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State of the Industry Q&A: ASTRA

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

KIMBERLY MOSLEY, President, American Specialty Toy Retailing Association

What are the biggest challenges facing the specialty toy industry as we head into 2019, and how is ASTRA addressing them?
Last year at this time, we anticipated more large chain store closures. As we all know, that prediction became a sobering reality that continues to reverberate across the entire toy industry and at all levels in the distribution channel. It offers members of the American Specialty Toy Retailing Association (ASTRA) unprecedented new opportunities, even as it raises concerns about competitive responses from well-resourced big-box retailers. Added to the mix for 2019 is uncertainty about potential consequences from new tariff policies from the U.S. and its trading partners.

We’re starting 2019 with accelerating change in our business environment. There’s nothing new about that, right? This year’s version is focused on the infrastructure side and characterized by fragmentation, new business models, and channel fluidity—all of which tend to be challenges for small businesses. However, those ever-changing consumer expectations play to the strengths of ASTRA stores—more experience-driven purchases, a focus on social responsibility retailing, and a desire for shared culture.

Successful ASTRA retailers always respond to a changing market by using their smaller size and entrepreneurial creativity as competitive advantages that make them nimble and adaptable. ASTRA will help identify what is working for independent stores and share it widely with ASTRA members using our portfolio of professional education options, including Marketplace & Academy sessions in Pittsburgh; on-demand, web-based education available 24/7; our certification programs; and conversations that flourish in our online community. ASTRA is known for members who generously share their best business tactics to help others. We will double down on our efforts to give our small business owners proven tactics for weathering the latest changes in 2019.

What are ASTRA’s key initiatives for the year ahead?

To grow the expertise of our members, which will in turn improve their business performance and increase the viability of their businesses. Check out academy.astratoy.org for details on our professional education programs and watch for the full launch of our new Certified Master Sales Representative (CMSR) this year.
Establish relationships and partnerships to expand the ASTRA footprint and grow face-to-face opportunities for members to get together, which will increase the mix of ideas, relationships, and products that flow through ASTRA. Think CES, Spielwarenmesse, Toy Fair New York, Toy Fest West, various gift marts and children’s products shows, and ChiTAG. ASTRA will have a presence at all of these and more—in some cases, fueled by formal partnership, and many offering in-person education and networking events.
Address big picture issues with the leadership of an ad hoc independent toy industry “think tank” we call the Innovation Council. Comprised of highly experienced toy industry professionals and others from aligned industries, you’ll hear more as this group prioritizes the longer-term issues we must tackle in the independent toy industry.
Add customer-focused activities and benefits centered on new ways to add no-cost, in-store philanthropic programs and information about toys and play to differentiate their stores.

State of the Industry Q&A: The Toy Association

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

STEVE PASIERB, President & CEO, The Toy Association

What are the biggest challenges facing the toy industry as we head into 2019, and how is The Toy Association addressing them?
Preventing tariffs on toy products from China and a threatened fourth tranche is The Toy Association’s top legislative priority, among many, this year. Our staff continues to aggressively communicate the detrimental effects tariffs would have on the toy industry in meetings on Capitol Hill and to the administration. Earlier this month, member companies were invited to join a Washington, D.C., fly-in as part of our participation in the Americans for Free Trade Coalition. Members added their voices on how tariffs can hurt the toy industry and will ultimately result in higher prices to consumers, impacting those who love to play—kids. The Toy Association also secured additional communications, public relations, and lobbying resources, which are being implemented.

Another important topic in 2019 is attacking IP infringement, forgery, and counterfeit products that pose not simply a financial risk to toy companies but, as we saw over the holidays with the tragedy in Wisconsin involving an illicit toy, these products threaten the health and safety of children. In January, we released a white paper on intellectual property infringement and e-commerce in the toy space, and we will continue to work with the toy industry, e-commerce marketplaces, and lawmakers to rein in these abuses.

Further, as the industry adjusts to the evolving retail sector and recaptures sales following the closing of Toys “R” Us, the question remains of who will fill the gap. The retailer frequently gave small- and medium-sized manufacturers that shot at growing significantly. In an age of limited retail shelf space, the Association will look to bring forward fresh thinking and diverse thought leaders to address this issue.

What are The Toy Association’s key initiatives for the year ahead?
Protecting and promoting both member companies and the broader toy community are the reasons we exist. We have many exciting happenings planned for this year, such as the Annual Business Conference this year in partnership with Target, continuing to strengthen Toy Fair New York and Toy Fair Dallas, and organizing a primary El Segundo, California, showroom location for members without business operations on the West Coast for April and September.

Elsewhere, a new multitiered membership offering enables specialty toy stores and individual toy buyers to participate as members in Toy Association activities; we will commission new research on evolving retail, industry studies, and consumer insights for members; and will continue to promote to families the value of childhood play.

State of the Industry Q&A: MGA Entertainment

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

ISAAC LARIAN, Founder and CEO, MGA Entertainment

What is one of the biggest challenges toy manufacturers face, and how is MGA Entertainment addressing it?

One of the biggest challenges toy manufacturers face in the industry is the mass production of counterfeit toys and other toy companies that knock off the hottest toys on the market. It’s also an easy way out for some toy companies and so-called “inventors” to make a copy of an original idea instead of innovating. Longer term, this will hurt these copycat vendors as well as the retailers who support and buy knockoffs. Our legal team implemented a global anti-counterfeit program that vigorously pursues all types of counterfeit and knockoff cases and enforces our rights to the fullest. We will always protect our rights and our loyal fans who deserve to receive the best quality toys from a reliable and trustworthy manufacturer, such as MGAE. As a leading company in the toy industry for creating innovative product, packaging, and marketing tactics in bold ways, we are growing faster than anyone else. We care about our brand’s fans who support and allow us to continue making creative and groundbreaking toys that become a memorable part of their childhood.

Unfortunately, L.O.L. Surprise! encounters a high volume of counterfeiters attempting to capitalize off of the unparalleled phenomenon, and we are vigilant in responding on social media and taking aggressive legal action as we urge fans to only purchase products from trusted retailers and websites. We also have a unique approach to educating kids about how to spot a fake that is in the tone and manner of our brand on our Unboxed series on YouTube, called “How to Spot a Fake L.O.L. Surprise,” which has received more than 10 million views to date. Maintaining the quality and integrity of our brands is a top priority and essential for the brand and fans.

What are your predictions for the state of toy retail this year?

I predict the loss of Toys “R” Us will have a major long-term effect on the toy industry. Many toy makers will likely not make new and innovative ideas, as major retailers, such as Walmart and Target, simply don’t have room to take new ideas. In addition, these retailers are risk averse to bringing anything onto shelves because their space is so limited. So, I believe the toy business as a whole will be down again this year because of the lack of original innovations that are brought to market. It’s unfortunate, but it’s a reality toy manufactures have to consider.

State of the Industry Q&A: Jazwares

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

LAURA ZEBERSKY, Chief Commercial Officer, Jazwares

Spending in video games increased 24 percent in the third quarter. How does this affect the toy industry?
The increased popularity of video games is amazing for the toy industry—it’s bringing new consumers into the toy aisle. These players are fully committed to the games they are playing, and spend countless hours honing their skill set, exploring endless opportunities of customization, participating in storytelling, and diving into multi-player interaction. Players are thrilled to have product dedicated to their favorite characters and in-game experience.

Some of the hottest toys this year were based on multiplatform games and YouTube content. Do you expect this trend to continue in 2019?
This trend will undoubtedly become more dominant in 2019 and beyond. Content consumption has completely changed; kids of all ages are engaged in new ways. From multiplayer games and phenomenon of influencer unboxing videos to creating their own content, this year’s hottest toys all prove that kids want to replicate that digital experience.

Jazwares signed on as master toy licensee for several properties in 2018, including Feisty Pets and Angry Birds. What are the differences in creating proprietary product lines versus licensed products?
The process between a licensed product and proprietary toy launch is very different. With more than 20 years in the industry, Jazwares prides itself as an expert on bringing licensed properties to life. In doing so, we become responsible for someone else’s content, which requires a complete understanding of that brand’s DNA. We are very focused on the authentic translation of the brand while providing the best customer experience, innovation, and on-shelf longevity. This is a special talent and speaks to who we are as a company. Creating proprietary lines is uniquely challenging and rewarding, as you are starting from scratch without the benefit of existing content, fans, and history. You start with a blank page, which is exciting, but most definitely daunting.

State of the Industry Q&A: Wonder Works

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

CHRISTINE OSBORNE, Owner, Wonder Works

What is one of the biggest challenges specialty toy retailers face, and how is Wonder Works addressing it?
Staying relevant is one of the important challenges specialty toy retailers are facing in 2019. Discovering the experiences and products customers want and expect and tailoring one’s business to offer them are key to developing this year’s business plan.

Reviewing our product mix for the age categories we provide for in our communities is essential to curating highly profitable, sought-after items. This involves expanding product categories, whether it is crossing the line into items mainly found in the mass market or adding certain adult gift categories for the moms and dads who are shopping in our stores already.

Wonder Works debuted the country’s first Mattel store within a specialty store last year. Was the concept successful? What are your plans to expand this year?
Wonder Works’ partnership with Mattel is extremely successful because the designated section allows customers to focus on one area for Mattel’s trusted brands—Barbie, Thomas, and Hot Wheels. Knowing they are getting the best of Mattel’s offerings and are experiencing in-store Mattel events allows for a well-rounded shopping experience.

Wonder Works also worked with Fat Brain Toys to assist in developing a couple of experiential shopping opportunities for customers, including a play table with display and play bins and a free-standing, three-sided unit that turns the merchandise three times faster. This houses shelves, a flat wall, and play bins for a great hands-on opportunity to play.

In 2019, Wonder Works looks forward to taking toy brands to the next level. Wonder Works will feature a unique, designated section for a well-known brand. Much time and effort has been placed into this project, and it is expected to be a revolutionary experiential and shopping experience much needed in specialty retail shops.

Do toys from mass market manufacturers have a place at specialty retail?
Absolutely. After the initial craze when L.O.L. Surprise! requests hit specialty stores in 2017, specialty retailers quickly learned to adapt, work together, and partner with companies that were willing to focus on specialty, such as KidFocus. The development of product sharing of MGA Entertainment brands with specialty stores was difficult at best in the past, but the generation of KidFocus created a pathway. Additional brands, products, and offerings were provided assisting specialty stores’ relevancy image.

Numerous distributors, such as License 2 Play, also bring mass-specific products to specialty, which due to a large social media presence, specialty can no longer ignore.

Companies including Moose Toys and Jakks Pacific are getting a broader customer base through the specialty channel License 2 Play creates. By offering these mass products to their customers, specialty stores are introduced to a customer base that may never have entered their stores otherwise. It is a win-win for all.

State of the Industry Q&A: eBay

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

MICHAEL MOSSER, General Manager, Lifestyle, Media and Toys, eBay

eBay launched Toytopia, a new section of the site specifically for toys, and its first-ever toy catalog. Were these initiatives successful? What are your plans to expand in 2019?
eBay distinctly stands apart from other retailers with a toy selection that only our online marketplace can deliver—the latest, trending toys, the sold-out and impossible-to-find toys, and the collectible, nostalgic, and super special toys.

eBay brought this unique shopping experience of Toytopia to life through a mix of online and offline experiences, including a pop-up experience at Chelsea Market in New York City. We also introduced our first-ever toy catalog, which featured 2018’s hottest toys alongside unbelievable collectibles, such as the Bumblebee Transformer for $19.99 on the same page as a first-generation 1987 Transformer Set for $100,000.

We also work closely to partner with our sellers to deliver our breadth of inventory. For example, Hasbro sells directly on our online marketplace, where we can offer consumers amazing deals and a popular selection ranging from Marvel action figures to games like Monopoly.

Throughout the 2018 holiday season, we experienced strong traffic and sales across our robust offering of toys, and look forward to continuing that momentum in 2019. As a cultural barometer for what’s trending, we’ll continue to offer a myriad selection, ranging from the latest action figures from a blockbuster film to the hottest STEM toys.

What were some of the most popular toy categories on eBay last year?
In 2018, we saw categories, such as interactive building toys (LEGO), action figures and dolls, and board games, continue to prove popular on eBay. For example, from March through September, more than 148,000 L.O.L. Surprise! toys were sold on eBay. The momentum also continued in the back half of the year, from July to November, when we saw a 70 percent increase in searches for L.O.L. Surprise! toys on eBay.

How do trends in consumer expectations affect toy sales?
There are a number of expectations that today’s consumers have when it comes to shopping that we focus on delivering. In particular, we’re dedicated to catering to the busy shopper, where 63 percent of the eBay platform involves a mobile touchpoint, and 71 percent of items ship for free in the U.S., the UK, and Germany.

Spending in video games increased 24 percent in the third quarter. How does this affect the toy industry?
The video game and toy industries were always closely related. If you think back over the years, there were a number of character toys created that were licensed from video games, and video games that were built around existing character franchises, such as Disney. This past holiday season, for example, there were a number of licensed products based on the wildly successful video game Fortnite. The titles that are driving an increase in sales provides a resource for character and toy development for licensors that can act and manufacture quickly.

State of the Industry Q&A: PlayMonster

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

SCOTT FLYNN, Vice President Sales & Marketing (Chief Fun Monster), PlayMonster

PlayMonster made several acquisitions in the past year, including Kid O Toys, Interplay, and Utter Nonsense. Do you have plans for further acquisitions at some point in the future?
Acquisitions will continue to be a major part of PlayMonster’s growth strategy. Our objective continues to be to acquire brands or product lines that extend or complement our existing product portfolio. We will also consider new categories that fit well with PlayMonster and expand our offering. The main criteria with any potential acquisition is making sure it fits with PlayMonster’s mission to champion play for all ages and make a difference through quality play. The key to any acquisition is to ensure we can add value in order to create long-term, sustainable growth.

How will your alignment with Audax Private Equity affect PlayMonster’s growth this year?
Aligning with Audax Private Equity is going to give us many more opportunities to continue our growth. With the infusion of capital and resources, PlayMonster can thrive and grow both organically and through synergistic acquisitions. We have ambitious plans for PlayMonster, as does Audax Private Equity. With their support, we can now explore expanding existing categories, such as Automoblox vehicles, and complementing existing brands, such as My Fairy Garden activities, along with some of our most popular brands and lines. We also now have the means to add new categories and brands through acquisitions to expand our already impressive portfolio of games and toys for kids and adults alike.

State of the Industry Q&A: FAO Schwarz

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

DAVID CONN, CEO, ThreeSixty Brands

How is FAO Schwarz different from a typical specialty toy store?
The big difference is the experience of shopping at FAO Schwarz. From a two-and-a-half-story clocktower and a giant rocket ship to toy soldiers that greet you at the door and, of course, the dance-on piano, a variety of exclusive, customized product-driven experiences make FAO a very unique toy store.

In today’s world, children have such exposure to a variety of media and technology, and are very savvy as to what is current. FAO Schwarz, in addition to being a great place for finding classic toys, is also a place to find the new and the unusual. Knowing that kids are so well informed today, our challenge is to continue to bring innovation, combined with imagination, through our products and stores. We aim to provide experiences that continue to engage, excite, and create new memories for the next generations of FAO customers. Our focus is on what’s next, and we look to our own product development, in addition to our worldwide search for unique products and experiences that will first be seen at FAO.

Another brick-and-mortar store is opening at LaGuardia Airport. Do you have any plans to expand to more retail locations?
We already have strong presences with FAO Schwarz shop-in-shops in stores across the country, including in Canada at Hudson’s Bay and in England at Selfridges. We opened our first airport store at LaGuardia and are opening more later this year in conjunction with Hudson News.

We also announced a partnership with Kidsland, China’s largest toy distributor and retailer, which has almost 300 stores. They will open a 27,000-square-foot FAO Schwarz flagship at China World Mall, slated for April. They are also planning to open a second location in Beijing in March 2019, followed by additional stores set to open across China over the next five years.

State of the Industry Q&A: VTech Electronics North America

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

ANDY KEIMACH, President, VTech Electronics North America

VTech created licensed Go! Go! Smart Wheels for the first time ever last year. Are there any plans to expand the partnership with Disney or any other licensors?
We couldn’t be happier with the success of the licensed Go! Go! Smart Wheels line, and we’re looking forward to continuing the momentum with the expansion of the line this year. In addition, we’re partnering with Netflix to develop a new animated series and toy line based on our Go! Go! Smart Wheels toys.

Many retailers stepped up their offerings for the 2018 holiday season. How many of these changes will stick? Will consumers have as many options for holiday shopping this year?
With so many ways to shop, retailers focused on personalized shopping experiences for customers this past holiday season. Consumer expectations continue to rise, so I think we will continue to see retailers and manufacturers working hard to anticipate these rising expectations. VTech prides itself on working closely with our retail partners to deliver great product and product experiences that seek to excite and delight our consumers.

How did the demise of Toys “R” Us challenge you to rethink the way you did business last holiday season?
The U.S. market remains diverse and dynamic! The departure of Toys “R” Us from the U.S. market presented us with both great challenges and a tremendous opportunity. With so much market share suddenly up for grabs for both manufacturers and our retail partners, it allowed us to work even more closely with them. We are fortunate that we can call on our continuous stream of innovative products, speed to market, and new product experiences to deliver very tailored and winning programs that will attract consumers to their stores and our VTech and LeapFrog brands.

How do changes in school curriculums affect the way you develop educational products?
We’re always cognizant of the growing list of skills children are expected to be fluent in by the time they reach school age, and we know school-readiness is a concern for many parents. Our VTech and LeapFrog products are designed to serve as a complement to the early skills children are learning at home, such as vocabulary, letters, numbers, colors, and more. We also work with a team of in-house learning experts to ensure we’re introducing a wide variety of beneficial, age-appropriate skills. We will continue to develop our educational toys to reinforce school curriculums in an exciting and engaging way to make it fun and create a strong foundation for lifelong learning.

State of the Industry Q&A: WowWee

Industry leaders, retailers, and manufacturers weigh in on toy trends, changes, and more in The Toy Book’s annual State of the Industry Q&A.

DAVIN SUFER, Chief Technical Officer, WowWee

How does WowWee come up with new and innovative takes on existing lines, such as Fingerlings, to keep them fresh and exciting for consumers?
We have a very playful and inventive team. We are quite literally always riffing on new ideas, things we see trending online, and what we see our kids doing. While that’s going on, our development team is constantly trying out new sensors, mechanisms, and design methods. When those two areas overlap, we end up with innovative products and innovative play.

WowWee entered a licensing agreement with Pinkfong in September, and had product for sale by December. What does it take to deliver products so quickly without losing any of the quality?
We were talking to the Pinkfong team for a few months at that point, but we moved quite quickly to get some really awesome items to market. Some of the ingredients that go into moving quick include an extremely engaged team, dedication to our brands, many late nights with the team in Asia, great manufacturing partners, and a lot of experience in what will resonate with young kids. On that note, it doesn’t hurt to have young kids at home to try out the products.