Advisory Panel: Channel in crisis!

Patrick Connor Senior VP of retail business development, Warner Bros. Consumer Products
February 1, 2004

Patrick Connor Senior VP of retail business development, Warner Bros. Consumer Products

‘The challenge for specialty retailers is to provide a fun, high-involvement environment that significantly increases guest visits from an average of three times a year. Toys ‘R’ Us is making breakthroughs with its Times Square store and 17 Geoffrey formats (which many guests visit weekly). Through these stores, TRU has arguably filled the void left by FAO. Incidentally, mass merchants have a similar challenge of increasing the number of times their regular shoppers visit the toy department.

The solutions are a shared responsibility that requires us to continually improve all elements of the marketing mix, including compelling product, store layout, in-store events, publicity and media. The real challenge is doing this in a cost-efficient way in thousands of stores.’

Sid Kaufman Executive VP of worldwide merchandising, Nelvana

‘Over the last 10 years, high-end and specialty retailers have become a breeding ground for new properties. But shelf space for properties has never been tighter, and retailers at all levels are looking for reliability and added value when it comes to licensing programs. While good retail strategies are important, brand-building and marketing are essential.

Although the number of high-end and specialty retailers has decreased, success at this level can still deliver the important first step of success to a long-tem program. Moreover, this market traditionally deals in manageable quantities, very focused promotions and quality products – all of which increase the chances for successful sell-through. Choosing the high-end market to launch a merch program may exclude the mass market for a period of time, but more importantly, a failure in the high-end market may prevent the program from ever going to mass.’

Al Ovadia Executive VP, Sony Pictures Consumer Products

‘We work with both mass and specialty aggressively to try to help them each make a point of difference in the marketplace. The specialty retailers are clearly challenged as to price, so a lot of toy licensees work closely with them on exclusives and other ways to set them apart in a given market. We, in turn, are committed to finding promotional opportunities and exciting traffic drivers to help them build their business, as we do with mass and mid-tier.

Drugstore chains are a huge new opportunity, and Spider-Man Merchandising LP is in final negotiations to include this channel as part of its efforts with Spider-Man 2. Grocery is clearly another opportunity, but it’s a little tougher to crack into. All of these retailers are looking to expand their product base, which is good news for all rights holders and their licensees.’

Rick Rekedal Head of toys and interactive licensing, DreamWorks Consumer Products

‘Specialty toy retailers are having trouble in large part because the demand for specialty toys is giving way to demand for lifestyle-based electronic toys. Six and seven year olds are asking for digital cameras and MP3 players for Christmas, and mid-tier retailers like Best Buy and Target are filling that demand. There will always be a toy market, but we’re increasingly looking at licensed electronics and lifestyle products for what used to be the core toy market of ages seven to 10. The new core toy market for the broad swath of traditional licensed toys is ages three to seven, demanding a more preschool focus – with some overlap, of course.’

Bob Solomon CEO, Applause

‘Now more than ever, doing business with specialty retailers requires extra-special attention. They need to offer their customers a reason to shop in their stores, and mass merchants and deep discounters have eliminated all competitive pricing opportunities.

So as a company, we develop and offer premium-quality products and characters that are mostly not available in the mass market. And we package and position our products as gifts, not toys, which promotes year-long sales for our specialty retailers.’

Maureen Taxter, Senior VP of retail and new business development, Nickelodeon Consumer Products

‘There are other valuable distribution channels for more specialty-targeted programs – like on-line (which grew 46% this holiday) and catalogues, which have distinct and loyal customer bases. While these channels don’t compete from a volume standpoint with the mass market, there are other benefits. With Avon, for example, we are able to get very quick results from a catalogue initiative and can immediately put follow-up programs in place that build upon those results. This nimbleness allows us to maximize the business and take advantage of trends. With, we are able to offer hard-to-find upscale items like the Authentic Blue’s Clues Thinking Chair.’

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