Special Feature - The Entertainer

The Entertainer playing to win

In early September, The Entertainer announced a renewed strategic focus on international expansion. With a Group Executive Committee now in place to manage Teal Group Holdings (the parent company of Early Learning Centre and Addo Play as well as The Entertainer), the Tesco concession roll-out complete and conversations well underway with international partners, it’s an exciting time for the team. Rachael Simpson-Jones caught up with Andrew Murphy OBE, Group CEO, Teal Group Holdings, to find out more about the plans.

To say it’s been a busy year for The Entertainer might be something of an understatement. At the end of February, following a successful trial, the retailer began the gargantuan undertaking of rolling out its concession model to hundreds of Tesco stores across the UK and ROI. Coincidentally, the day I spoke to Andrew was the day the very last concession was being installed – and also the exact date the team had earmarked for completion way back at the start of the year, before the roll-out commenced. Given its scale, this has been pretty slick, I’m sure you’ll agree.

Then, in September (while the Tesco roll-out was still very much in full swing), The Entertainer and Moonpig unveiled a new partnership which will see a curated selection of The Entertainer and Early Learning Centre products available to buy alongside Moonpig’s vast range of personalised cards. Although not of the same scale as the Tesco partnership, Andrew is delighted with how things are shaping up so far. Somewhat unusually, the retailer has seen sales across all 130 of its SKUs (this will rise to 200 in due course) and as a result, expectations have been revised upwards ‘significantly’. An eventdriven shopping platform, it’s unsurprising that ELC has been a particular hit with consumers celebrating the birth of a new baby, while Valentines Day, Father’s/ Mother’s Day (and birthdays, of course) also present huge opportunities to present shoppers with the perfect addon purchase to go with their personalised card.

“The Moonpig team is full of wonderful, straightforward people,” Andrew tells me, when asked if he feels the same way Moonpig GM David Rimmer does about the partnership. “It’s just been a perfect match.”

By joining forces with The Entertainer, Moonpig became the latest business to adopt The Entertainer’s ‘Toy Box – Total Retail Solution’, joining Matalan, M&S, Tesco and a host of other retailers across the globe. Now, The Entertainer is pushing ahead to with plans to increase its international footprint further. The retailer has already enjoyed success internationally – along with some challenges. Spain’s Poly Toys retail franchise, which The Entertainer acquired in 2018, entered liquidation procedures in March in the face of the “inviability of the business”. With this in mind, I was keen to find out how The Entertainer’s experience with Poly would shape its expansion strategy going forward.

“We have three different ways to bring The Entertainer’s business model to an international audience,” Andrew explains. “The first is direct ownership, which was why we bought Poly. Looking back, I think it’s fair to say that the Spanish property market was less helpful to us than we thought it would be, and the supply chain was badly affected by Brexit. It became clear that Poly wasn’t going to get where we needed it to be to justify the investment and make it a profitable business. It was a sad decision to close Poly –but the right one. The fact is, you need to be really sure of the market potential and your ability to exploit it before you take on direct ownership of retail bricks & mortar internationally. I’m not saying we won’t revisit this approach at some stage, but for now it’s not where our focus lies.”

The franchise model, however, has always worked well for The Entertainer, though the store portfolio has levelled off in recent years and isn’t likely to be a source of transformational growth. Which brings us to the concession model, on which The Entertainer is arguably increasingly hanging its hat. Outside of the UK, where it’s also been a huge success, The Entertainer boasts franchise retailers across Eastern Europe, the Middle East, Indonesia, Singapore and Malaysia and continues to pursue concession deals with multicategory retailers in both existing and new territories - including grocers, department stores and more. Historically, The Entertainer has been brought into retailers that have struggled to get their toy offering to meet their overall economic objectives, bringing with it the benefits of expertise and scale alongside a curated product mix with higher-than-average margins. This recipe for success looks set to continue.

Andrew says that regardless of where The Entertainer concessions end up internationally, the retailer’s approach will have to allow for range tailoring that reflects the local market. Ranges optimise much faster here in the UK than they do overseas, but retail remains the same no matter which country you’re in; consumers vote with their wallets. In all bar one of its concession partners, The Entertainer has been able to access sales data on existing toy ranges, giving it the ability to go in with knowledge of what’s working and what isn’t. As they say, forewarned is forearmed. Nonetheless, Andrew says British retailers heading across the pond need to retain a sense of humility and open-mindedness.

When Toy World visited Andrew and Geoff Sheffield (then chief commercial officer, now commercial director, International) earlier this year, when the retailer was on Week 7 of its Tesco rollout, Andrew described the team as ‘keen students’ with a ‘learning mentality’. In practice, internationally, this means any offering made to concession partners must be agnostic and able to mould to both what the retailer in question and its consumers require. For example, if a partner wanted The Entertainer to stock only low-margin products, it would – but the pricing of those products will reflect those low margins. And if a partner was keen for The Entertainer to carry a high level of inventory so it can offer its shoppers plenty of year-round choice, that’s fine too – but again, the pricing would reflect what it takes to carry that level of product 365-days a year.

To support its plans to scale by replicating the concession model successfully deployed in the UK, The Entertainer has made a raft of changes to its senior leadership. Geoff Sheffield, as mentioned above, transitions to an International CCO role, while a new group executive role, Chief Product officer, has been introduced and taken up by experienced retail buyer and trader, Brian Proctor.

So, what does all this mean for The Entertainer’s existing suppliers: will further international concession expansion present new opportunities? Well, yes and no, depending on where they fit into the picture. The Entertainer team has made it clear that moving forward, whether it’s in its own stores or in its concessions, it’s seeking a 40/60 product split at group level – with 40% own-brand, Addo sourced product, and 60% third-party brands. Currently, it’s operating at around 20% ownbrand, so there’s some balancing of the scales to be done yet. Of course, as own-brand ranges take up more shelf space, there’s less for outside suppliers’ brands. But, says Andrew, such is the nature of the retail beast.

“For some brands that currently work with The Entertainer, there will be fewer opportunities,” he admits. “The split we’re aiming for naturally means we need to work only with the best of the best when it comes to suppliers and their brands – we need to place only the most dynamic, economically worthwhile and sought-after products on the shelves of the retail partners we work with. We feel loyalty to a lot of the brands we work with, but the toy industry is just too tough for sentimentality. If you want to be part of our strategy, then sharpen your pencils - we need innovation and great prices.”

He continues: “Our plans require a heavy slug of own brand. We’re pouring a lot into Addo Play in terms of product development and new launches, and the brand’s phenomenal success in Tesco has done nothing but cement our belief that economically, designing and producing our own toys and games makes a huge amount of sense. Our five-year ‘health plan’, so to speak, demands that we grow our own-brand ranges aggressively, both for domestic and international retail settings.”

Christmas is now less than eight weeks away (though it has certainly been on the radar much longer, for those of us in the toy business). It’s been an undeniably tough year for toy retailers and while the festive season always significantly eases the pressure on businesses, it seems that a bumper Christmas is far from guaranteed. A pragmatic, level-headed man, Andrew tempers any optimism he may have for the months ahead with a cautiousness born of experience and knowledge.

“Q4 last year wasn’t great; from mid-November, things just didn’t take off the way they have done in the past,” he notes. “We were also disadvantaged by the calendar. Christmas Eve fell on Sunday, when we don’t trade, which was a big deal for us. This year, Christmas Eve falls on a Tuesday. That changes things and I think we will end up with year-on-year growth. But do I think it’s going to be a stellar Christmas? No, I don’t. Am I nervous about what the Chancellor has in store? Yes, I am. Although saying that, while it takes a brave person indeed to be too bullish about things, from The Entertainer’s point of view I think we’ll be coming into 2025 the most optimistic we’ve been for two or three years.”

Adding to this sense of optimism is the fact that The Entertainer will be running an above-the-line advertising campaign on TV and other platforms for the first time in its history. It may surprise readers to hear that brand awareness is relatively low for the retailer, considering its size and position within the toy landscape. Andrew hopes the ATL campaign will place The Entertainer front of mind in the run-up to Christmas this year. November, meanwhile, will see the opening of a new The Entertainer store in Exeter, where the retailer has been keen to establish a presence for some time in the UK; this follows the opening of another store in Milton Keynes on 26th October, where it has returned following some years away.

“The ATL campaign is another weapon is our arsenal and we expect its benefits to carry through into 2025,” adds Andrew. “Next year, for us, is all about optimising what we’re doing with Tesco – we can advertise our presence nationally now the roll-out is completegrowing our presence with M&S and Moonpig, and, hopefully, announcing more major new concession deals with international retailers. Watch this space.”