New Toy Distribution Paradigms
There are many cynical, wizened old souls who believe there is little new under the sun.
They also believe that without Walmart, Argos, Carrefour etc., there is little volume potential for Toys.
But I’m not sure they were ever right, and I believe they are even further adrift in this brave new world we are in. Moreover, looking forward beyond the Global Financial Crisis, I believe that the world of Toys is going to fragment further in terms of Toy distribution and retail/retail channel market share.
So firstly, let me tell you a quick anecdote about what lead me down this path for today’s article – I happened to need a reliable Wi-Fi connection, and in my experience, McDonalds has the best and most reliable, especially versus those more up market coffee shop chains who really should know better than to have crappy/intermittent connections…
Anyway, while sipping my cup of tea in McDonalds, I started to ruminate over the well known fact that McDonalds is the world’s largest Toy retailer/distributor in unit terms via Happy Meals (note not in terms of $sales clearly). They are supposed to move billions of units of Toys every year, which makes them a massive player in the Toy industry. Yet most Toy companies would not see them as a primary distribution outlet. In part this is understandable, as clearly McDonalds are focused on Entertainment event properties i.e. Movies, and aside from the obvious example, few Toy companies own blockbuster Movie franchises.
However, the point is more one of looking beyond the obvious and perennial distribution channels. The point is looking for more entrepeneurial and creative pathways to sell Toy products.
Often in the larger Toy companies, where there are very large Sales teams, they will have focused resources on different channels of distribution. The challenge though is getting away from the potential size of a single extra SKU in Walmart, Argos, Carrefour etc.
Yet therein lies a huge amount of risk as well. Those suppliers who were burnt by the demise of Woolworths and others took a beating. However, so did nearly every other established Toy company in the UK…as you would expect when a retailer with close to 20% market share disappeared nearly over night.
Looking forward a few years, we can clearly see a much more fragmented retail space due to the maturing of online retail, and the likely rationalisation of physical outlets and chains.
So why do we not spend more time chasing product driven or opportunistic sales.
For example, I once worked on a Bingo game. The game did quite well at retail in fairness, but it sold in equal quantity in the chain of Bingo clubs which co-Branded the product. The best part of that was the Bingo game was on it’s own at the front of the hall where something like 5million people per month walked past it…it wasn’t compared with 200 other competing products, it was just there on it’s own. Even better than that, that was presented back to retail as a major cross-promotion hitting 5m people every month, creating a much more compelling proposition for them!
That deal took me 2 phone calls to put together, and was significantly more profitable than our usual business.
You might say that was a one off, you might say it was specific to Bingo, you might say all kind of things to be honest, and frankly most companies do say all those kind of things as an excuse for not seeking out such opportunities themselves. There is always a reason/excuse not to do something in business, but I am often bewildered by the mental inflexibility of some people and some businesses.
Here’s a few examples – got a Car related product? Every country has at least one national motoring organisation akin to the A.A., who in turn have millions of customers/members. is there a special gift opportunity? Probably! The American Automobile Association have a reported 50million plus members!
Have an animal Toy of some kind? Well the American Society for the Prevention of Cruelty to Animals has 1.2million members, in the UK, the Royal Society for the Protection of Birds has over 1million members.
I’m not suggesting that each of these opportunities is akin to a listing at a major retailer, but I can guarantee that they will be more fun to put together, will be completely incremental business, will be far less competitive and will help you to rely less on a small amount of listings for a small amount of shelf space in just a few retailers.
I would encourage you to stop and think about how you can challenge the status quo within your own Distribution Strategy…
All the best
P.S. If you need help with Toy distribution, 2 things:
1. I have a number of published guides including ‘How To Explosively Grow Your Toy Distribution’, ‘Practical Guide to doing Toy Business in Europe’ and others, to be found at www.stevenreece.com/shop
2. Drop me a line if you need specific help on a product line, region or individual market: firstname.lastname@example.org