Guest blogger Richard Gill is a former owner and developer of Pictionary. Born in the United Kingdom, he was responsible for overseeing the phenomenal successes’ of both Trivial Pursuit and Pictionary internationally for over 15 years before the successful sale of the Pictionary company to Mattel Inc. in 2001. Richard now provides international sales and marketing consultancy services to multiple toy and game clients via his company, NH Contract Management.
The simple answer is a resounding “yes”. Now the truth behind the headlines is a little more complicated……..
When I see an article proclaiming an item is $20 here and in Europe it is $35 my, and I am sure everyone else’s reaction, is disbelief. Well myth #1 - they are not comparing ‘apples to apples’ – European prices by law – include the sales tax, which in many markets, is 20%!!
The retail landscape in Europe is not the same as here. Europe has more department stores, independents and smaller chains that generally operate in smaller footprint stores, with significantly higher real estate costs. European consumers demand better staffing levels in stores. Retail margins are by necessity therefore higher than our “big box” discounters here in the U.S.
Safety testing requirements add yet another cost. Unlike many industries that have one standard that the world generally adheres to we, the ‘Toy Industry’, have allowed, and in many cases caused, the fragmentation. With historically poor QC, ‘price at any expense’ attitude and constant recalls leading to “knee jerk” regulatory and government reaction region by region or even market by market. Further expensive market specific (or even retailer specific) testing on smaller production runs increase costs dramatically.
Gas and diesel cost anywhere from $6 – $10 per gallon in Europe. Multiple distribution centers in different markets, fragmented retail and congested roads all add to the ultimate cost of delivery.
Selling to the consumer – be it via TV advertising (if it is even allowed), print or even on-line/social media is significantly more expensive in Europe – this is a cost that ultimately the consumer has to bear as part of the price. Making a TV commercial to sell, may be 75,000 units of a product, versus 500,000+ units here in the US is a material expense.
Lastly, and not always applicable, designing and manufacturing the product specifically for individual markets. These costs can include translating packaging and rules, game content, language/sound chips for toys, different material requirements, box sizes, drop tests additional European law markings – the list is endless. Multi-lingual packs abound to try to hold down costs but no Italian child wants to hear his or her favorite Star Wars character speak in German.
So, am I defending this completely? Absolutely not! There are cases where the prices charged are not fully reflective of the costs incurred but at the end of the day we operate in a free economy – we charge what the market will bear and toy prices are comparable to other consumer goods.