Margins Won’t Allow It, Sorry.

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"We can’t afford inventor royalty, nor inventive features in our products."

Wow! This is an approximate quote from an executive of one of the largest US toy companies. From yesterday.

That sends a shiver up my spine, not surprisingly. Margins won’t allow for inventor royalties and therefore won’t allow the incorporation of those inventive features in new toys hitting the shelves.

Business-increase-profits
I don't see how that will result in better product. I don’t see the net benefit to the consumer or to society in that mentality. What is the force behind this change in policy? It is the retailers – and not all of them, just a very few.


It may even be just one retailer with the clout to demand pricing and narrow margins that is squeezing out the new, novel, improved, and inventive features that add richness and play value to products.

What to do? I can assure you we are scratching our heads on that topic as you read this.

Confusion
Perhaps toy companies can just make the same products each year, but in different colors, or with only minor changes, like so many other product categories that do not have the level of innovation and invention that the toy business has long been a source of.

“Sorry I am not the bearer of better news regarding our industry…”

This was the beginning of a message last week from another client company.

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He went on to say, “Over the years, margins in our business have continued to be squeezed. This has occurred for a variety of reasons, including the cost of manufacturing and the ongoing demands of retailers.”

“In today's environment, it is nearly impossible for us to consider any form of inventor submissions owing to the added cost burden it brings.“

Gulp.

So what to do? I have always believed that cream rises to the top and that we, as the creme-de-la-creme, by dint of hard work, harder thinking, and relentless efforts will be able to survive and thrive in the most difficult environment. It has been true in the past. I pray that it still is.

In years past we have had to get better at what we do to continue to thrive in the toy industry. That is the silver lining, that we must, and will, evaluate and improve.

The challenge of getting more effective, more efficient, and just plain better at the work that we do is very satisfying to tackle and to accomplish.

One thought

  1. I was just talking about a similar trend with a books publishing friend… sad! Hope that one day some smart upstart in a country like India or Brazil eats Mattels, Hasbros, Barnes & Nobles et al. alive, the way they did most everybody else here 🙁
    Guess that now my jumpshooting figurines have no chance at all…

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