The Pokémon problem:

Of course, you can't catch what doesn't exist, and that has been the conundrum facing North American consumers trying to track down merchandise based on the hit Japanese video game/animated TV property, and retailers trying to stock the stuff since it...
September 1, 1999

Of course, you can’t catch what doesn’t exist, and that has been the conundrum facing North American consumers trying to track down merchandise based on the hit Japanese video game/animated TV property, and retailers trying to stock the stuff since it moved into the market 10 months ago.

Unlike most collectible toy crazes, though, in which vendors carefully calibrate supply to keep consumer demand at a steady hum, the current shortage of Pokémon merch, namely Wizards of the Coast’s (WOC) trading card game and Hasbro’s Pokémon action figures, has been an unbridled success story-sort of.

While WOC has managed to get cards to stores-albeit on a limited basis (lineups greeting new shipments are not uncommon)-Hasbro’s action figures, which include the Battle Figures (US$5.99) and the Pokémon 3-Packs (US$7.99), have often been a no-show at retail since their release last November. Without any licensed Hasbro Pokémon action figures in circulation, many retailers have turned to the grey market to fill the demand, purchasing from wholesalers the figures produced by Japan-based Pokémon toy licensee Tomy and, sometimes unwittingly, buying bogus Pokémon merch from counterfeiters. For Hasbro and the retailers-in the short term, anyway-all this has translated into lost sales.

Rich Brady, president of Play Co. Toys, a specialty toy chain that has 23 stores located in southern California and the American southwest, estimates that the company lost nearly US$100,000 from April to mid-June, when Hasbro was out of stock of the action figures. ‘If they had shipped us our order of 12,000 units, we would have turned them 100% through in a matter of days,’ says Brady.

Multiply that dollar figure by the thousands of stores that offer Pokémon product across the U.S. and Canada, and the number of unrealized sales begins to add up in a hurry.

It is not surprising then that in this environment, several retailers have sought out the Tomy-produced action figures. Even though they come with Japanese packaging, the toys themselves are virtually identical to what Hasbro produces. Nevertheless, they are still illegal to sell or to import into the U.S., says Perry Drosos, VP of marketing for boys toys at Hasbro. (More recently, Hasbro’s Pokémon plush figures have emerged as the latest items to go on a sales tear, with retailers reporting plush back orders of as long as five months).

The shortage of the action figures has also created fertile ground for counterfeiters hoping to cash in on the craze, which has cut into Hasbro’s potential Pokémon profits. In a recent published report, a spokesperson for Nintendo Canada, the Pokémon licensor for the territory, estimated that one-third of Pokémon product in Canadian stores was counterfeit.

Given the successful global history of the Pokémon property, the State-side toy mania seems elementary and predictable in hindsight.

The property launched in Japan as a Nintendo Game Boy title back in ’96 and went on to sell in excess of 8 million copies. The cards, which are produced for the Asian market by Tokyo, Japan-based licensee Creatures Inc., have so far tallied sales of more than 400 million units worldwide. Nonetheless, in the face of such promising sales data, U.S. buyers believed that as far as toy tastes went, Japanese and North American markets were still oceans apart.

Initially, the retailers were apprehensive to buy into Pokémon because there hadn’t been many properties that had translated well from a gaming format to a figure line. ‘[Additionally] in the past, Japanese anime was not successful [in the U.S.] with properties like Sailor Moon,’ says Hasbro’s Drosos.

Also giving retailers the yips about hopping aboard the good ship Pokémon was the impending merchandising menace of the new Star Wars toys, which, pre-movie hype had promised, would vaporize any kid-targeted entertainment tie-in merch that dared to stand in its path. That Pikachu has managed to coexist with Anakin Skywalker in the North American toy universe certainly ranks as the year’s biggest surprise, yet it’s also the reason why retailers are scrambling to lay their hands on any Pokémon product now.

Will the recent paucity of legitimate merch cut short the life span of Pokémon?

Historically, an absence of product-orchestrated or not-has made the collector’s heart grow fonder (see Beanie Babies), and retailers predict Pokémon will be no different.

Drosos says Hasbro is projecting the demand for its Pokémon merch to remain high for many more years, giving it an opportunity to make up on lost sales. It’s an opinion he bases on the sales performance of the Pokémon products in Japan, which he says are still selling at a strong clip more than three years after they were released. ‘As a market, Japan is much more fad-oriented than Western countries are, so we’re confident in saying that the consumer support for Pokémon will remain pretty heavy next year,’ says Drosos.

This fall, the search for Pokémon merch will get a little easier. In October, Wizards of the Coast will release Fossil, a new card set featuring 62 cards, including 16 holographics and several alternative versions of existing cards. In the fourth quarter, Hasbro will return with more action figures, and will be producing tie-in products for the feature Pokémon the Movie: Mewtwo Strikes Back, in which a few new Pokémon characters are slated to make their debut. Additionally in September, Kids’ WB!, which currently airs Pokémon the TV series six days a week, will start running the program twice daily. The introduction of more entertainment and product should all but guarantee that kids won’t tire of trading or hunting for Pokémon any time soon.

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