Toy merchants prepare for uncertain Q4
With the important holiday selling season right around the corner and a series of highly publicized toy recalls in the not-too-distant past, several multichannel toy merchants are re-evaluating the product mix, making toy-testing information available on their Web sites or adjusting their search marketing strategies with an eye toward making consumers feel safer about buying toys.
Some toy retailers generate almost 50 percent of their business between Thanksgiving Day and Christmas. This year, however, many are nervously waiting to find out if the recent spate of recalls for products made in China will affect sales.
While not all of the recalls were related to toys, the sheer number of recalls has been unprecedented and the fear is that some consumers may start putting away their wallets as soon as they see the words, "Made in China." If so, this could hit the toy industry especially hard since approximately 85 percent of all toys available in the United States are made in China.
"We've had some items returned simply because they were made in China, no matter who the vendor is," said Deb Wilson, general manager of Sensational Beginnings, a specialty toy cataloger based in Monroe, MI.
However, when customers see that a product is made in Europe or the United States, "they feel better," Wilson said. The company is considering adjusting its product mix to put more of an emphasis on products made outside of China, a move other retailers said they are more apt to begin looking at.
Specialty toy retailers often differentiate themselves from large toy retailers like Toys R Us and Wal-Mart by carrying a wide variety of high-quality toys that emphasize learning. Many, although not all, of these toys are made outside of China. This means specialty toy retailers could be in a position to benefit this holiday season if consumers continue looking for alternatives to the "Made in China" label.
National toy retailers, on the other hand, often market themselves based on their ability to deliver the lowest-priced toys. However, this year, with "cheap toys" quickly becoming synonymous with "Made in China," it remains to be seen if they will continue to employ the same strategy this year. According to Toys R Us and Wal-Mart sources, neither has released its fourth quarter marketing plans as of yet. Toys R Us typically announces the hottest toys of the season at the end September every year.
The concern over where toys are made could be just a passing issue.
"My sense is that like with every other event that has been similar to this, the furor will wane," said Sharon DiMinico, founder of Learning Express, a chain of 134 franchised specialty toy stores.
For example, sales dropped off for Thomas the Tank Engine products after a product recall related to the brand was announced earlier this year. But they've already returned to normal levels, DiMinico stated.
Still, Learning Express is taking measures to make sure consumers' concerns are addressed. The retailer is sending out a letter to all of its vendors asking them where they manufacture other than in China and will disseminate this information to all of its stores and put it on its Web site.
The chain is also reevaluating its product mix, and is considering dropping some items. "We've been selling Polly Pocket items for years but I'm not quite sure what the consumer response will be to those items now," DiMinico said. Polly Pocket was one of the lines included in a recent Mattel toy recall.
Conversely, DiMinico pointed out, "products made outside of China could benefit from this."
For example, Habba, which makes building blocks and other toys for babies, toddlers and children, is one of the few toy companies still manufacturing in Europe.
"I think Habba's business is going to increase," DiMinico noted.
Fat Brain Toys, a specialty toy multichannel merchant based in Elkhorn, NE, posted a toy safety information center on its Web site in mid-August, soon after the second big Mattel toy recall. The information center provides links to other sites involved in the testing and certification of toys.
"We're getting our customers the information and the disclosures that they are looking for," said Mark Carson, co-founder, Fat Brain Toys.
The retailer has also asked its suppliers, including those based in China, to provide a safety statement that Fat Brain Toys will post on its Web site.
"Not all toys made in China are bad," Carson said. This sentiment was echoed by other retailers, who agreed that what consumers and retailers need to look for is if the manufacturing process is being consistently tested by an independent third party.
Fat Brain Toys is also adjusting its search engine marketing and optimization efforts as a result of the recent toy recalls. For example, the company is bidding higher to advertise on some keywords based on the fact that there is rising interest in American- and European-made toys. The company is targeting consumers who are "tired of cheap toys" and are looking for quality items, Carson said.
Another strategy the retailer is working on is putting the country of origin on all of its product pages and creating special sections for American-made toys. "This is a little more organic in nature," Carson explained, "but we think it will make a big difference as the season goes on."
One decision that Fat Brain Toys is not currently considering, however, is revamping its merchandise mix. "We're going to be reinforcing the quality of our toys," Carson said, adding that this is true regardless of where the toys are made.