Friday, February 13, 2009

Build It and They Will Come


Another White Sox Fan

Being from Chicago and a long time baseball fan of the same team as Barack Obama, I knew a bit about the 1919 Black Sox featured in Kevin Costner’s movie, Field of Dreams. As you likely know, the movie focused on players banished to an Iowa north forty cornfield only to magically appear once a ball diamond was built.

It occurred to me there is a similarity between that movie, major mass-market retailers, and mall developers. When mall developers see an open field, it is not a baseball diamond they build, but rather huge mega-malls. Their hopes must be, “if I build it (a mall), they (shoppers) will come”. However, in these hard times of economic meltdown and changing shopping habits, shoppers are not coming. In fact, there are dire projections about retailers in 2009. Michael Burden, principal with industry adviser Excess Space Retail Services, expects as many as 14,000 stores will close in 2009. "We could see the highest ever number of closures," he said. And the International Council of Shopping Centers estimates that chain store closings could exceed 3,100 in just the first half of the year.

Such troublesome forecasts can only have a rippling effect on the toy and game industry., Anne D’Innocenzo in a recent AP article cites a number of reactions retailers may have to the economic climate, saying “ retailers will cut marginal suppliers, keep inventory lean, hold special buying events, and provide an array of products at lower prices.” I ask, “haven’t Walmart and Target been doing this already to industry marketers for years”? When we attend Toy Fair and witness the sea of products, hear the optimism and see the carnival that is Javits, it is astonishing that only a trickle of those products will reach the shelves of the two reigning retail giants. Those two retailers, in particular, have already cut suppliers, kept inventories lean, and pressured marketers for incredibly low prices. The result at big box stores is a sameness of limited selection of toys and games.

What might be the answer to the retail malaise? Re-emergence of TRU where there was always great selection? Increased traffic at “specialty” stores where there hasn’t been an inordinate mix of laundry detergents and bed and bath linens at the sacrifice of toys and games? More dot -com sales without the need of consumers in mall store aisles?

I must admit that as a “product” guy, I was never satisfied with “sales” guys’ explanations of why products couldn’t be offered at places more convenient to consumers as a way to increase sales. With travel games to sell, why couldn’t they be placed next to Coke and Pepsi at all those gas station mini-markets? Why weren’t those games with movie characters licenses placed in video stores or in the lobbies of movie houses next to the $8 popcorn barrels and $5 soda cups tempting consumers to buy?

Maybe now more than ever when consumers are reducing trips to the mall, products need to get closer to a potential buying event. Maybe if the temptation is heightened, the consumer may break out of buying restraint and make an impulse purchase. And maybe in desperation, we will have to go back to methods vacuums and hairbrushes were sold during past hard times. Would you believe?... Knock, knock. “Who’s there?” Ahhh, “toys and games”. (Can you see all those silhouettes in red suits with big, big bags going door-to-door all across America in search of consumers? Any unemployed Santa’s out there?)

Knock, knock, toys for sale!

3 comments:

  1. In the land of the blind, the one-eyed man is king.

    Maybe as the economy contracts, the distribution expands, and as the economy expands, the distribution concentrates again– back to the malls?

    Keep that monocle clear.

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  2. The door-to-door model you stipulate is already being explored by SimplyFun to an extent. I have some disagreements with this model, particularly in the Internet age.

    In the Internet age, retailers need to rethink and reframe their models. Their new and true value is direct exposure to a customer who has the option to go elsewhere to purchase the product (sometimes avoiding sales tax or claiming greater discounts). Consider that a person who is just in town on a business trip is not going to buy that massive boardgame and stuff it in their luggage... they'll have it shipped after placing an order on their IPhone.

    The modern retailer needs to negotiate with manufacturers based on traffic levels and their ability to provide live presence. The retail store becomes a demonstration center. Inventories will be lean, but product exposure... the manufacturer's ultimate interest... will increase. The demo center should have a one or more preferred large vendors, and coupon codes that allow their efforts to be tracked.

    The modern retailer may be responsible for making the sale without reaping the benefits. The survival of retailers everywhere is dependent on moving past traditional models and adapting to the Internet age. There is terrific value in a retail storefront, and everyone loses when they go away.

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  3. Mike Langieri/Inventor & Former Toy ExecFebruary 13, 2009 at 7:11 AM

    As Ron well knows, I like living on the bleeding edge when it comes to technology, and when I look at the toy & game business there are three models; the past, present, and the future. The past is the retail end of the business, the brick & mortar establishment, whether it be a stand-alone specialty store or a major retailer like TRU. The present is a combination of mega-retailers like Wal-Mart and what's left of the specialty stores. The future is online, where products are drop-shipped from a warehouse devoid of frills and eye-appealing displays and other expenses. Take a good, hard look at Amazon and their ability to deliver a myriad of consumer products at prices far below local retailers.

    Unrelated to the toy industry but still an interesting experience. I recently bought a HD TV for my kitchen from Amazon and saved 20% when compared to the local Best Buy for the exact same set. In our area, there used to be a several TRU stores, some Child World stores, and several local toy stores within a 20 mile radius. Now we are down to one TRU and one specialty toy store in the same area.

    In today's economy, consumers are thinking long and hard about driving 15 miles to buy a toy or game. However, I think the idea of buying that same toy or game online... for less money even when shipping is factored in, well that can only be called "logical." They might get free shipping, and perhaps there is no sales tax to boot. Money is a precious commodity these days (and it always was and will be) so I wouldn't expect normal retail sales of toys and games to flourish in the days and years ahead.

    It's the internet, stupid (that's my analysis, not an accusation).

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