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The Other Side of the Tunnel

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Industry Forum

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The Other Side of the Tunnel

by Nick Truss

In the early and middle months of the pandemic, industry operations were very touch and go. Last week’s cataclysmic disruption was this week’s new reality. Each supply line jam and cancelled trade show accelerated the evolution of toy business, inexorably, to where we are now. With the worst of the pandemic hopefully behind us, we can now cautiously claim the bene t of hindsight, and learn from the trials and tribulations moving forward. e toy industry has proven to be, if nothing else, adaptable and relisilent. We reached out to a number of toy industry professionals to weigh in on the new business world that we all must navigate, as well as any insights they’ve gleaned from the past two years.

Kathy Hawk, Senior Manager of Marketing and Publicity at Smart Lab said, “Covid has challenged and changed every industry worldwide. With toys, sales rose 16% in 2020, and even higher in 2021, according to NPD Group. Parents began homeschooling their kids and looked for ways to keep their kids engaged with toys. SmartLab Toys are STEM/STEAM toys, educational and participatory, as much as they are entertaining. We were able to learn a lot about the buyers’ digital shopping journey and ne-tuned our marketing strategy to meet the needs of these families.

VP of Marketing at Red Toolbox Donna Arbietman also remarked on the greater consumer interest in STEAM toys. “At Red-Toolbox, we felt this trend with increased sales of our Stanley Jr. DIY kits which introduce engineering and math concepts, o ering a great bonding activity for parents and children. Our Stanley gardening tools also enjoyed tremendous growth during and post the Covid pandemic as a result of people being more home bound and looking for non-screen based activities and toys.”

Many families made the best of a tough situation and grew closer during the quarantine. Jim Seymour, VP and CTO at E-Blox, stated, “ e pandemic led to much more time at home together as families, and one thing that was learned is that toys give families the fun play experience to bond and enjoy time home together. As a Play Ambassador for the Genius of Play group within TIA, I have been promoting the Power of Play, and as we come out of the pandemic I expect families will make the time continue the fun play experiences they enjoyed over the last few years with the great variety of toy products available in the industry.

Lisa Gulli, General Manager at Educational Insights, added, “We have a positive, bright outlook for how toys and games will continue to in uence and impact children’s lives and family fun. Families are once again gravitating to experiences, and toys and games can enhance those experiences, making them richer for everyone. Plus, we’re nding that intergenerational play is important to many families. Some of Educational Insights’ most popular games and toys are great connectors that spark togetherness; they make family game night or playtime inclusive and fun across generations.”

Some companies are anticipating a surge in demand for outdoor toys and experiences. Lev Nelson, CEO and Co-Founder of Sky Castle Toys, postulates, “Despite in ation, the toy industry remains recession-proof thanks to the fact that parents need to keep kids happy. If anything, in ation will bene t lower-price point and novelty toys that can satiate kids’ toy appetites without breaking the parental bank. While we can’t predict how future Covid strains will a ect retail sales, theater attendance or group gatherings, we anticipate a growth in outdoor and active play categories with group activities becoming more common. ere is a growing sentiment that the Covid-paranoia of slumber parties and indoor gatherings is a thing of the past, so let’s hope that continues!”

How Will February Fare Without a Fair?

e Toy Association’s decision to move Toy Fair from February to October was a monumental decision, if not unexpected. With two years of postponed NYC Toy Fairs, something had to give. Ask any number of industry insiders what they think of the move, and you’ll get just as many di ering perspectives. Of all the changes that occured in the wake of the pandemic, Toy Fair’s shi from winter to fall generated some of the highest buzz the industry had seen in quite some time.

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Kevin McGrath, President and Founder of e Original Toy Company, o ered his perspective on a possible shi in attendance rates. “I do think that this change will have some minor impact on the Mass Market, but clearly Specialty will be changed forever within the show environment on a yearly schedule. I believe that this change will have overwhelming support and everlasting positive changes for current shows like ASTRA Marketplace and ToyFest West. e di erent showrooms around the country like Atlanta, Dallas, Las Vegas, Seattle and Minnapolis will see a major upswing in attendance and participation in all of those venues, and rightly so, with the biggest winner being ASTRA Marketplace.”

Many welcome the change, seeing it as an opportunity to put more of their weight into advertising for the winter sales season. Mr. Nelson remarks, “As bad as the pandemic was for business and society, this is certainly a silver lining for our industry. Toy Fair never made sense from a retail perspective in February, and now we will be able to meet with retail partners when they’re actually making decisions for holiday placement the following year. In truth not much will change in our R&D or planning processes, but we will now be able to champion brand extensions and new innovations at Toy Fair when it matters most — Q4.”

Ms. Hawk has a measured outlook, observing both pros and cons. “It’s going to be a challenge, timing wise. Not all toy companies would traditionally be ready to present nished lines in September, we will have to rearrange our thinking and shi our development process forward. However, having over a year’s notice provides us with some breathing space to advance our schedule. As for seasonal operations, honestly it may make it easier. We tend to roll out new product throughout the year, rather than all at once. is change gives us time to formulate our launch plans. It will be an added bene t for the specialty stores to nd some new and exciting products for the holiday season.”

Others view the move more immediately as a complication. Mark Carson, President and Co-Founder of Fat Brain Toys, excplains, “I personally feel it’s a step in the wrong direction for the toy industry. From a buying cycle perspective, it’s e ectively elongating the process by a full six months. In this age of technology, progressive companies are making faster decisions, not slower. I understand the factors that are driving this change, but it goes against many of the tenets that have given rise to the most successful modern-day companies. It will cause us to re-think our roll-out strategy for new products, but we’ll continue to push ahead with the buying cycles that make sense for our customers.”

Michelle Seeber, Brand Manager at Faber-Castell USA, takes an optimistic and exible outlook. “Connecting and collaborating with our customers all throughout the year is a top priority. It’s wonderful to see the industry coming back together in tradeshow and even newer formats.”

Changes, Great and Small

e rescheduling of Toy Fair was but one of myriad alterations to business as usual. Companies not only had to adapt to their own new cisrumstances, but the circumstances of the consumer as well. e current state of how toys are bought is just as important to grasp as how they are developed, manufactured, and distributed; both are mutually informed the other.

Mr. McGrath reckons that supply chain hang-ups and the digital marketplace have forced companies to rethink their strategies. “ e buying & selling channels have slightly changed, but if there is a major change, it is now in the aspect of the manufacturing of toys and the ful llment of toys. is has changed dramatically, and maybe changed forever with the continued challenges and supply hurdles that will exist for a great deal of time to come. It is all about pro t margin for companies, retailers, or internet sellers, whoever is in the business of selling toys. We no longer will have the luxury of general selection of products; we now must ne-tune our selections and o erings on a very short tight rope if we are to be pro table in this ever changing world.”

Mr. Seymour adds, “I believe that the pandemic accelerated some trends we were already seeing pre-pandemic. Retailers were forced to focus on online sales and curbside pick-up options when they were shut down during the pandemic. Now, having developed an online and curbside pick-up presence, they will continue to leverage these sales opportunities moving forward. While I still believe there is a huge value to being able to go to a brick and mortar store, the pandemic pushed people to buying online and through curbside pick-up.”

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“Some of the conveniences they experienced will lead them to purchase this way more o en. So seeing more retailers that have a brick & mortar, online and curb side pick-up presence is something I think is here to stay. Our main strategy that we introduced during Covid to support online sales for our customers is our drop ship capability. To help retailers with their online and curb side pick-up sales, we provide our retailers with images & videos to list any/all of our products on their website, and when they get orders we can drop ship the product to their store or the end buyer, whichever is preferred.”

Ms. Arbietman recognizes the importance and newfound ubiquity of social media in toy marketing and advertising that came out of the pandemic. “ e pandemic accelerated online adoption in the industry. Up until 2020, our industry has been somewhat traditional and slow to move online both in terms of e-commerce and social media. e pandemic has changed all of that and online business is becoming a substantial part of businesses across the board in our industry.”

As for how Red Toolbox is capitalizing on the situation, Ms. Arbietman explains, “We are selling online on multiple platforms direct to consumers as well as B2B. We are investing more resources and e orts in our online presence and using our online sales as a launchpad for new items. We nd that the online sales channel helps us become more agile as a company and more connected and responsive to our customers. e data we are able to glean from our eComm and social channels is invaluable in helping us netune our marketing and sales both online and in stores as a result.”

Ms. Gulli seems to share this sentiment. “We meet our customers where they are—whether that’s on TikTok, Instagram, YouTube, Pinterest, or their favorite online shopping site. It’s important to us that we stay part of our customers’ daily digital experience. at may be through free digital learning activities via our Spark More Play initiative, or by providing our moms with helpful advice through one of our expert in uencer partners, or by using a diverse o ering of online livestreams to both entertain our customers and make their shopping a fun, memorable experience.”

Smart Lab has shi ed strategy to focus more heaily on social media and viral marketing by way of customer reviews. Ms. Hawk explains, “Today, customer referrals, reviews and word-of-mouth have become the largest in uence in the purchase process. One of our top sellers is Amazon, so we focus on all the marketing tools available to us through Amazon to help get our toys in the hands of kids all over the world. We run AMS (Amazon Marketing Services), Ads, Promotions and the Vine program which encourages purchases and honest reviews of our products. We also focus heavily on images and videos for all our products for promotional use and to engage our customers.”

Sky Castle has observed the need for creative solutions in reaction to higher air shiopping costs. Mr. Nelson says, “Previously many companies enlarged the size of their retail packages to show more value to customers, but bigger is no longer better when container fees cost $20k+. We have seen and will continue to see a contraction of packaging sizes at retail and particularly for e-comm channels as companies reduce packaging sizes to maximize their container load quantities.”

In regard to Sky Castle’s online sales strategy, he continues, “E-commerce is already a major pillar of our Annual Recurring Revenue, and we’re excited to continue growing our online presence and drop-shipping capabilities. While Amazon is the major player in the space, building a strong D2C store with custom products and exclusive releases is imperative to fully leveraging the channel. We are allocating substantial company resources to the creation and cultivation of social media content and communities to funnel tra c to our D2C store versus other 3rd party online marketplaces.”

Mr. Carson ruminated on big companies’ need, or potential lack therof, for in-person events. In response, Fat Brain threw things at the wall, and they had something stick. He explains, “We dabbled in various virtual “shows” with minimal results and even less excitement. However, we have recently released a proprietary platform that holds the hand of the retailer or sales rep, and steps them through each new product. In addition to product videos and “live” demonstrations, the interface is also cart-enabled, allowing retailers to favorite items, place orders online, or email their sales rep for follow-up. e feedback so far has been outstanding, and we look to leverage this new tool for all future product rollouts.”

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Ms. Seeber acknowledges that these seemingly indelible changes may yet give way to others in due time. “ e business of toys will continue to always change, innovate and grow. It’s hard to say that any change is a permanent one. We do see that the consumers’ ‘path to purchase’ will continue to evolve in a direction where the ability to buy what they want, when they want, in the manner they choose will be here to stay. Our strategy and our ‘Why’ (Enriching Lives through Creativity and Self-Expression) puts the consumer at the center of everything we do. We continue to ful ll our ‘Why’ and nd the consumer where he or she is shopping.”

e Light at the End of the Tunnel

e one thing that will never change is what makes toy people who they are: passion and excitement over new product! As the world’s grip on Covid continues to rm, there is plenty to be excited about.

Mr. McGrath shares what e Original Toy Company has on deck, saying, “Some of our new and exciting products, such as the First Years series, are currently having very strong sales. We have also had recent success with children’s pretend food products such as our Tea Set.We are continuing to develop new products in the Counter Cash Impulse series, new games like ‘Shopping List,’ and gliders for our outdoor toy selection, just to name a few things we are proud of.”

E-Blox’s Jim Seymour says, “We are introducing 2 new products this year: e Circuit Blox BYO DJ Set, which you build and use to create your own DJ table. You can play 3 original DJ songs by SOLI and insert 15 di erent DJ sounds like sirens, horns & scratches. Plus, you can play your own music through the Hi Def speaker through Bluetooth and insert DJ sounds to your own music. ere’s also the Power Blox Electric Crazy Action Racers 10-in-1. Build a fan car and watch it zoom across the room, build a crazy spinner, or build a car that launches a fan high in the air. is set includes a brick based motor that lets you to build 10 cool cars, racers & spinners that provide hours of fun.”

Smart Lab’s Ultimate Squishy Human Body is what to look out for, says Ms. Hawk. “We took our best-selling STEAM toy, the Squishy Human Body, and leveled-up the experience with an interactive electronic scanning platform. e SmartScan Technology is like a personal anatomy tutor. When one of the eight removable SmartParts is placed on the SmartScan, you’ll hear information about the part, the system it belongs to, and fun facts, along with sounds based on the organ in question..”

Ms. Gulli says of Educational Insights’ new sustainable toys, “It’s our 60th Anniversary, and the Educational Insights team is celebrating through reimagined versions of our most popular toys, including BrainBolt, Kanoodle, Playfoam, Design & Drill and more! We’re also expanding our selection of Playfoam learning compounds with Playfoam Sand and even Playfoam Naturals, an innovative cork compound that is shaping up to be an environmentally friendly way for kiddos to learn about and respect the world around them.”

Lev Nelson adds, “Sky Castle is very excited about the growth of sensory 2.0 trends outlined by the TA earlier this year and plans on expanding its foothold in that category with extensions of DoodleJamz; squishy, sensory drawing pads that combine dget with art! It’s like nger-painting, but without the mess and provides for hours of fun, especially on long road trips.”

Mr. Carson said of Fat Brain’s upcoming products, “Our popular Dimpl family is expanding into bath with Dimpl Splash, as well as a the pop & pulling innovation of Tugl. We’re also extremely excited to welcome three new ranges to the Fat Brain family including Lamaze, MOLUK/Bilibo, and Pretendables.”

Ms. Arbietman remarks, “As in every year, we keep growing our range of Stanly Jr. woodworking DIY kits, with exciting new kits such as kaleidoscope kit, periscope, fooseball table and many more. We also launched our brand new Constructor line for Black and Decker. e Constructor is a great STEM toy, fostering understanding of engineering and math concepts. Later this fall, we are so happy to launch a new range of kitchen appliances for Tasty Jr. that are super sleek and modern looking! Additionally, we are launching 5 sets of pretend play boxes that are based on Tasty’s recipe videos. Lastly, during the Dallas Toy Fair, we will o cially launch the Char-Broil grill and Oklahoma Joe’s smoker for kids. ese mini grill and smoker are bound to become the faves of any BBQ loving family.”