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Company Profile - Mattel

In a good place

Just before the pandemic hit, Mattel signed a lease on a brand-new office in Slough, where it planned to relocate from its long-term home in Maidenhead. Two years on, John Baulch got to experience the new premises when he met up with vice president and country manager UK & Ireland Michael Hick and Kelly Philp, who leads Marketing for the UK.

I met up with Michael and Kelly last month, shortly before Mattel unveiled its Q2 results (check out the Toy World website for details). Even though we weren’t able to talk through the Q2 numbers, the Mattel team was still celebrating a stellar set of Q1 results, described as “the highest on record for net sales and other key metrics.” Furthermore, EMEA was the fastest growing region globally, with a 29% increase, and the UK was one of the key markets, posting record-breaking first quarter numbers. So, it’s fair to say that Mattel is feeling positive at the moment, and the EMEA operation is not only gearing up for the second half of the year, but also has exciting plans for 2023, when the Disney Princess and Frozen line will re-join the Mattel portfolio.

I started by asking Michael about the first half of the year, and what Michael put the strong performance down to. “Our Q1 global results were outstanding - +19% represented a very strong performance,” he tells us. “It was also a record-breaking quarter for Mattel UK, off the back of a record-breaking 2021. We have started the year in a really good place; we’re trading exactly where we wanted to be at this stage and we’re optimistic about the second half of the year.

“In terms of what drove that performance, I would say two key factors have been innovation in our marketing and in our retail execution. Globally, we have done a great job with our brands, and the team here in the UK has delivered some exceptional campaigns and activations.

Michael adds: “The other important element is the way we have developed relationships with our retail partners and delivered brand execution at retail – we have created a lot of fun and innovation in the way we go to retail. Our market share according to NPD YTD June was up at 7.7% - that’s our biggest market share in five years. A key part of our approach is to give retailers a point of difference; we put together joint business plans to drive traffic into their stores. In addition, we have a clearly defined channel strategy: we make sure that we are connecting with the consumer wherever they are on their shopping journey.”

“This is true across the board; we’re not just looking at every channel, but every size of retailer to make sure that we are servicing them in the best possible way. We want a steady flow of product going to those stores. We create huge demand for our products, we try to get our fair share of space with that retailer and then we strive to service that demand as efficiently as possible.

Despite the strong start to the year, Kelly admits that “as an industry, it has been challenging - we’ve been comparing trading figures from the pandemic and lockdowns. However, we’re about to hit a new phase, with plenty of upsides to focus on: we have incredible product tied to what we believe are the big movies of the summer – Jurassic World Dominion and Lightyear, Minions and DC League of Superpets. And of course, last year we faced huge supply chain issues as an industry in Q3, trying to get products onto shelves. The key now is to drive as much demand creation as we can with our marketing activity.”

While it is clear that the cost-of-living situation will present challenges for retailers in every category this year, Michael still thinks that the toy industry is well-positioned to face those challenges: “I do believe toys are recession resistant; parents will forego many things for themselves to make sure the kids are looked after.”

One of the biggest hurdles for suppliers last year was ensuring retailers were stocked with the right product at the right time – so how does Kelly see that situation evolving as we head into the festive trading period? “We’re excited for the holiday period. Over the past few years, as parents have spent more time at home in close proximity to their children, we’ve found that playing with toys is a core element of family life again, and suppliers and retailers will hopefully benefit from that.”

As Q4 approaches, there has been much talk within the toy community of a significant shift in the marketing arena, so I asked Kelly how she sees these changes manifesting themselves in Mattel’s marketing campaigns: “The marketing space is always evolving. The platforms we’re using and the ways in which we’re communicating with both children and parents is as diverse as it has ever been. We want to be at the forefront of the evolution, leading in new platforms and testing and learning against those platforms.”

And if that means spending more marketing budget, Mattel is not shy to back its key ranges:

“We always think of ourselves as a marketing led organization and that’s our commitment to the toy industry – to continue to drive consumers to store, so our investment continues to grow. It grows in different ways, but mainly within the digital space.

Kelly believes that retailers are getting used to the conversation around the marketing space changing, not only in their businesses but as they talk to suppliers as well. “Mattel has been on this journey for 5-7 years and we have always tried to explain why we did those campaigns and the results we saw,” she tells us. “Over time, that has built confidence,” explains Kelly. “A lot of the time in our business, we’re also talking to parents – that is different to purely being in the kids’ space. For many kids, a key part of their day is still traditional TV, whereas parents transitioned out of that being a priority platform a long time ago. However, TV isn’t going away – it is still a key platform. But there are so many different forms of TV that we can tap into now, which makes it more effective in reaching our target audience and enabling us to be more precise with our messaging.”

As we enter the second half of the year, the question that many suppliers and retailers are asking is whether consumers are likely to change their spending habits this year – will they be looking for more value? And if so, how does that affect Mattel and other big toy companies with market-leading brands, which are traditionally priced towards the premium end of the pricing spectrum?

Kelly points out that “Parents are always looking for value. There will always be those gifts they buy purely because their child wants it so much, but they are looking at how long their child will play with a toy, what does it have to offer above what they already have.

“It will be back of mind as people go into that Xmas spending period. We’re in quite a fortunate place with our portfolio of brands, and also the range architecture – we always have a range of toys at different price points that can be played with together or independently. Take Hot Wheels diecast as an example; it’s our number one volume toy and one of our lowest priced items, which is accessible for everyone. Consumers can buy into the world further with the Hot Wheels Ultimate Garage, which is a premium price point- but they don’t have to, there is something for everyone in the range, whatever the budget. “

Michael sees retail promotional activity returning to the landscape this year: “Last year, there was high demand, but not enough supply. Consumers are going to be looking for value – but value doesn’t always just mean price, it is much more about the overall play value of the item. It's all about where the spend is going to go. Parents want to create memories at Christmas - and toys deliver memories. That’s where the industry can really capitalize – we’re creating positive play experiences for families. Hopefully that will encourage parents to protect their spend on toys.”

So, what new launches are the pair excited about in the second half of the year? Kelly suggested: “In the short term, we’re really excited for our product range tied to the Jurassic World and Lightyear movies, and then the Minions and League of DC Superpets movie – so we have great movies to see us through the summer. To end the summer, we’re excited about the WWE event in Cardiff; Clash at the Castle. Then as we come into the back end of the year, we have some exciting things happening with our own IPs such as the Hot Wheels Legends Tour. We also have a year round partnership with the charity Family Action on Fisher-Price, which will really home in on the Early Childhood Development elements of our product range and help parents post-pandemic, where they may feel that some of those developmental stages have been lost when they were unable to send their children to nurseries or pre-schools.”

Michael is also keen to point out that there is plenty to look forward to at the start of 2023: “And that’s just the warm-up to January, when we go live with our Disney Princess and Frozen range, which we’re incredibly excited about. We’ve shown some sneak peeks to retailers and they’re excited about what we’ve done with the range and our plans. We can’t say too much more at this stage, but we’re looking forward to unveiling the line in due course.

“Then next year we have the Barbie movie – that is going to be huge. The list of A-list celebrities involved is incredible. We’ve got a lot of momentum across our core brands – who would have thought that the number selling item in the industry last year would be Hot Wheels diecast? And the Barbie Dreamhouse was the number two selling item. That momentum has really continued this year – Hot Wheels is red hot right now. With all the plans in place for the remainder of 2022 and the early part of 2023, we’re excited for our momentum and the tremendous opportunities ahead for Mattel, our partners and our consumers.”

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