About Us

Steven Reece We are a leading Consultancy to kids entertainment brands including TV, toys & games. Our services include cutting edge qualitative consumer insight and consulting with entertainment brands to maximise their merchandising potential.

The Myth Of Cannibalisation – Why Toy Brand Cannibalisation Is An Exaggerated Threat

Posted in Uncategorized on 15 September 2013

Why Most Toy Shouldn’t Worry About Cannibalising Their Own Brands

Most toy companies labour under the misapprehension that their products can’t exist alongside competing products in their own portfolio.

This perspective is true in one sense, but false in another.

The reality is that demand is limited, and consumers will only buy so many Toys. So therefore anything else vying for consumer spend in the same space can be seen as a competitive threat. However, it’s faulty logic to presume therefore that a company shouldn’t have competing products in it’s portfolio.

To give you two huge examples:

1. Monopoly board game - how many versions of Monopoly does the average family need? I can’t answer that question, but I can identify that of the hundreds of versions of Monopoly each has a different positioning/motivation to purchase. And so therefore multiple Monopoly games are sold to the same people…often year after year.

2. Monster High / Barbie – Monster High sits in the adjacent space on shelf to Barbie in numerous stores. It definitely sits in the same category, and yet Mattel’s bright young thing has grown exponentially in a short space of time despite this, with a massive incremental sales boost. For sure Barbie will continue to have it’s ups and downs, but then competition is inevitable…

…so the key point is that by having 2 brands/products on the shelf instead of one your market share improves, and you deliver another competitive threat for the other toy companies in your space to deal with.

None of which means that anybody should aspire to running ‘also-ran’ brands, far from it, in our opinion, you either have ‘heroes’ or ‘zero’s', there’s no place for in betweens any more.

But the reality is that someone or something will compete with your products & brands, so why not let it be you? Because the more shelf space you have the more leverage you get, and perhaps you might even move towards a category management position with some of your retailers eventually where you control/heavily influence what is listed.

 

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Understanding Children’s Toy Product Preferences – Hierarchies Of Toy Appeal

Posted in Uncategorized on 14 September 2013

We thought you might find this article on our sister website www.KidsBrandInsight.com interesting.

The article looks at why we need to understand how children’s wish lists affect the purchase dynamic for toys & other kid related products:

http://www.kidsbrandinsight.com/2013/09/13/understanding-childrens-toy-product-preferences-hierarchies-of-toy-appeal/ 

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Toy Fair Planning…Get It Right!

Posted in Uncategorized on 10 September 2013

Toy Fair Planning…Get It Right!

It’s about this time in the Toy industry cycle that Toyfair planning becomes a real area of focus.

Toy Fair is your chance to put your company out there, by way of an exhibition stand for anywhere from 3-6 days at the key trade shows. However, you don’t want your company to be out there in the wrong way!

To ensure you make the most of the Toy Fair opportunity for those exhibiting, here’s some handy hints:

1. Set a budget, and stick to it – do you really need those dancing girls/boys, the 90″ Plasma screen and 20 crates of champagne for ‘entertaining’? Probably not! So set the budget & keep to it.

2. Create an inviting environment to present to your customers in -  your buyers are likely to have sore feet, dry mouths, presentation/product overload & more. So why switch them off right from the start? You don’t need to create a prison style environment, when comfortable seats take just a little more organisation than the standard ones provided by the event organiser.

3. Setup to deliver an impactful presentation – sometimes your product does all the work for you, but everybody else has fun product too. So how can you make your presentation go with a bang? Do something different and avoid death by powerpoint if you want buyers to have any idea what you presented to them when they get back to the office & try and remember everything they saw.

4. Seek specialist help to manage logistics/organisation – in a previous role, we brought in a professional Events Manager one year to help us manage an event as we had not been doing ourselves justice. The Events Manager managed to deliver an infinitely better looking, more productive stand & overall show while effectively paying for themselves due to efficiencies & savings made due to their better knowledge and supplier contacts.

We’re still working with that Events Manager and her team today to offer either hands off Consultancy advice, or hands on Project Management for trade show stands, product launches, PR events and more.

If you’d like to know more, please feel free to drop us a line.

 

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How To Find The Right Toy Factory

Posted in Uncategorized on 05 September 2013

How To Find The Right Toy Factory

We began offering our Toy sourcing services by accident.

We found that most companies we Consulted for had gaps in their supplier framework, or in some cases inertia was leading some clients to stay with suppliers who were frankly not up to scratch.

However, while we saw clear opportunity, it would be fair to say that toy manufacturing isn’t the most scintillating topic out there, so we didn’t rush into solving this problem for clients…

…until one particular client practically begged us to help them find the right solutions using our contact networks and resources. And so we did. Since then we have found this to be one of the strongest areas where we can add value to the businesses of Toy companies across the world.

Effectively we operate this service as a Toy Sourcing agency, meaning that the factory pays us for bringing your business to them, so you don’t have to pay us. And of course, if the factory doesn’t deliver the prices/service you need, you aren’t obligated to use them, so far this approach has proven to be a win-win all round.

We work with a comparatively limited number of factories so that we know they are reliable, cost effective, offer good customer service and comply with relevant safety standards.

We have a tick list of critical factors we need a factory/supplier to fulfil before we will consider recommending them.

Every year we’ve been doing this, our business has grown, and every client we introduced to new factories is still using the new factories, so we must be getting something right, despite not finding this a very exciting area of our business it could nevertheless be a useful resource for  your business…

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Don’t Forget The Silent Majority…

Posted in Uncategorized on 03 September 2013

Don’t Forget The Silent Majority…

These are incredibly exciting times for the toy industry. Kids tablets are all the rage with several being top selling items in terms of $value.

Skylanders topped a $billion, and Disney’s Infinity looks set to wow.

On top of all this, came the news that Lego Minifigures, a phenomenally successful low price iteration of the Lego brand will have it’s own toy/digital game crossover offering before too long.

These are all huge trends which are in the process of carving out large chunks of the market.

However, one point to note is that while these tech driven phenomenon drive huge sales numbers, there is still a silent majority we’re in danger of forgetting – that is traditional, non-Tech toys.

Traditional play patterns still predominate if we look at the market share by category stats. An obvious example would be Lego again, which while having many exciting new fangled iterations, has at it’s core the same play pattern that’s been engaging and developing kids for decades.

The board games category, for long written off as doomed continues to plug away year after year, some years up, some years down, but still making up a significant chunk of the business.

Vehicles, playsets and dolls continue to own a massive chunk of the market, even if the brands they are based on are being launched via different media than they might have been before.

And above all, children themselves still continue to want to play with both Tech and non Tech toys.

If you had the patience, permission and inclination, and you stacked up all the Tech toys in Toys R Us on one side of the store, and all the non-Tech toys on the other (I’m not including simple voice chips as ‘Tech’), you’d only have just over an aisle full of Tech toys.

There is no doubt based on kids focus groups we’ve conducted recently that kids are loving the LeapPad, Kurio & Innotab, there’s also no doubt that they are loving Skylanders etc., but in every kid’s bedroom these days is an absolute plethora of toys. At least a box full, if not a whole room full.

Our research suggests that children can get anywhere between 6-30 gifts just from other children attending their birthday parties alone, all of which has to be bought, all of which has to be developed, and all of which drives a significant portion of toy business total sales.

And at Christmas and other key periods, kids today don’t just receive the major headline gift, they get many more smaller presents.

So let’s embrace the opportunity, innovation and momentum provided by all this exciting Tech, but let’s not forget the silent majority plugging away year after year, fulfilling children’s play needs with less technology, complexity and lower pricepoints.

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Understanding The Post Global Financial Crisis Toy Industry

Posted in Uncategorized on 15 August 2013

Understanding The Post Global Financial Crisis Toy Industry

Perhaps this post should have started with ‘anticipating’ versus ‘understanding’ the Toy industry post GFC, but I’m an eternal optimist!

For the first time since storm clouds gathered over financial institutions, and thus the rest of us, there are definite green shoots of recovery, and even growth (albeit slow) evident in several major economies of the world.

There is no doubting that we aren’t yet out of the woods, but recent increases in consumer spending, GDP & several other measures in Europe’s big 3 – Germany, France & UK – heralds a definite upturn.

So as we now look to how the toy business will be in this post financial apocalypse, there are certain evident differences pre & post GFC:

1. Dearly departed retailers – there are numerous previously core retailers who didn’t make it. On balance, while this was very painful for all concerned at the time, it seems probable to me that in the longer term the demise of a significant portion of physical retail chains was inevitable.

2. Bricks & Mortars loss was Online’s gain – we’ve all known this upcoming trend was going to become a massive juggernaut at some point, and between the start of the GFC and now, the momentum/market share uplift has been weighty.

3. Slimmer, leaner, meaner Toy companies – the Toy industry is a great place to work. While there is always a ‘sharp’ end of the business, and while there are always risks, hundreds of Toy companies big & small have had to address overstaffing issues, poor commercial practises & general inefficiency, in order to get through the GFC & depressed demand it’s caused.

4. Brands, brands, brands – brands are critical in this industry, and in the last few years this has become even more the case as retailers fall back to ranges/products which they perceive less risk in stocking, and known brands tick all the right boxes there.

5. Broader pricing spectrums – one of the common themes in many Toy companies ranges during these troubled times have been the introduction of more lower priced products, while at the same time, hero priced products i.e. Kids Tablets etc., have also been hugely successful.

6. Licensor consolidation combined with more power to the Toy companies – one company in particular has seen huge gains in this period – Disney’s acquisitions have been staggering, and as demand picks up & as there movie making machine ramps up, we’ll see continued growth for Disney. Aside from Disney’s massively increased leverage, I see a shift in the power balance between content owners & Toy companies, at least partly because so many of the larger Toy companies are now content developers & owners themselves. And for content owners trying to secure new licensing programs, versus the hundreds or thousands of existing proven licenses out there, let me tell you – it ain’t easy!

7. Cost inflation/reduction in competitive advantage of China manufacturers – if we look back to the happy pre GFC days, China ruled the roost. Today, there is no escaping the sheer scale of capacity & expertise in China, but a fair proportion of the cost advantage has been eroded, which shifts back some demand/opportunity to local manufacturers after decades of focus on China. Those Chinese factories who prosper today are those who embrace reliability, quality & customer service above all…many of the factories we work with in our role as sourcing agents have these qualities and so they are succeeding, even prospering, but those also-rans at the bottom of the pile have already fallen by the wayside!

So the Toy industry today is very different to the Toy industry pre GFC, and while there is plenty that hasn’t changed, we shouldn’t presume that it’s just the same old thing all over again.

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Surviving Adversity In The Toy Industry

Posted in Uncategorized on 25 July 2013

Riding The Ups & Downs of The Toy Industry

Anyone who has been in the toy business for longer than a few years has seen their fair share of catastrophes and rock bottom low moments. If you think about it’s actually completely inevitable that we will all at some point reach that point…

…because we work in a hit or miss industry, complicated by safety issues, intellectual property complexities, aggressive competition, an elongated cashflow cycle and many other challenging factors.

For those of us who toil to produce an annual product line, we’re going to have good years when we launch the hits, and bad years when our hard work frustratingly delivers total dogs onto the shelf…this is inevitable if you play the numbers game coming back for another round of fun year after year, selling cycle after selling cycle.

And that’s just the standard level of risk before we look at other complexities.

Speaking as someone who has made multiple $million mistakes in my career I have to say that at times it’s felt like it’s time to go learn how to park cars or mow lawns rather than ride this outrageous roller coaster ride with it’s thrilling ups and it’s gut wrenching downs.

But like all positive people, there comes a time to dust oneself down, analyse and learn what one can from the mishaps, screw ups and twists of misfortune, and then get back on the ride for the next roller coaster ride.

At the time of writing, there have been some (more) notable problems for significant companies in our industry, and so my message to them and anyone else bumping along near the bottom is that this is a long term game, with multiple ‘innings’, so don’t let a bad innings take the wind completely out of your sails…because the tide always flows back, and so it does for good people, good companies and good brands in this industry.

And in the meantime, here’s one of my favourite quotes about living the moment, taking risk and dealing with the grim reality of failure versus a life sat on the sidelines:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” Theodore Roosevelt (I think he might have known what he was talking about!).

 

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5 Tips For Finding Reliable Cost Effective Toy Factories

Posted in Uncategorized on 12 July 2013

5 Tips For Finding Reliable Cost Effective Toy Factories

If you look at the P&L of virtually every toy company in the world, there is one cost item which accounts for the highest %age of sales – manufacturing. For most toy companies, manufacturing accounts for between 20-30% of net sales value.

That’s a really hefty chunk of costs!

But what’s surprising is how many non corporate companies fail to maximise the delivery of this critical part of their business. Which is not that surprising in one way, in that creating really cool products & chasing/securing licensing deals is much more exciting for sure, and getting the right product to market can create the difference between winning and losing…

…but so can an efficiently managed Sourcing function!

The challenge for those companies not large enough to have dozens of people working in this area is that normally a small team of one or two people is left to manage a huge amount of burden, especially at key times, in terms of order processing & everything else that goes along with manufacturing.

Management time is normally stretched between too many functions, and so the chance to reduce costs, increase reliability & quality compliance is sometimes missed. So here’s 7 Tips to make a difference to your efforts to find reliable toy manufacturing & good toy factories to work with:

1. If you can’t find new toy factories or board game factories, find someone who can – either ask around your industry colleagues or use a good sourcing agent. We offer a sourcing agency service, so drop us a line if you need help finding good factories.

2. Use factory database services – a good example of this is Alibaba.com.

3. Due Diligence – believe it or not, it’s really easy to find ‘a factory’, what is much harder is to find a reliable toy factory meeting all necessary safety standards and delivering at competitive costs. So once you have a shortlist of factories, you need to go through due diligence. For starters, most factories (rightly or wrongly) will tell you who else they are supplying, so find out who their current customers are, and ask these companies what they think of the toy factory. Beyond that, don’t just take the word of the factory that they meet certain standards, get a copy of the certificate, then check with the authorising authority.

4. Know your stuff – in this internet age, most of the information you can possibly need is online. So don’t let the factory tell you what safety standards you need to meet, find out yourself & interrogate the factory on whether they meet the standard. Check out this link for a list of global toy safety standards http://www.toy-icti.org/info/toysafetystandards.html 

5. Visit the factories – your reputation/business is on the line every time you put product on shelf. Why wouldn’t you visit the factory you are considering using? If you add a factory tour trip onto the end of a trip to HK toy fair you will significantly reduce the risk of any issues.

So that’s just a few quick tips to help you find toy manufacturers and board game manufacturers in China & other markets.

iI you’d like to take advantage of our Sourcing introductions service, please feel free to drop us a line. We are working with around a dozen factories who we know well & highly recommend.

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EducationCity.com partners with Virtual World Licensing & AT New Media for Brand Licensing program

Posted in Uncategorized on 01 July 2013

Please see following press release from our Virtual World Licensing business:

EducationCity.com partners with Virtual World Licensing & AT New Media for Brand Licensing program

EdCity_Ad

London, UK – 1st July 2013 – EducationCity.com, the world’s leading online provider of curriculum driven engaging educational content for schools today announced the start of a new licensing partnership with Virtual World Licensing & AT New Media to roll out consumer-facing educational merchandise and app iterations of the brand globally.

“EducationCity.com is a brand we have been following for some time.” said Steve Reece, CEO, Virtual World Licensing “With its huge installed base and massive metrics, combined with market leading educational content, it’s known and respected by both children and parents, and as such we see a significant commercial opportunity for licensees in multiple categories.”

AT New Media, CEO, Simon Kay said “With EducationCity.com we have a huge opportunity to expand the brand into the consumer world of apps and tablets, to maximise the reach and educational influence of the brand. We’re working to secure industry leading app developers to work with in rolling out the program.”

EducationCity.com can be found at: www.educationcity.com

Since its founding in 1999, EducationCity.com has remained faithful to its commitment to produce unparalleled educational experiences based on highly engaging content and exceptional quality.

Dedicated to creating new ways of delivering curriculum content, recognised with awards by educationalists and adored by children everywhere, EducationCity.com pioneers the evolution of teaching with technology in the new digital learning era. Today, EducationCity.com is used and trusted by over 15,500 schools, including 43% of UK primary schools, with almost 3 million online activities completed each week.

Virtual World Licensing & AT New Media are leading UK based licensing agencies specializing in the world of gaming. With a team of interactive games and licensing experts they represent a growing portfolio of global game brands. Leveraging core brand strengths they create high performing product opportunities that extend virtual brands to the physical world.

“We are proud of the positive impact EducationCity.com has on the educational development of children.” said Richard Whalley, MD, EducationCity Ltd. “We’re now looking to extend this positive impact beyond our core schools market via a program of carefully developed consumer-facing apps & physical products. Virtual World Licensing & AT New Media understand the unique nuances and integral educational credibility of our brand and will ensure that while our reach grows, the robust educational credentials of the brand and its positive educational influence are maintained.”

About EducationCity.com EducationCity.com is a leading developer and publisher of educational content for schools with offices in Rutland, UK, and Dallas and Minneapolis, USA. We employ over 100 people comprising talented artists, programmers, producers, trainers and school support teams. We have a large network of specialist educational advisors spanning the world.

In 2012 generated over £10 million in revenues and continue to invest heavily in both our online services and delivery capabilities. Including additional free product upgrades to maintain our market leading position, and ever greater capacity at our server farms housed in secure, enterprise level data centres in London, Minneapolis and Dallas, ensuring customers continue to enjoy faultless service provision.

For more information, please contact: Steve Reece

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Are You Ready For The Direct To Consumer Revolution That’s Looming For The Toy Industry?

Posted in Uncategorized on 31 May 2013

Are You Ready For The Direct To Consumer Revolution That’s Looming For The Toy Industry?

These are very dangerous times for those with a vested interest in the status quo. The music industry has been revolutionised by digital downloading driven by easy consumer access and online portals versus physical purchase.

For those who remember the resistance from the music industry to the change, perhaps in hindsight we can reflect that they should have taken an ‘If you can’t beat ‘em, join ‘em’ approach.

The book industry has been revolutionsed by Amazon’s Kindle and others. The Home Video industry has been massively affected by the trend towards D2C, cutting out traditional retail.

Just looking at the towering market value of Netflix on the stock market, and their substantial and growing annual profits shows just how much this industry has been changed. So none of this is news.

We all know of these changes, but are you clear on the coming changes for the Toy industry? Or are you wallowing in ‘it will never happen to us’ inertia? Because any business without a D2C strategy in this industry is missing a huge opportunity, and failing to protect their future prospects.

As an industry, we’ve certainly embraced new media in terms of marketing and Brand licensing. Angry Birds et al proves the latter point! However, we really haven’t seen any major players (publicly at least) embrace what is clearly the coming revolution of our industry. And as with all revolutions, new power bases emerge, and old power bases disappear.

The 2 major areas of change are 3d printing and crowd funding.

Now again, everyone knows about these 2 up and coming area, however, it appears to me that many companies have failed to understand the implications.

Just as the book industry power balance was entirely in favour of the publishers who controlled the gateway to retail/commercial opportunity, so the same effectively applies to Toy companies today.

Kindle stripped away the gatweay effect for book publishers.

Will crowd funding and 3d printing do the same to the Toy industry…?

Firstly let’s look at fundamental challenges in our industry:

1. Inventory/justifying MOQs.

2. Limited shelf space/listings at mass retail.

The first issue is a critical point, inventory represents THE biggest risk Toy companies have on an ongoing basis. But in terms of the industry as a whole, inventory risk and MOQs effectively act as barriers to entry into the industry. Combine that with limited mass retail shelf space for our Category, limited number of vendors per retailer and potentially company busting huge orders from some mass retailers, and in effect there is a bottleneck, where those who effectively control product input to retail effectively act as gatekeepers to the industry as a whole – like a dam holding back a huge mass of products pooling up behind the dam.

Anyone who has tried to open a new trading account with Walmart, Carrefour etc will understand my point here!

So here’s the critical point – by allowing (effectively) direct access to consumers 3d printing and crowd sourcing offer ‘dam busting’ opportunity to smaller players, to those with no capital, to those with low engineering/manufacturing understanding and therefore potentially can revolutionise our industry.

Although we might not think it (!), we currently have comparatively few Toys on offer versus App stores/book stores etc. This is because of the sheer risk of developing Toy products in terms of launch risk and financial investment.

BUT if you can use crowd funding to meet initial breakevens on mass produced products and 3d printing to allow more customisation and less need for robust and costly tooling etc., then you have completely changed the game! Suddenly those products that can’t hit a 50k units tooling breakeven become possible. The flood gates will open, which will open the market and lead to huge shifts in what sells and how it sells!

Now by way of perspective, I am not at all suggesting the death of bricks and mortar retail, or that the industry as we know it will fade away. Far from it!

In fact the success factors will remain the same I.e. Brands, innovation and consumer footfall will always win. Toy companies that embrace other technologies will continue to discover opportunity, and mass retailers will continue to sell huge quantities of boxes.

However, take a look at the music, video, video game and book publishing industries and how they’ve been revolutionised in the last decade by D2C digitally driven distribution…

It’s time to make a choice, will you man the barricades and shore up the dam, or will you embrace the considerable opportunities ahead…?

Steve and team

P.S. Have you checked out our new Tele Consultancy service? It offers a budget solution for top level insight! For more details, click here: http://www.stevenreece.com/services/

 

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