Opinion - Letter from America

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 nine 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 looks at the success of licensed ranges for independent retailers.

Licensing for indies

Two questions I often get asked are why we don’t stock more licensed product and whether we see huge sales based on the latest hit YouTube, TV or movie-based property. My answers often surprise people. With a few notable exceptions, licensed properties don’t always necessarily work that way for indies. At times, when a new licence hits and we are able to get hold of the product, we see great success. CoComelon is prime example. But stocking licensed lines is an area we need to consider carefully. The economics must be worked so that we can be competitive with the mass market and online rivals, but still offer our in-store customers fair value. It is a delicate balancing act.

These were the top toy licensing brands nominated by The Toy Association for a TOTY award last year:

• Star Wars: The Mandalorian • Baby Shark • Blue’s Clues & You • L.O.L. Surprise! • Marvel • PAW Patrol: Dino Rescue • Pokémon • Ryan’s World

And the winner was…Star Wars.

Do such licences really propel sales in the indie toy market? Examining the top nominated licenses above, only two really stand out as having generated notable sales for Learning Express: Pokémon, which saw a big surge in trading cards and L.O.L. collectibles.

In my thinking there are several reasons for this. As an indie retailer, our core customer base often chooses to shop with us for unique, not generally seen items as well as hot viral toys. They are seeking something other than the latest mass-market top property.

Here in the US, many of the top selling toys within these properties are geared to the Big Box stores in terms of their packaging, size, pricing and promotions. Smaller, independent stores may have difficulty in securing stock of some of these high-profile lines, and I, for one, am not willing to settle for the second-tier toys within that property.

The other issue is that at holiday time, these lines are often low-margin loss leaders or promo drivers. While we carry these for our customers, they are not the key focus of our range and are not heavily promoted. We want to be known as a destination for the different and maintain the surprise element in our offering that our customers love.

I have noticed that top movie properties and licensed items are not guaranteed to achieve the kind of impact that they used to. Star Wars Lego is still a good seller, but no longer matches the numbers achieved in its heyday, and it will be interesting to see how refreshed licences like Blue’s Clues, which was a phenomenal success when first introduced and a tremendous seller for us, will perform today, and what longevity it will have this time round. Some licensed ranges can grow stale over time, or the brand is expanded too far away from the initial core range, which everyone loved.

It’s hard to say how much the pandemic has affected the licensed category itself, because of the strong growth in toys overall in 2020 and the new fad crazes that have marked the start of 2021, especially for independents. Holding personalized events like Pokémon Training and Trading Days have always been successful drivers of sales and promote loyalty to our stores. Such events have been severely restricted lately, but we hope to return to that model in 2022.

However, there are bright spots. The perfect partner example is Cepia’s Cats vs.Pickles franchise. Released to us on 11th July 2020 (during the pandemic), we worked with Cepia to fine tune a display, introduce the fun characters and promote it on our social channels. In turn, Cepia kept us in stock and ran local Facebook ads driving customers and prospects to our location. As a result, the 4” plush was a top seller in 2020 and has accelerated in sales in 2021, ranking in our Top 5 SKU dollar ranking. Pokémon was strong last year but really took off in January this year, with new releases and hype building for the 25th year of the brand. I started 25 years ago, so have grown along with this property!

Bluey from Moose Toys was a strong seller late last year, even before it achieved widespread popularity online, so we have been able to capitalize on its second-year trend here in the States. Bluey’s message fits our stores very well. I am also looking forward to Melissa & Doug launching an exciting new Viacom partnership this year for two licences: Blue’s Clues and Paw Patrol. The company has told me there are significant ad dollars behind the launch, so let’s see if this will help drive traffic and ultimately sales of these properties in our stores.

I know the best way for us to compete in the licensed market is to identify trends early and work with vendor partners that can provide quality licensed toys to us at a fair price. These sit alongside the many other unlicensed toys that we carry, to continue to surprise customers and delight kids. Don’t forget, if kids want a certain toy line, it is our responsibility to stock it. Licensed or unlicensed, both are needed for the indie channel.