Mattel and the Specialty Toy Retailer; A New Pathway?

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The toy industry's largest companies have always had difficulty in determining just what to do with the Specialty Toy channel of trade. As a result, to the most part, they have simply ignored it.

Its not that they have something against these independently owned retail stores.  It's just that companies like Mattel and Hasbro are built to work on a very large scale. This means that, in order to support their heavy advertising commitments, they have to go where they can get the biggest revenue and marketing bang for their buck. And that has always meant, at least until now, Big Box retailers like Walmart, Target and, in particular, Toys R Us. 

As a result, Specialty Toy retailers have frequently missed out on the latest toy trends and hot products.  That paradigm is changing. The toy industry is now facing a new reality in which, due to the ongoing demise of Toys R Us,  there is no longer a national chain of retail stores that specializes in toys. The question is:  How, after years of focusing on Toys R Us, does the toy industry successfully pivot to independent Specialty Toy retailers as a conduit to the communities that have lost their Toys R Us outlets?

Mattel may be giving us an answer. The Charleston Post & Courier has an article that is must reading for all of us. Written by Warren L. Wise and entitled, "Charleston retailer to be U.S.'s first specialty toy shop to host Mattel store within a store", the article details Mattel's decision to test out a strategy for selling through independent toy retailers.

The retailer housing the Mattel store within a store is Wonder Works. Located at 975 Savannah Highway in St. Andrews Shopping Center in West Ashley it will be worth a trip to see what the Mattel store within a store is all about.

I like the Mattel concept for three reasons:

1.    Though the article does not specify how many feet will be dedicated to Mattel's products, it seems that having a store within a store will mean that there is a considerable space and inventory commitment by Wonder Works. This means that Mattel will be able to secure larger shipments while consumers will have a better selection. Wonder Works will of course benefit from having a Mattel selection that, though probably not as deep, will be far broader than what can be found at the big box retailers.

2.    If Mattel were to secure a store within a store in, say, 100 or more specialty retail stores, it could in essence have a chain because each of the stores would conform by carrying the same products and potentially running the same ads and promotions. Good for Mattel and good for the retailers.

3.    This new pathway could be an alternative to how the industry has been doing business for the last fifty years. By working with independents, a toy company like Mattel can create partnerships with retailers who are intrinsically local and therefore not only know what their customers want but who they actually are. Its a great way to micro market by using local knowledge to fine tune assortments.

Mattel seems to have stepped out in front of everyone else on this one so it will be interesting to see who follows suit or who comes up with an alternative pathway. Either way, its a great and long overdue break for the independent toy retailer.

 

5 thoughts

  1. We, at Imagician Playthings have started doing the same as this means we focusing on 65% of the potential. We have a comprehensive portfolio of multiple categories at aggressive price points that give the speciality retailer the confidence of quicker sell through.

  2. If they get enough retailers they can create a line of specialty retailers packaging and slightly different configurations. We did that at Sportfun for years and it was good for both specialty and discount

  3. If it is a store within a store–who owns the product, Mattel or the retailer? If Mattel, prices can be competitively low.

  4. The Specialty Retailer will have to sacrifice their margins if they carry the Mattel Line otherwise they will look foolish with a 50% margin and Walmart and the other Boxes out at a 34% margin or lower.A customer seeing the higher prices will naturally think the whole store is overpriced and they will actually lose business by carrying Mattel.

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