David Henderson, Chief Commercial Officer at Melissa & Doug, discusses sustainability, new product development, and the balance between specialty and mass retail in this extended edition of The Toy Book’s 2023 State of the Industry Q&A roundtable. Want more insight from the all-stars of the toy industry? Click here to explore this year’s lineup!
The Toy Book: Melissa & Doug has been a leader in the movement toward a sustainable future. How will those efforts continue this year?
David Henderson: Sustainability is at the heart of what we do here at Melissa & Doug. After all, our first hit toy was a wooden puzzle and, ever since, we have been focused on making well-crafted toys that get passed down from generation to generation — and stay out of landfills.
As the No. 1 preschool brand for wooden and sustainable toys, we believe in responsible forest management. That’s why we have committed to planting 10 million trees by 2030 and are partnering with One Tree Planted to help us reach that goal. We also accelerated our commitments to using Forest Stewardship Council (FSC)-certified materials and were recently the only global toy manufacturer named a 2022 FSC Leadership Award Winner. We’re currently rolling out How2Recycle labeling on our packaging and are working toward our goal for 95% of our product packaging to be curbside recyclable by the end of 2025. We continue to proudly be 100% carbon neutral in our own operations, with our purchases of carbon offsets going toward forest management projects.
We don’t simply make long-range promises, however. Our goal is to embed sustainability into our processes wherever possible, including product development, manufacturing, supply chain, distribution, office initiatives, and more. Starting with a sustainability mindset affects the way we think about every piece of the business. It’s something we all need to be striving for as an industry. We look forward to making continuous sustainability improvements throughout 2023 and beyond.
TB: How is innovation fueling new product development at Melissa & Doug?
DH: Our goal is for innovation to always complement our successful core business to drive growth for years to come. Our brand, design, and development teams continue to partner with inventor communities around the world to combine great ideas with our own pipeline of original, fresh, open-ended play concepts. You will see tremendous innovation in our core categories in 2023 and beyond … and fabulous, groundbreaking initiatives in both our core areas and exciting new spaces. We are fortunate that our core items — such as our Scoop & Serve Ice Cream Counter, Water Wow On the Go line, and Dust! Sweep! Mop! best-sellers — continue to resonate with every generation. Newness wins, but a productive core is what sustains long-term growth for our retailers and our brand.
TB: Over the past few years, Melissa & Doug has expanded its direct-to-consumer business and its presence at mass retail while remaining strong in the specialty realm. How does the company find balance among each channel?
DH: Our key focus is to be where our consumers expect to see us and experience our brand. We can’t be just anywhere, we have to know our retailers, our channels, and how best to elevate our brand and build joint successes. For decades we have partnered closely with Learning Express, ASTRA, Toymaster (UK), and thousands of global independent toy stores. These partners are key for our industry and our communities. They can showcase and focus on great toys and brands 365 days a year. Our brand is known around the globe and we have been in mass retail for more than 20 years. We were one of the first toy brands to partner with Amazon here in the U.S., and we partner closely with great retailers around the world such as Walmart, Target, Dollar General, Meijer, Walgreens, Smyths, and John Lewis Partners to name a few. Thanks to the breadth of our catalog covering so many play patterns and price points from $10 and up, we’re positioned to serve each channel according to its needs, including offering exclusives that support differentiation. I am fortunate to work with the best commercial and sales organization in the industry with more than 150 years of toy industry experience at the leadership level alone.
TB: What are some highlights to look forward to from Melissa & Doug this year?
DH: 2023 will be another remarkable year for the toy industry and Melissa & Doug. Our retail partners were thrilled to see the unique launches we have planned and our focus on our core in 2023. You will see new innovations throughout the year launching online and in stores, key new retail exclusives which elevate our brand, and some new and unexpected partnerships which will continue to drive our growth. Stay tuned for details on one upcoming partnership that we’re particularly looking forward to which supports natural environments. We also will continue to expand our line for infants and toddlers, introducing toys that provide the foundation for imaginative, open-ended play. Every day will count in 2023 and in partnership with our global retailers, we are excited for what’s ahead.
TB: How does Toy Fair moving from February to September impact your business, and what’s your take on the trade show shift?
DH: We love it! The change only enhances our business opportunities. We are in daily — if not hourly — contact with all retail partners and constantly driving new opportunities and measuring our joint progress. September allows us to meet with key retailers in New York City at the start of the important fourth quarter holiday season to lock in any new and last-minute opportunities for this year but also showcase amazing new innovations for the following year. Our development planning supports this timing as well as our pipeline of new innovation, which is ongoing. This timing also aligns with retail decision-making schedules. We also look forward to attending the London Toy Fair (January), Spielwarenmesse (February), and other key exhibitions and shows that support our global business.
TB: What are your overall predictions for the state of the toy industry — and toy retail — this year?
DH: The toy industry is an exciting place to be. During an uncertain economic period — or let’s just say it: a shallow recession — the toy industry has shown consistent resilience. The known challenges remain such as high inventory levels, the potential for soft consumer demand, continued inflationary pressures, and supply chain risks in China and around the world, but every industry is facing these, including toys. These won’t change in 2023. The difference for 2023, from what I see, is how we succeed may look different and we must remain agile and ready to adapt to new challenges and opportunities.
- The Consumer: Always looking for tremendous value, great innovation, and quality — this won’t change, but how it comes to light will be different. They will seek out your brand and toys online and in stores. Price is no longer the only key driver — play value and quality win as consumers look to items and brands where they will invest their dollars versus spending on a whim. You must have a range of price points that support the impulse purchase to the planned purchase for all budgets. We have that across all our categories. Play value and quality will win every day.
- Trusted Brand: Consumers love the Melissa & Doug brand and we work hard to ensure that we deliver great toys for kids and families around the world every day. They trust it for quality, safety, and tremendous play value. In times of uncertainty, you must continue to connect and demonstrate to consumers what your brand stands for. As parents and gift-givers look to invest their hard-earned dollars, they need to know that the toy will deliver a great experience and years of fun for the child.
- Innovate: Innovation comes in many forms, including products, communication, and partnerships. New Innovation in product supports growth and is key for the industry. Innovation should also come in how you connect with your consumers. You must know where your consumers are seeking information on your brand, your items, and the overall category, and you must constantly innovate how you connect and engage with them. You must innovate and challenge how you go to market with key retail partners. In challenging times, I believe, you must seek to partner more closely with retail to seek new opportunities and solve traditional challenges. I love knowing that our plans will change and we will have to adapt and tackle challenges that aren’t yet known. It’s the toy industry, embrace the craziness!
- Sustainability: The consumer demands that sustainability not be made of promises but of action and measured commitments. Melissa & Doug is delivering on our promises and continuing to put new actions in place every day.
- Screen-Free Play: We all spend a lot of time on screens and consumers are saying that we have to find a balance. Play wins the day. Our day-to-day, at any age, is very scheduled and scripted. Children of all ages need time to play, use their imaginations with friends and family, and have genuine uninterrupted screen-free fun.
- Retail: Change! Some of the shifts we have seen before. We will have some key players step up and elevate toys into a win and stand for a great experience while others will have to adjust for corporate priorities. Some will no longer be in business at the end of this year, or they will exit the toy business. The winners will be able to showcase toys with a great experience and be in stock online and in-store when the consumer expects it. They will have an updated selection of the brands that are winning versus simply resting on what has been in place from the past. Both online and physical retail experiences will win.
2023 will be a challenging year for all industries, not just toys. However, after being in the toy industry for over 22 years, there is no place I’d rather be than here at Melissa & Doug with the best team in the toy business. The future is bright — let’s go!
A version of this Q&A was originally published in the 2023 edition of The BIG Toy Book. Click here to read the full issue! Want to receive The Toy Book in print? Click here for subscription options!
