Steven Reece

Nuremberg ToyFair – Spielwarenmesse 2013 Review

Wow – what a show!

Nuremberg is normally a pivotal moment of the year, as the biggest Toy trade show in the world, it’s the place where most Toy people can be found at any one time of the year. Which means huge opportunity for anyone trying to do business in or with this industry.

The relatively recent move to the show’s first day being Wednesday instead of Thursday has seemingly had a very positive impact on the experience and opportunity for international visitors and exhibitors, with more days in which the right people are there to get things done.

This is always the hardest show of all to pick highlights for, as it is nigh on impossible to see anywhere near everything, and even more difficult to distil the product innovations of thousands of exhibitors.

So, because of this, I’m going to present the show from my own experience, and hopefully this way can find some insight/clarity among the gargantuan reams of activity, innovations and people at the show!

The first challenge ahead was the failure of my pedometer to work, really wanted to measure total miles walked during the show, as I’d racked up a suprisingly hefty 33 miles at the much smaller UK show. Subjectively, would be surprising if the distance was not at least double, but guess we’ll have to work that one out next year!

The unique feature of this show from my perspective was my involvement with some of the official events/presentations for the official Spielwarenmesse/Toyfair company. This involvement gave me new insight into the complete professionalism and efficient organisation of those behind putting this show on. When you think about the challenge of dealing with thousands of exhibitors and tens of thousands of attendees, the mind boggles, but my experience proved to me just why this is a great show every single year – because there is a top team behind organising and arranging it!

I judged the China Toy Award, alongside Mr. Stephan Bercher (Marketing Director at Vedes the German buying group) and Christian Ewert (President & CEO of the ICTI Care Foundation). This process provided good insight into how the industry as a whole encourages Chinese based factories to meet appropriate standards.

There were also two presentations to be delivered. The first was at the Toy Business Forum in Hall 4, the presentation title was “Toys: What Will The Trends Be In 2020″. The presentation seemed to go well, and the audience seemed mildly interested at least (well that is nobody fell asleep)!

I also delivered a presentation as part of the ‘India Day’ on the Saturday. The topic of this presentation was “Is There ‘The’ European Toy Market?’, a topic which is very close to my own interests as a graduate of European Politics, and someone who has spent most of my career working across Europe in the Toy industry. Sadly, by this point I had been talking pretty much non stop for 4 days by the time this presentation came around, so my output may well have been unintelligble! Dread to think what the people in my last two meetings after this presentation thought of my garbled, exhausted patter…(moving swiftly on!).

If anyone is interested in the topic of those 2 presentations, feel free to drop me an email, and I will reply with a copy of the presentation via PDF. When we can get hold of links to video footage of either I’ll post here as soon as I receive.

In terms of product, clearly with over a million products on display, it would not be possible to capture even a small percentage of the totality of product on offer. However, there were several points to observe from my standpoint:

First, Disney Infinity was on display (in a limited form) at the Toys 3.0 exhibition. This really blew me away. Not because of the product functionality, which wasn’t really on show, but more because the ‘sizzler’ promising what is to come made it evidently clear just what an awesome opportunity Disney have to take an amazing array of characters and worlds into digital gaming…can’t wait to see the final thing in action!

Secondly, there were significantly less ‘App’ add on Toys versus last year, but considerably more traditional Toys with an App Brand license on. This trend is surely only going to grow over the net year or two. (Check out www.VirtualWorldLicensing.com for more of our take on this world!).

Thirdly, there is a new annex hall being built towards the East/Ost end of the complex, which means even more exhibitors and products to get round when that’s finished!

Finally, as I trudged away weary on the Saturday evening, I (and hundreds of others who were also starting to drift away) were held captivated by an amazing firework display which, from my perspective when combined with the ‘look inside’ my albeit limited involvement had given me gave me a lasting impression along the lines of ‘WOW – what a show!’

All the best

Steve and team

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2013 – Another Brilliant UK Toyfair

Call me anal if you wish, but I wore a pedometer to this week’s UK Toyfair.

Why did I bother among all the other things going on? Because every year, by Day 3, retailers and Licensors get lower and lower on energy, and should you be unlucky enough to have a Day 3 meeting slot you can normally rely on a tough audience. So rather than put this down to the usual after show entertainment, I wanted to see if there was any substance behind the complaints of sore feet.

So to cut a long story short, I covered 11 miles on Day 2 of the show, which if we multiplied that by 3 would = a massive 33 miles of walking in 3 days. So there you go, for all you stand dwellers, there’s a good reason to have the most comfortable seats at the show!

Anyway, such minute practicalities aside, the 2013 BTHA UK Toyfair was great. The extended space gave greater life and purpose to the mezzanine level. The usual array of celebrities and charcaters walked the aisles, and as we’d expect, some really cool new product was on display.

As ever, many of the best meetings are to be found while walking the hall. For me personally, being a member of one of the biggest Toy industry clubs (the ex-Hasbro club) yet again proved both really useful in a professional/opportunity sense, but also provided a real feeling of warmth and belonging which I’ve never seen at other trade shows.

There are numerous reports out there regarding hot product news, but for me the highlights were Lego’s amazing progression – taking their awesome Brand Management approach to yet another meteoric level with brilliant products, cutting edge own IP and strategic use of Licensing.

Also, John Adam’s HolograFX had the ‘WOW’ factor – check out a video on it here: http://www.toynews-online.biz/news/38092/VIDEO-See-the-worlds-first-holographic-smartphone-toy

Overall, it was a great show, and proof yet again of th sense in moving the show back to Olympia after it’s hiatus to the more isolated Excel centre.

UK Toy Market Forecast For 2013

We thought that regular readers of this Blog might be interested in Steve’s predictions for the UK Toy Market in 2013. The press release below with Steve’s predictions has just been released…looks like it’ll be another exciting year in the Toy trade!

“Leading Toy Industry Expert, Steve Reece has unveiled his predictions for the UK Toy Industry at the annual UK Toyfair in London.

“We’re going to see winners and losers in 2013, but overall we’re predicting overall growth of a couple of percentage points. There is a huge amount of product innovation happening in the toy industry right now.”

“Kids Tablets have been a huge new factor in the Toy business, but we believe this trend is still in it’s infancy, and as adult targeted Tablets become ubiquitous over the next 2-3 years, so the kids Tablet market will explode. We also see significant growth potential in the Construction & Building Block category, plus continued expansion of sales of Licensed Toy from virtual world and App Brands, and likely follow up from Hasbro on Furby.”

He added “There is also potential upside in terms of Video Game/Toy fusion products such as Skylanders and Disney Infinity, which as yet have not been generally accounted for as part of Toy sales, (instead being seen as Video games), despite taking up significant space within Toy aisles.”

“There are multiple negative influencing factors, not least of which is tough times at retail, however, overall we remain optimistic based on product innovation, and the success in 2012 of high end, high pricepoint Toys.”

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Why Disney Infinity Doesn’t Signal The Start Of A Flood Of Video Game Plus Toy Products A La Skylanders

One of THE biggest trends of the last year or so, and one of the biggest trends for the next 5 years+ is the fusion of on-screen Gaming with physical Toys. Let’s face it, Skylanders has been huge in a way that few Toy products manage.

And if we look at the interactive functionality of Skylanders Toys, they are comparatively simple in technical terms – Technology has a lot more to offer in the coming years as this Category evolves, and I expect Skylanders to get smarter and smarter in terms of the functionality of the Toys, now that the Franchise is established as a huge Global Brand.

In short, Skylanders is not going away.

So what should we make of the annoucnement of Disney Infinity, which if I can use a rather simplistic comparison, seems set to be something like Skylanders with Disney characters?

My first reaction upon seeing the announcement and watching the trailer was WOW!

WOW for 2 reasons:

1. Because it’s huge news, and as Disney is a massive Brand, an entertainment powerhouse and has the most wonderful universe of Branded characters going, the potential experience and commercial potential is vast.

2. Because this is a very ballsy move! The cost of entry into this Category are very significant, and the business model is inherently risky, because it combines both the heavy development investment of a traditional Video game with the higher manufacturing cost as a percentage of sales of traditional Toys. If you look at the story of THQ of late, there disastrous punt on UDraw can’t have helped their current plight.

Now frankly, with the Disney Brand, their marketing might and the awe inspiring array of characters avvailable it seems likely that Disney will be successful, but in the end one of the key criteria for launching such an initiative must be deep pockets, and the ability to survive the hangover if it doesn’t work.

That actually doesn’t leave many companies left with a chance of taking a punt at this.

Hasbro or Mattel have been burned by the Video games model before, and as such License their rights out. Could we see Hasbro Licensing rights to a Game/Toy fusion product line based on Transformers? I’d say it’s more than possible, maybe even likely. Because EA must be looking at the success of Skylanders with green eyes.

However, what I find most interesting is that Disney are launching with their own brand and array of characters versus Star Wars. Clearly Infinity will have been in R&D for some time, and perhaps this explains why Disney is the Brand/character universe being utilised, but nevertheless, Star Wars in this format would be an unbelievably stron combination…I can’t wait!

Whatever happens, the Toy market is set to see yet more innovation, despite the tough times…

All the best

Steve

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US Toy Market Maintains Market Size In 2012

Maybe it’s the optimist in me, but I can’t see what the Toy industry as a whole has to complain about right now.

For sure, time’s are tough at retail, and it would be a very short sighted company indeed that didn’t care about the fortunes of those who actually sell our products on to consumers. And consumers are certainly under pressure in several ways.

BUT…we work in an industry and with a product category that drives a significant amount of traffic into retail, and which delivers a huge amount of sales revenue for retailers. So yes, they may be having a tough time, but we as an industry are one of the bright spots, because parents just don’t cancel Christmas for their kids regardless of how tough things are.

So anyway, it came as no surprise to me at all that NPD reported that the US Toy market was flat year on year, with a hefty December boom in spending making up for a tough November.

We might prefer massive growth, but compared with many industries we are the fortunate ones…the size of the total opportunity in Toys has not gone down year on year.

There are always winners and losers. There are always massive hit products and massive dogs which just won’t move off shelves. Some companies are up, some are down, certain categories are up, some are down.

Let’s face it, there were plenty of winners in 2012.

The more defensive our mindset becomes the more a downward defensive spiral becomes self prophecising.

So success is there for the taking in 2013. I predict the overall US Toy market size will grow by low single figures c. 2-3% in 2013, but even if it’s flat again, it’s still worth many $billions, so we needn’t accept that doom and gloom must prevail!

P.S. To read more about NPD’s assessment of 2012, just click here: https://www.npd.com/wps/portal/npd/us/news/press-releases/after-year-of-uncertainty-consumers-reward-us-toy-industry-with-strong-finish-to-2012-holiday-season/

All the best

Steve

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HMV, Jessops and Blockbuster UK Go Into Administration

This has been a dark week for UK retail on the face of it, with 3 major national retailers employing thousands of people going under.

HMV, Jessops and Blockbuster UK have all fallen by the wayside in the last week. Fingers crossed there aren’t any more to come.

Now these 3 retailers may not primarily be Toy retailers, although HMV did dabble and could do strong volumes on music related Toys & Games, but still this seems like an abyss has opened on the UK high street.

But on reflection, while the troubles of these retailers and the jobs at risk, or going, are very serious, in all 3 cases, it can’t be that surprising based on the challenges each faced.

HMV and Blockbuster have been at risk since the first piece of digital content was downloaded quite some years ago, and they had not reinvented themselves to a large enough degree. For Jessops, the commoditisaion of consumer electronics and price focused buying via online retail have acted as a nearly final nail in the coffin.

The reality is that the demise of all 3 of these chains was on the cards, because their main product offering or previous point of difference no longer adds up to a winning formula.

So we shouldn’t view these latest casualties as the beginning of the end for high street retail in the UK.

5 Tips For Toy Industry Success In Another Tough Year – 2013

Having reviewed the Retail footfall figures, sales reports and estimates for Q4 2012 (some of which I believe more than others!), it is clear that in the end 2012 will go down as another tough year for retail, the Global economy, and to a degree the Toy & Games industry.

For sure we’ve had winners, in terms of company, Brand and product performance, and overall the industry looks about flat year on year from the indicators I’m seeing.

However, it hasn’t been easy, and collectively speaking we’ve had to work our asses off, in a continuing tough environment.

It doesn’t look like that situation is going to improve dramatically in a hurry…so in essence I expect 2013 to be another tough year. So looking back at 2012 and before, here’s 5 Top Tips towards achieving Toy Industry success in 2013:

1. Continue To Innovate – in tough times, it’s hard to deliver innovative new products due to all the negative forces, but the continuing innovation from Toy companies has been a very large part of the relatively stable Global Toy market size despite the most severe financial situation of recent years. Innovate! An obvious example of this would be Hasbro – after seeing the G.I. Joe movie postponed to 2013, Hasbro could have battened down the hatches and prepared for a regressive 2012, but instead they announced the relaunch of old favourite Furby, a launch which has gone a long way to addressing the sales gap from GI Joe beiing postponed.

2. It’s all about Brands and Licenses – The reality is that any company without strong own Brands, a Licensed portfolio or both will struggle in this industry. That is a perpetual factor in success, but it’s even more important in tough times, as retailers will not take risks, and prefer to trust on known quantities and Brands/Licenses with presence. Longer term, building your own strong hero Brands is THE only way to ensure long term stability and success in this industry.

3. Prudent Inventory management – again this is a perennial factor, but this too becomes even more critical in these times. Having cvash tied up in slow moving/obsolete stock will kill cashflow, which can and does kill companies! Caution must prevail, and ruthless clearance must be applied to avoid year end stock holding sitting on the books until the following Q4.

4. Hold onto Your Key Staff, Especially Performing Sales Staff –  most companies will be operating with lower head count than a few years ago at this point of the economic cycle. The key to success will continue to be holding onto the staff who deliver. Those staff who have strong retail relationships and the continuing ability to influence retail buyers are worth 10 staff in any other department. Sorry to all those hard working folks in Finance, Logistics and whatever else, but unless Sales are coming in through the front door, none of those people have job security. Penny pinching on bonus formulae and Sales pay levels can be self-defeating. For sure, if people aren’t delivering, hold a tight ship, but regardless of the size of your staff, structure or anything else, do what it takes to keep staff who deliver sales!

5. Smarter Marketing Spend – outside of known Brands/Licenses, what retail loves are TV advertised products, but for success, we need to focus on marketing that both secures listings, AND returns on investment. Social Media is the buzzword, but in the end success in marketing for 2013 will be at least partly driven on an effective combination of TV and grass roots word of mouth building driven by great product experience and responsive, aproachable marketing support.

So there you go, some Tips for success in 2013.

We wish you all the very best for a prosperous 2013.

All the best

Steve

P.S. For Free Guide and to receive our informative Newsletter, just fill in your details on the right hand side of this page.

Taking Pride In What We Do!

At this time of year, we’re all frantically trying to finish off loose ends (or leave them hanging in some cases!), so we can depart for a well earned break with our Families (until Hong Kong comes a calling all too quickly).

But it’s all too easy to forget the massive positive impact of our work in the previous year. And that impact largely manifests itself in the next week or so, I’m referring to:

- The millions of little boys and girls across the world who will open up their often numerous Christmas presents with glee and excitement.

- The massive impact our products will have on their play, and a considerable portion of their development and education.

- The Toys which make them cool among their friends.

- The tools which harried parents use to gain respite from over exuberant, boisterous kids.

- The Toys which keep millions employed in less economically advantaged countries.

- The key products which set tills ringing and ensure our retail partners make it through to next Christmas.

- The aspirational Brands which will hold a dear place in the hearts of Kids who grow into adults.

And much more.

So yes, this is all a bit sentimental, all a bit nice, a bit corny, and frankly, quite hard for a cynical soul to write…

But still, this is a time to be proud of the positive impact we have in so many ways…

…at least until the whole roller coaster comes round again for another year!

Merry Christmas, wishing you a happy and prosperous New Year

Steve

Furby 2012 A Big Success In The UK

Surprise, surprise…Furby with Appification, featuring lots of new Tech patents, and with a massive marketing blitz to match has been a massive smash hit success!

Back when Hasbro announced the relaunch, I predicted golden prospects for Furby this time around.

Frankly though, I’m not going to be too smug, as I don’t think it was difficult to predict, however, there were those who emailed me back then and highlighted the not as successful relaunch in 2005…I won’t name and shame them!

What I can say, as per this article on the UK’s excellent Toy News site http://www.toynews-online.biz/news/37780/Hasbro-Furby-reception-has-been-phenomenal, is that demand has been very strong, and sell through very good. On a subjective note, I have walked 6 or 7 different retail chains in December, and not found a single unit available to buy.

In John Lewis’ massive store on Oxford Street, in the heart of London’s main shopping area, the massive feature display of Furby had to be replaced with another Brand due to selling out (according to store staff).

Whether Furby will be top toy or not this year in the UK remains to be seen, and it does look like LeapPad will be No. 1 based on latest trade intel, but for certain the Furby relaunch has been a big success here.

What will be really interesting though, is what comes next in 2013…because the original Furby was followed by several other iterations of the same technology i.e. Poo-Chi the dog and some other less successful iterations. So how will Hasbro beat 2012′s performance over here? Don’t know, but my guess is there may be something canine in the works!.

Hope this article was helpful?

If you want more along these lines, I have a Free guide on Top Toy mistakes which you can download from here:

http://www.toymarketingacademy.com/toptoycompanymistakes/

All the best

Steve

P.S. And to sign up for our Free emailed Newsletter, just enter your details on the right hand side towards the top of this page.

The Importance of Carry Forward Products For Toy Companies

In an industry where between 2/3rds and three-quarters of all SKUs are new each and every year, it is very easy to focus on the new heroes, the new round of TV advertised products, and the latest hot license we have just signed.

One of the most common pitfalls we can fall into in this magnificent industry is focusing on the products and Brands which cause us the most work i.e. the new ones!

The reality is that the 1/3rd to 1/4 of products which carry forward are normally the most profitable by far.

Seems illogical? Well not if you analyse the P&L on an actual SKu by SKU level.

Think of all that development cost and development resource committed to new products.

Think of new tooling cost.

Think of the normally considerable marketing launch spend required.

Think of the cost, cashflow implications and trade relationship cost of clearing failed new products.

On the flipside is that boring old product which just continues pootling along, year fater year in some cases, needing far less marketing, if any at all, to keep it on shelves and keep it selling.

The up front costs are largely written off, and therefore they generate higher profit, as well as a significant and low maintenance amount of sales.

So think of it this way – if you went to a Casino, and they kept offering you crazy new gambling games to play, or you could stick with straight old poring Poker, which let’s assume you know quite well, which would you stick with? Well it’s entertainment, so maybe you’d chase the novelty to remain entertained? Or maybe, just maybe, you’d focus on what you know works, what delivers you a better return and what is most likely to profit you first, and chase the novelty second…?

There will be people reading this who will decry this opinion, as retail always wants ‘new stuff’, and to a degree that is correct. But what retailers like, actually no, what retailers LOVE are products which they KNOW will perform, which won’t leave them with a stock hangover come Jan 1, and all the bickering that goes with clearing under performing stock, and which they can be confident will actually sell off their shelves.

To be clear though, not for one minute do I suggest we ignore the novelty factor, or the massive array of products which are needed to make up that 66.67% – 75% of sales. No, I’m not saying that, I’m just suggesting that we need to pay attention to the unsung heroes in the back, which require little management, little investment and churn out the cash…as well as doing all the work needed to get new products and ranges to market!

Hope this article was helpful?

If you want more along these lines, I have a Free guide on Top Toy mistakes which you can download from here:

http://www.toymarketingacademy.com/toptoycompanymistakes/

All the best

Steve

P.S. And to sign up for our Free emailed Newsletter, just enter your details on the right hand side towards the top of this page.