Company Profile - MGA

No holds barred at MGA

When we last spoke with Neil Bandtock, managing director of MGA Entertainment’s UK & Ireland operation, he was rolling his sleeves up in preparation for a busy year. Six months later, Toy World caught up with him to find out how the company’s plans were proceeding, whether raw material and cost price increases are of concern, and why good is never good enough.

In previous issues of Toy World, we’ve heard from retailers across the UK that business has been very good since they’ve been allowed to reopen their doors. MGA reports the same from the supply side; feedback has been positive with strong sales across all MGA brands. The company is currently focused not only on ensuring a healthy end to the spring/summer period, but also on delivering a healthy start to autumn/winter. To this end, retailers are being offered best-in-class store takeovers and access to MGA’s impactful FSDU programme (which Neil says is widely considered to be one of the best in the industry), all bolstered by 360-degree marketing campaigns that will drive footfall to stores. At the same time, MGA has invested a significant amount in eCommerce, designing landing pages that grab visitors immediately, while also making it easier than ever for them to discover the essential information needed to make a purchasing decision.

“These things always sound like they should be simple to implement, but, in reality, they can be the hardest part of the job,” explains Neil. “I’m often left shocked by how difficult it can be to find and buy the product I want online, so we’re trying to make the process as easy and user-friendly as possible. Ecommerce has been great for us, but some of our lines benefit much more from being touched and handled, particularly our smaller collectible lines. These products will always do better instore, so we’re pleased the shops are now back open.”

MGA has increased its market share +26% YTD (Week 19), which Neil is understandably pleased about given recent challenges. L.O.L. Surprise! remains the No. 1 Doll property, and Rainbow High, which launched less than a year ago, is No. 3. Zapf’s Baby born celebrates its 30th anniversary this year and nine of the Top 10 Nurturing Dolls are Zapf’s.

Little Tikes is also enjoying a stellar year. Large YOY increases were seen in January and February, months not usually associated with high sales of Outdoor Toys, which Neil believes boils down to families’ newfound appreciation for their outdoor spaces, whatever the weather. Little Tikes’ performance, as well as that of other outdoor brands, puts paid to the concerns bandied about by some last year that consumers would have reached outdoor toy purchase saturation point, meaning a poor year lay ahead for those in the category. Not so, clearly.

The Collectibles category didn’t enjoy its best year in 2020, suffering the effects of school and shop closures. To Neil, the reopening of schools, where brands such as L.O.L. Surprise come to life in the unique kid marketplace that is the playground, was just as important as the reopening of stores. Concerns about the safety and availability of foreign holidays will also likely provide a boost for the entire toy category this year. Neil says: “Many more families than usual will be staying in the UK for their holidays, and that’s probably part of the reason Outdoor is having such a good year. Consumers will be spending their money here. I understand the frustration among families who wanted to get away, but it’s no bad thing for the economy if we can’t.”

MGA is a company that plays its cards very close to its chest when it comes to product development and upcoming launches. Neil, therefore, must be careful what he can reveal. Autumn/winter will see 150 new launches across all brands, all of which will deliver against the three MGA Entertainment pillars: innovative products, creative and beautiful designs, and stunning packaging. Of these pillars, packaging is often the most overlooked by MGA outsiders. The company prides itself on its packaging concepts, which often contribute towards the overall play experience. To a layperson, it may seem odd to for any company to spend so much time and money on something that may ultimately end up destined for the recycling bin, but MGA takes care to create packaging that goes beyond its core purpose, by offering storage for the toys, a backdrop for creating scenes, and much more. One of the best examples of this is MGA’s Lalaloopsy, due for relaunch this autumn/winter. The packaging of each item within the range transforms into a house or play set for the Lalaloopsy doll within, and every bit of the packaging can be used. This concept is also seen in the L.O.L. and Rainbow High ranges, both of which feature large elements that can be used during play. Rainbow High’s packaging, an ombre explosion of colour, also clearly calls out how the brand taps into the exploration of colour and self-identity. MGA’s retail partners understand and appreciate the difference good packaging can make in-store, so MGA previews include plenty of information on planograms and provide clear visuals of how product will look on-shelf.

It's also worth noting MGA’s efforts to improve the sustainability and eco-credentials of its packaging. The company partnered with Terracycle a little over two years ago to make it easy for L.O.L. Surprise! fans to recycle the collectible range’s packaging, and in January this year it was announced that Zapf was ditching the traditional transparent window boxes previously used for its dolls, instead introducing plastic-free closed boxes with bold designs that showcase the Baby born or Baby Annabell product within.

“All our launches are commercially sensitive, but I can assure you that children will be thoroughly entertained by what we’ve got coming up,” adds Neil. “MGA has an absolute showstopper of a main season launch in the pipeline from L.O.L. Surprise! this year, as well as the L.O.L. movie announced recently. There’s also the possibility of a live L.O.L. tour, too, dependent upon Covid restrictions. A movie and a tour are things we’ve never done before, so this year marks another major step forward in the approach we take to brand engagement.”

Returning to MGA’s first pillar, innovation, I was keen to find out how the company keeps pushing forward its product development year after year. With so many launches coming through, it would perhaps be fair to assume that at some point the company will run out of steam – but Neil says this couldn’t be further from the truth. Take L.O.L. for example, a brand that revolves around the unboxing experience, with

packaging that is as much a part of the play experience as the toy itself. The brand, which has been a leader in the Collectibles and Dolls spaces for several years, is this year welcoming a slew of major new additions for autumn/winter which will elevate the play pattern to a whole new level, such as boxes that fold out again and again to create an incredible play set. Secret surprises remain a core element of the brand, but unboxing remains as big now as it ever was, and the appetite for toys that provide it in new ways is higher than ever.

MGA supports its launches with a varied mix of marketing spanning TV and the digital space, sponsorship campaigns and influencer partnerships. The company has made good use of the influencer space for a number of years; it’s how MGA launched L.O.L. Surprise!, and the tactic continues to resonate among young fans. Noting that it admittedly sounds ‘a little clichéd’, Neil stresses that MGA really does opt for a 360-degree approach to marketing. He says: “TV advertising is still as important as ever. It’s still an incredibly important part of our mix.”

The company has a very clear, very ambitious objective for 2021: to double its business. Ambitious or not, Neil believes that MGA is well on course to do just that. Presented with that scenario at the start of the year, staring down the barrel of another four months of lockdown, this perhaps would have seemed a pleasant but unrealistic pipedream, but MGA Entertainment has never been one to take no for an answer. As readers will know, thanks to Toy World’s extensive reporting, the industry is facing several challenges largely out of anyone’s control, and Neil is aware that these mustn’t be allowed to derail MGA’s growth plans for this year. As MD, his focus over the next six months will be on adaptation – bringing lines in earlier to avoid last-quarter logjams, making decisions earlier – and he is urging retailers to do the same.

“This is not a year for ‘just in time’ or ‘last minute’ orders, hoping there’ll be stock left in Q4,” he says. “This is a year for bringing stock in while you can, to ensure you have your autumn/ winter ranges. Companies not doing so is probably my biggest concern this year. These are different macroeconomic factors to what we were dealing with in lockdown during the pandemic; this year feels much trickier on the operational front. We’re also facing cost price pressures in almost every area: raw materials, labour, containers, shipping. There’s practically no area unaffected. We’ve had a modest price increase already this year, and I am hoping that will be the end of it, but it’s hard to tell with any degree of certainty. Again, it all comes back to the message I’m trying to get across. The sooner we can get product made, shipped and into warehouses, the less effect all these things will have later down the line.”

So how is Neil feeling about the second half of the year? Optimistic, due to MGA’s strong line-up of new launches and position in the market? Or somewhat trepidatious about what the next few months could hold. Happily, it’s largely the former, though his enthusiasm for the months ahead is, it’s fair to say, somewhat tempered by caution. MGA believes that the toy industry will enjoy a brilliant Christmas period. Retailers especially will feel the positive effects of consumer demand, though suppliers may well notice the pinch on their side.

MGA Entertainment is a hugely successful company with a raft of best-sellers under its belt (and surely more to come), but that doesn’t mean the company is resting on its laurels. MGA is working with NPD to improve its SKU efficiency, building upon its reputation for providing some of the most efficient SKUs a retailer can offer. From a retail perspective, this means turnover and profit per square foot can be much higher with an MGA range than it would potentially be were a different one in its place. But if that’s the case, why is MGA investing in improving its SKU efficiency, rather than simply enjoying it for what it is?

“You always want to do better,” Neil replies when I put this question to him. “Your brand might be growing, but the question you need to answer is how to make it even bigger. How do we make our brands the clear No. 1? How we take top spot from those ahead of us? We’ve don’t have many rungs of the ladder to climb but we still want to be at the top of it, and it’s clear to us that our range, although it’s developed massively year-on-year, is still smaller than some competitors’ brands. To counteract this, we can expand into new areas while retaining our efficiency of SKU. We’re just starting our spring/summer previews, and the range looks like it should for autumn/winter. There are so many products; we’re just going for it, no holds barred. And the reaction has been amazing. We’re showing retailers stuff they’ve never seen before - and they’re hungry for more.”