Letter from America - Rick Derr

Where do indie toys fromgo here?

After 20 years working at A.C. Nielsen/D&B Research Company, Rick opened the first Learning Express Toys franchise in the Chicago area in 1996, and then became a sub-franchiser, opening 10 more stores. Although leaving the corporate environment behind, he has combined his expertise in data and numbers with a passion for the toy retail space. This month, Rick follows up on the suggestions he put forward in last month’s column regarding the indie toy market.

Last month I gave an honest assessment of what I thought the US toy store market needed: a reboot. If you didn’t get a chance to read the article, please do. It caused quite a bit of a stir here. But will anything change?

Before I get into the outlook for 2025, here’s a quick recap of how we ended    up here at Learning Express in 2024, and what we learned from our top vendors and categories.

The top 10 final vendor dollar rankings made up 35% of store volume, as follows:

•   Lego 6.8%

•   Spin Master/Melissa & Doug 4.6%

•   Pokémon/Mattel by ACD Distributor 4.5%

•   Jellycat 3.5%

•   Dope Slimes 3.4%

•   Pick Up items through US Toy 3.0%

•   Douglas Plush 2.5%

•   Fat Brain Toys (Tomy) 2.2%

•   Epoch Everlasting Play 2.2%

•   Schylling Toys 2.1%

The top 5 product categories made up 54% of store volume, and were:

•   Plush Toys 14.1%

•   oy/Pick Me Ups 11.6%

•   Tween/Fashion 9.7%

•   Building 9.4%

•   Crafts 9.2%

The recap clearly shows a year that lacked a stand-out hot product. Back in 2022, at the height of the Squishmallows craze, the brand made up 13% of our sales (and 17% in 2021). This year Squishmallows was not in the top 10.

The positive news is we had a successful year (albeit not great) by featuring many mid-tier vendors and sprinkling in new partners as the market evolves. The arts & crafts category strengthened, and I believe with more newness it will continue to grow into a very significant category for us. It will be interesting to compare how UK indies performed against these rankings and what the bright spots were.

As I look forward to 2025, I am forecasting single digit growth. Last year, two individual months hurt us the most. April was very weak as Easter sales all crept into March, but not enough to offset declines from 2023. The second weak month was November, and I am just not sure why. The calendar sets up better for us in 2025 so I feel confident we can increase those two months significantly.

Of course, we are taking action, and our four-step plan is as follows:

• Implement a value section, full of surprises, each week.

• Add customisation options to ongoing vendor partners. We started this in 2024 - examples include the Dope Slime Sundae Station where kids make their own slime. Other considerations are a patch bar - we supply the bags, hats and containers and kids pick their custom patches that we affix via heat or glue. Many other ideas are swirling, as they offer even more reason to visit us and take the item home on the same day - no waiting on Amazon for delivery.

• Offer more intimate events such as readings, Rain Forest education sessions to outside groups, informational activities like “how to professionally gift wrap”, etc. I have been following the resurgence of Barnes & Noble bookstores by CEO, James Daunt, and his change in philosophy to let the local stores select their own inventory. Customisation is key!

• Test and build the infrastructure to begin social selling. We need to have the platform, inventory quality, people and streaming capabilities to do this correctly, reaching our customers in their homes during slower times at the store. With the odd exception, most indie stores in the US are not offering this service.

And finally, we are commencing a “big picture” change, to revamp our strategies against Amazon and other online sellers that now capture the bulk of the toy business. If you add Amazon, Walmart and Target together they now comprise approximately 70% of the toy dollars.  Our slice of toys is getting narrower but there will still be a lane for us. This is a niche worth keeping and those retailers that do it well will not only survive but thrive. At Learning Express, we plan to be one of them.