Viewpoint
sales as a result. However, you still need to be careful to avoid destructive price competition, and giving away profit unnecessarily. Anyway, a website should be part of your marketing effort, so why doesn’t it also include an online shop where you take all the profit? You may not want the bother of fulfilment, but that can always be outsourced. Indeed, the only reason why you might not want to do this is because you value your partnership with the national retailers distributing your product and therefore let them sell it online without directly competing with them (which does rather look like the basis of Argos’ current strategy). Indeed, when you consider the cases of both the nationally-marketed toy and the toy that is marketed
through the high street retailer, what you have to conclude is that there is never a case for letting your product be sold through a pure online retailer other than yourself.
Conclusions So, to sum up, we are living in interesting times. A new equilibrium is still in the process of being established, and both retailers and suppliers need to understand how this affects them. The independent retailer must focus on products where they are a valued part of the marketing chain, and differentiate themselves by how well they do this. Suppliers that use the retailer as part of their marketing need to understand that this means that the online presence must first and last support
the retailer, and should never allow parasitic sales by pure online retailers.
Those suppliers that see the retailer’s role as
primarily distribution must also carefully consider their online role. Are you supporting the online market directly, or are you in partnership with national chains that sell in both major shopping centres and online? And finally, it seems obvious that once suppliers – at least those that are left – finally understand the online market, there is no room for the pure online retailer. They offer nothing other than a means of weakening your marketing effort, brand devaluation and lost profit.
Dan
David
Salem Prism Digital
Solutions Happy Christmas...
And now we can all breathe a sigh of relief as the year draws to a close. For those of you who have had a great year, or those who have struggled, 2013 is a fresh start. Moreover, as our own economy, and those of our European neighbours, continues to struggle, what’s great is that Santa always delivers for the kids, which is what our industry is all about. It is all too easy to get lost in the world of FOB pricing, margins or shareholder returns, but at this time of year it’s about seeing the joy in the kids eyes when they open their presents; or watching the panic in parents eyes, as they struggle last minute to buy their children the latest must-have toy. Reaching this audience is an on-going battle of wits, and next year will see more media opportunities battling for your budgets. Will tablet advertising for kids be an option? Or, will the success of the Kurio, with it’s pre-loaded, ad-free games, make a statement against increases in advertising for kids from the parental point of view. The array of dedicated TV channels will continue to have their ratings highs and lows, and the online offerings will be an evolving feast of new advertising opportunities. But, with the advances in technology and the
increasing marketing opportunities aimed at kids, traditional toys and play patterns will still be an important part of kids social development. Therefore the role of PR, in-store marketing and advertising aimed at parents, should not be overlooked as plans for 2013 are being put together. In 2013 I will share a variety of case studies from 2012 of the some of the most successful campaigns, and will also be catching up directly with all of the media owners for a look at their predictions and offerings for 2013. It’s going to be a cracking year. Enjoy the break, and see you in 2013.
44 Toyworld
The toy industry law of supply and demand
The toy industry must be the most generous and customer-centric industry in the UK and, as a customer, it is great to see toy retailers saving their largest price reductions on key items for the main Christmas trading season. What other industries take a hatchet to pricing just as their critical main season arrives? Why does the toy industry continue to ignore the age-old economic relationship between supply and demand? If I want to buy a toiletries gift set or a confectionery selection pack at Christmas, I am forced to pay double the price of the individual items they contain.
The gaming industry is one of the closest parallel and substitution product categories to the toy industry, and a cursory review of retail pricing across this year’s key console launch games titles will show an average discount of 10-15% vs the suggested retail price, with many retailers selling at SRP. Product value is also maintained in the gaming industry on many ‘played it, trade it’ used titles, where the price remains within 10-20% of the brand new price. Moshi Monsters Theme Park for the Nintendo DS is a great example of a key Christmas title that is holding its value in both the new and used gaming charts. This year the retail toy specialists, Smyths and TRU, took a very early lead on key prices in November; in previous years such an aggressive price position has been the preserve of the grocers. A November pricing comparison, featuring 11 of the Toy Retailers Association’s 2012 Dream Toys, showed that Smyths were cheapest on six of the items, Toys R Us on four and
24studio.co.uk on just one item; not a grocer or Amazon mentioned in the whole article. The total savings generated by purchasing the 11
Ripley Former Tesco and Woolworth executive
items from the cheapest retailers on the day the pricing comparison was published - 8th November - was £163 from a total SRP of £574, reflecting a reduction of 28% on the ‘must have’ hottest items in the market; items that are so sought after by parents that there will be shortages long before peak trading occurs, thus totally ignoring, and indeed reversing, the basic economic laws of supply and demand. In response to the Dream Toys pricing article that featured in the Sun newspaper, the now traditional pricing pantomime started in earnest with toy stockists retaliating to the feature by matching or further dropping prices. Just 24 hours later, the collective discount on the 11 items, driven by significant price reductions on Furby, Innotab2 and LeapPad2, had increased to £197, or a huge saving of 34% on the SRP. The further reductions were driven by Toys R Us taking a significant price lead on Furby, which is arguably this year’s highest profile toy at £39.19, a full £20.80 or 35% below the suggested retail price. Tesco entered the price war by taking a price lead on the VTech Innotab2 and LeapPad2 at £49.59 and £59.32 respectively, reflecting a 34% drop on the LeapFrog line, and a massive 42% reduction on the lead main season VTech product. On a positive personal note, such heavy discounting on key toys always helps balance the family finances, especially when faced with the reality of the December food price inflation spike on key main season items such as turkey, alcohol and party foods in general. Many everyday products also disappear from supermarket shelves during December, and are replaced with volume stacks of expensive seasonal variants. The breadth of range of value- and standard- tier own label items at Tesco, Sainsbury’s and Asda are also strategically minimised, forcing shoppers to trade-up and spend more in the key season. At the risk of grossly simplifying where kids will be spending their money this year, my kids’ Christmas lists consisted of 50% toys and 50% console games, which would indicate at the grand ages of six and eight they are already moving away from toys altogether. Maybe such large retail discounts are required just to keep spend within the toy industry. Have a great Christmas and a happy New Year.
David Ripley has just completed his assignment at London 2012 and is currently seeking a new challenge. David will be attending the UK Toy Fair and can be contacted directly on 07738 999210,
david.ripley72@gmail.com or via LinkedIn.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72