CONTAINER INCREASES The impact of freight rate increases varies based on the number of units in the container and the overall cost of the individual units. However, both large items that are expensive and small items that are lower priced are signiﬁcantly impacted when container prices increase 200% in an 18 month period. For example, a typical board game box (10.5" X 10.5" X 2.5") will ﬁll a 40 ft container with about 10,000 games. At January 2020 rates ($4000) that is about $.40 per unit. However, at estimated October 21 rates the same 40 ft container will cost $25,000 (must ship Premium rates) which equals $2.50 per unit. The increase of $2.10 per game if fully passed on to the retailer will result in a game that retails for $19.99 being increased to $24.99-$29.99. Raising rates of games and toys this much will result in lower sales as consumers move to substitute with other choices--hurting the entire industry.

WHO IS GETTING SHIPMENTS SHIPPED? Short answer: Only those who are paying 3-4 X normal shipping rates and booking Premium. The normal (Prior to 2020) system for shipping products from China was fairly straightforward if not completely fair and transparent. Companies booking freight had three ways to book: 1. Negotiated Shipping Rates: These were typically large shippers (Nike, Gap, Apple) or retailers who imported directly (Walmart, Target, MarMaxx, Kohls) where annual negotiated rates were established each year. These rates typically ran 20-30% below market rates. 2. Market rates/Spot rates: These rates ﬂuctuated during the year based on fuel prices and seasonal demand. Shippers of less than 1000 containers per year typically shipped at these rates. 3. Premium Rates: These preferred rates were for faster shipping and guaranteed that bookings would not be bumped. In 2021 with rates increasing monthly and running 200% or more ahead of 2020 rates those companies booking negotiated rates or market rates are ﬁnding their bookings postponed by weeks or months. The demand for Premium rates is so high that the shipping companies are often refusing space to long time and large customers who have booked under lower rates. This threatens the economic model and the sustainability of large companies, national retailers, and smaller suppliers who cannot get their products shipped in a timely manner. In order to have product at retail in 2021 and 2022 suppliers and retailers must be proactive in addressing the situation together and forging creative solutions.

WHY IS THE SUPPLY CHAIN BROKEN? While the container ﬂow is out of balance along with shortages of chassis at port and drivers for trucks, these are only symptoms of a larger supply chain dysfunctionality. It isn’t these events that have caused the major supply chain issues, but rather the reaction of factories, suppliers and retailers that have brought us to the

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brink of insufﬁcient supply of product and double digit price increases. These exogenous events have been met by three primary and distinct reactions. Each is indicative of a Company’s culture and decision-making process. 1. THE POSTPONER: Taking the current increased freight rates as an example, many suppliers and some retailers decided in January and February to “wait and see” if the rates went down in July or August. The thinking was similar to the way some people think about “overvalued” stocks. Since freight rates were at unprecedented high levels these companies decided to wait until freight rates reverted back to “normal” levels. To accept the higher rates would negatively impact gross margins. To the “Postponer” it only made sense to wait and avoid excessive freight charges.

ON MANUFACTURING: Batch Manufacturing -A batch process involves a sequence of steps followed in a specific order and designed to manufacture a specific quantity of finished goods in a specific time. Examples include printing, injection molding, computer chips and Die/mold making. Continuous Flow-This method is focused on producing a large number of products where the product is made on an assembly line and the product flows through the line resulting in a final product at the end of the line. This is used in car manufacturing and pharmaceutical manufacturing. Just In Time-Based on the Japanese Kanban system, just-in-time manufacturing and inventory management is a system where planning aims to carry inventory for the shortest and most efficient period of time. The system has been adapted by big box retailers to maximize inventory turn and increase cash flow through weekly deliveries from suppliers.

2. STATUEMAN/STATUEWOMAN: These managers understood that there were threats to profitability but weren’t given any direction to change course by upper management. Without direction from senior executives, they continued to manage their business as they had in prior years expecting the supply chain to self-correct by Q4. These buyers used language like “hope” and “let’s cross our fingers” but have not actually adapted to the reality of supply chain disruptions. They continue to fight any cost increases or changes in terms of payment without offering much to assist the suppliers or the factories. By the time many start scrambling for temporary space or to fill planograms they are finding few suppliers prepared. 3. PLANNER: These decisionmakers are more comfortable with risk than the other two groups. They have consistently worked directly with their Chinese factories to understand the entire supply chain from forest/mill to retail Distribution Center. They have modified their inventory management systems and worked to modify terms and timing with their customers. They will be able to build their businesses with those retailers who are willing to adapt to the realities of today’s supply chain. For retailers who take the “PLANNER” approach, the holiday season as well as 2022 will be less stressful and more profitable. We have not explored how the percentages of the three types of managers breaks out, but it appears that most of Suppliers in the Toy Industry are POSTPONERS (type 1) and most of the retail buyers are STATUEMAN

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(type 2). Unfortunately both of these paths have proven to have devastating effects. Meanwhile the PLANNERstyle managers are having record years and are better ready for Q4 2021 than their competitors and customers. It is imperative to understand “what is happening” in order to forge a plan of action for your Company. The seminal roots of the problem can be seen in the very basic way that toys are made, warehoused and ordered.

A LITTLE HISTORY

In manufacturing and operations management there are three basic ways of building and controlling inventory: Batch manufacturing, continuous ﬂow, and just-in-time manufacturing. In the 21st century a natural disharmony has developed in many consumer products categories including the toy industry that need to be addressed during the current situation.

BATCH MANUFACTURING Factories in China required Minimum Order Quantities (MOQs) in order to manufacture a toy, puzzle or game. The quantities generally run from 10,000-25,000. These are manufactured in one production run and shipped complete to the US supplier or are offered on an FOB basis direct to retailers.

BATCH IN/JUST IN TIME OUT MODEL The US supplier creates a ﬂow of inventory so that there is a stilted continuous ﬂow. The goal of good inventory management is to bring in the next shipment when the current inventory is down to one month’s inventory level. The amount brought in is the batch built by the factory. Once received the inventory can be stickered, assorted or bundled as required by various retail customers. This Batch in/Just-in-time out across many items creates a staggered system where various items come in every month as the inventory levels run down.

JUST IN TIME SYSTEM Retailers, on the other hand, are working on a Just-in-Time system where their goal is to order weekly and keep 6-8 weeks of inventory in their distribution system at all times. If volume increases or decreases retailers like Walmart and Target adjust their purchases on a weekly basis. Since the Chinese factories manufacture and ship by batch and the retailer orders only what they need each week, the bulk of the inventory risk falls on the Supplier. Normally, this is a manageable although not efficient system for all parties. In 2021 this is not working since the Suppliers are not maintaining a continuous flow and may not be in a financial position (after surviving 2019 and 2020) to handle the financial risk of the “system.” The result is late shipments, missed modular sets, strained relationships and increased costs across all three elements of the supply chain. To fix this short term for 2021 and 2022 a rejuggling of risk and a modification in how retailers work with suppliers and suppliers work with factories, is required.

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supply chain issues, but rather the reaction of factories, suppliers and retailers that have brought us to the

WHAT TO DO? There is not a simple cure-all to the situation but the Retail Manager may be the key to solving the situation. Generally, the retailer (national chains) has the most resources in terms of people, capital and cash flow. However, it is the retailer that takes the smallest inventory risk and takes the longest amount of time to pay for the product. The factory makes a smaller margin but generally is paid the fastest with terms ranging from pre-payment to 30 days from bill of lading. The Supplier is financing the inventory with 30-90 day payment terms to the retailer. In addition, labor increases and freight increases in 2020 and 2021 have been absorbed by the Supplier in most cases, resulting in substantial margin compression. The reaction of the Supplier has depended on whether they are a Postponer, Statueman or Planner—but none of the reactions fully supports The Retailer. While all three players in the chain need to make modifications, the flexible and pro-active retailer will gain the most by adapting to the changing business environment. By understanding what is happening in terms of management philosophy, factories, suppliers and retailers can all be successful both in the short term (2020-2021) and the long term. The changes needed will not only improve performance during the current crisis but establish internal practices that will benefit the players during the structural retail changes of the next ten years. Sitting still and staying the course is a dangerous path and may lead to a slow, long decline for all parties.

TODAY’S RETAILER RETAILERS: Take an audit of your suppliers. Who are the POSTPONERS, STATUEMEN/STATUEWOMEN, and who are the PLANNERS? Create a strategic initiative with the PLANNERS and work out a 2 year plan with them that accomplishes the following: 1. Maintains product ﬂow-It is essential to do whatever you can to ensure that you have product in a timely manner for holiday 2021. 2. Allows your company to maintain a blended margin that is acceptable to management. 3. Creates differentiation in supplier management from others in the market place It is important for the Today’s Retailer to take a revised look at supplier management. It requires the grit to identify and trust some suppliers to give you preferential treatment to the Planner-style suppliers and to deliver high quality products and programs. The key is to develop a scenario where you “know” that you will get product delivered. This is the most important objective.

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We have not explored how the percentages of the three types of managers breaks out, but it appears that most of Suppliers in the Toy Industry are POSTPONERS (type 1) and most of the retail buyers are STATUEMAN

ACTION PLAN The Modern Retailer A. Offer Supplier Incentives and Penalties: Retailers may offer reverse-incentives for 100% shipping compliance by actually paying more. Some retailers are providing extra ads or guaranteeing promotional space for suppliers that ship 100% complete. Tied to the incentive for 100% complete shipments is a penalty for less than 90% shipping compliance. These retailers are allowing Suppliers to opt in to these programs. B. Sliding Pricing Scale: Another idea is to create a sliding pricing scale for the Retailer that is indexed to freight costs. While this shifts cost risk to the Retailer if properly designed it can also lead to a reduction in costs when freight rates are reduced. Without this fulcrum Retailers may see cost increases in 2021 which become permanent even if freight costs are later reduced. C. Technology/Business Analytics: Retailers, Suppliers and Factories will beneﬁt from exploring technology solutions that facilitate better supply chain management from purchase order to delivery. All of these tactics shift some risk from the Supplier to the Retailer, but they may actually create a more functional supply chain than the current structure. These changes also shift more of the control from the Supplier to the Retailer, as they are aimed to increase the likelihood of timely delivery and margin maintenance. Each Retailer, Supplier and Factory needs to ﬁnd the right formula for them. The key is that until senior executive instigate and implement some changes to their thinking about the supply chain, we will see increasingly empty shelves and higher Retail prices to the consumer.

The Opportunist Supplier Suppliers play a role in bringing the supply chain back in balance. The recipe for suppliers requires creatively modifying relationships with factories and with retail customers. Suppliers can work with Factories to provide forecasts by item annually and agreeing to accept shipments when the factory manufactures, regardless of time of year. Suppliers can try and be more ﬂexible on annual raw material purchases and in the speciﬁcations on commodity items like paper and plastics. Suppliers can also be proactive with Retailers and work with Retailers to anticipate their needs. This may require more planning meetings vs selling meetings with key customers so that lead times can be better managed. Suppliers need to be margin conscious regarding their Retail customers and plan price increases with longer notice periods (90 days or more). By working more closely with Retailers on issues that Retailers are facing, this period can be a hugely successful time for Suppliers vs. the nightmare that they might be facing today.

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The Factory Factories will beneﬁt by better and more complete communication with their Suppliers. When Suppliers understand the raw material constraints, the labor constraints and the space constraints of factories, they can be better customers. For the factories providing longer lead times, utilizing Chinese contacts, and proposing cost and time efﬁciencies will be met with sincere approval by Suppliers who are PLANNERS.

CONCLUSION The focus of the Supply Chain Crisis is on the Covid outbreaks, freight rates, transportation shortages, port capacities and labor shortages. However, the underlying framework of how factories, suppliers and retailers work together currently creates more dysfunction and product shortages than are necessary. By planning together, changing the timing and terms of working together and by adjusting the inventory risk through innovative and creative programs Retailers can be more successful. Suppliers and Factories can also deliver better results in 2021 and 2022 by rethinking how they interact with their customer base.

ABOUT THE AUTHOR

A. ROBERT MOOG A. Robert Moog is a 36 year veteran of the toy industry. He originally sourced factories in China in the early 1990s and has worked with more than two dozen different factories in the US, Canada, Thailand, China, Hong Kong and India. In 1985 Mr. Moog co-founded University Games, a leading global game and puzzle manufacturer. In 1999 Mr. Moog founded AreYouGame.com, an ecommerce retailer and private label producer. AreYouGame carries more than 3500 different games/puzzles and STEAM products and works with more than 125 different suppliers. Currently Mr. Moog is researching the systemic changes in the consumer products industry and the strategic challenges facing global companies in the next 10 years. Mr. Moog has lectured at Golden Gate University on entrepreneurship and strategic marketing. He has also served as a guest speaker at several universities including the University of San Francisco and Stanford University.

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