Why having Retail Partners is hurting the Toy Industry. Business 101 being ignored.

[00:00:00] Speaker 1: Hey everyone, welcome back to the Spectre Creative channel. As you may have noticed, I'm a Lego representation of Scott Toy Guru Nightlake, your host. This is a bit of an older video I was working on that, well, finally wanted to complete, hence why it's a little bit of the older format for those of you watching the channel. All right, today I want to talk about something very important with the toy industry. The difference between a toy company, you know, like your Hasbros and your Mattels, your vendors, your distributors, and how it's a big problem when a customer becomes a partner. Okay, what am I talking about? I'm not talking about like, you know, collectors asking toy companies to make something. I'm talking about when your customer that, well, your wholesale customer is just your partner. Okay, what do I mean by this? Well, obviously your factory makes the product and your consumer purchases the product, right? That's what's known as the end consumer, meaning the person who actually interacts with the product. But even before the kid gets the product, you're probably dealing with the parent who purchased the product. Unless, of course, you're like, you know, you or I who are adult collectors and thrive on buying our own toys. Awesome Blossom, if that's the case. All right. So what I mean is, let's look at who are the customers for toy companies? Because we usually think, oh, okay, you know, Mattel, Hasbro, Spin Master, your customer at the end of the day is a kid or a collector. But no, a toy company is a, well, a manufacturer, they're not the vendor, but they're selling to Target, right? Target is the customer. It's called a B2B, business to business transaction, as it was the B2C, business to consumer. Something like Maddie Collector or, you know, any or HasLab is a B2C. 95 plus percent of product that goes out of Hasbro and Mattel is going to a retailer. All right. But what happens if you only have one retailer? This is what's known as a business partnership. Meaning, instead of having a customer or a group of customers, you have a single. Now, this is not the way it used to be. Back in, you know, the 80s, when toys were awesome and great, there were so many more toy stores. And that was a big part of it. Because even in the 90s, KB was on its way out the door. And you were left with things like Target and Walmart and Toys R Us. Yeah, you had, you know, there were a couple F.A.O. Schwartzes out there that still existed, but even their folding. So the fact that we have so many fewer toy stores means that toy companies have so many fewer customers. They still have consumers that want to buy stuff to put under the tree or, you know, give us gifts, et cetera, et cetera. But they don't have as many customers that are purchasing the product for distribution. Now, sometimes you get things like exclusives, or the toy industry calls them customized items, where it's designed specifically for one retailer, for one reason or another. The main reason is to drive customers so that that store, like Toys R Us here, can say, hey, you can only get this item at our store. Make sure you come in. Don't go to Target and Walmart, because you can only buy this at Toys R Us. Now, this is just done as sort of an enticement to bring the customer in, whether it's, again, parents or the end user of the product, which is ideally a child, or I guess an adult collector who's just going to put them on their shelf and collect dust. So that's why you have exclusives. Exclusives complement a main line, so they're usually tied to a larger product line. They complement it, they add to it, and it's meant to, again, draw people in. Sometimes there are items that could only be sold at one store. I mean, you're not going to sell a Jeffrey's Giraffe Pop at Walmart, right? It makes sense that that would be at Toys R Us. So that's kind of a side part of the whole partners and customers issue. You're always going to have customized product. What I'm talking about here is when the main line product only ships to one retailer, and this is becoming a bigger and bigger and bigger problem, because sometimes, like, this item was not developed for Toys R Us, but only Toys R Us bought it, which made it an exclusive by default. Same with something like the McFarland Superpowers line, which I think is awesome. Target didn't take this. Walmart was the only major retailer. Yeah, some mom and pops have it, maybe you can get them on Amazon, but as far as being able to see them at detail, you got to go to Walmart. And that's a problem, because this makes Walmart your partner. And if your partner decides to quit on you and say no more, the toy line goes away. This is why it's a major issue that we have so much, well, so we have less distribution, because there are fewer and fewer toy aisles out there. You know, again, things like these Motu figures that pretty much only showed up at Walmart because Target wasn't taking them at the time. You know, some of them have shown up, you know, in time. But yeah, there's a lot of product that either Target or Walmart takes that the other one doesn't. And now that we only have these two major toy aisles, now that Toys R Us is gone. Now that KB is gone. This is one of the biggest problems facing the toy industry. And how manufacturers, your Spins, your Mattels, your Hasbros are going to react to this? Well, I think we're going to see the rise of more and more small toy companies that don't have the huge overhead that these Fortune 500 companies have. That might be a solution, and we'll see more and more kind of A-list IP going to these. But when you have a partner and not a customer, meaning one major retailer buying into a toy line, that is very, very dangerous because the moment they change their mind, well, that toy line goes by. I hope you enjoyed this video and it was a good look at something that's really not discussed that much. The concept of having only one major retailer interested in your product and the consequences. Let me know if you have questions about this. And as always, the best way to support this channel is to share these videos with others. Thanks for watching, and I'll see you next time.