Not Just Child's Play

It's back to the future for toy makers, as products with sophisticated technology, interactivity and educational value fill the aisles alongside "retro" toys of yesteryear that appeal to college students and Baby Boomer and Generation X parents.And with these toys come new issues for in-store marketers: appealing to children or parents; deciding between interactive displays and "try-me-on-the-shelf" setups; making sense of the varied requirements of major retailers and specialty shops; and how best to harness the power of licensing, which continues to play a greater role in both toys and their in-store displays."Educational toys have been one of the fastest-growing pieces of the market-place, particularly in preschool," says Neil Friedman, CEO of Fisher-Price Inc., East Aurora, N.Y., and chairman of the Toy Industry Association Inc. (TIA), New York. Toys of the past, like Masters of the Universe, Transformers and Care Bears "have all been brought back, some more effectively than others," he says. "The other thing that continues to happen is that as electronics become less and less expensive, children expect their toy to do more -- as does mom."A year-end industry report by The NPD Group Inc., Port Washington, N.Y., showed the industry's sales figures fell 3%, from $21.3 billion to $20.7 billion, from 2002 to 2003. However, the report predicted a "much more profitable" year in 2004, thanks partly to licensed products tied to major movie and other entertainment releases. Michael Redmond, senior industry analyst with The NPD Group, says licensing will finish on a strong note in 2004, as will the price pressures created by mass merchants that have hurt (or killed off) such retailers as KB Toys, FAO Schwarz and Zany Brainy."The mass-market retailers started to put price-pressure on, using hot toys as loss leaders, cutting prices on those to boost the flow of traffic into the store," Redmond says. "That will be something that everyone's going to keep a close eye on this year. [Toy stores] are going to be as price-competitive as possible." The NPD Group saw strong sales gains in such categories as card games, spinning tops, dolls and accessories. Learning and exploration toys posted modest gains in dollar sales and an 8% gain in unit sales, while arts and crafts posted a 5% increase in dollar sales and 10% increase in unit sales. The biggest losers, according to the report, were action figures and accessories, building sets, infant/preschool toys and vehicles, but NPD predicts rebounds in 2004 thanks to licenses and strongly branded products.Redmond says the growth in educational toys probably will level off. "That category, which is all preschool electronic learning, had grown by leaps and bounds the last couple of years," he says. "Now, it's kind of flattened out a little bit."While the TIA does not produce a similar industry report for public consumption, the association's annual Toy Fair, held in New York in February, brought forth similar anecdotal reflections. The association says "prominent themes" included an increased licensing focus (tied to new movie releases and popular television shows), retro products released in "refreshed" versions to appeal to "today's more tech-savvy kids," and upward trends among educational products, games, and arts and crafts.Beep, Buzz, HissOne quality that makes brands come alive for today's kids is an electronic element. The resulting beeps, buzzes, bells and whistles have tended to drown out quieter toys in children's minds, says Ann Kearns, vice president of licensing for global toys at Sesame Workshop, New York, which markets via licensing arrangements with such companies as Fisher-Price."The trend in the toy industry overall is the opportunity to have more electronics at more attractive pricing," Kearns says. "That tends to feed the public: The more they get, the more they assume it's always going to be there. It's created a little bit of a monster in that some of the basic toys that are wonderful toys, in and of themselves, pale in comparison. For our preschool market, that's the trend."As for marketing these interactive toys in-store, one challenge is how much of the toy should be showcased. Kearns says Sesame and its licensees see try-me-on-the-shelf displays as a big selling point. "It affects packaging design. You've got to have it accessible so the parent can try it and hear it." For more involved toys with a trial-and-error learning process, "The parent's not going to go through that whole exercise on the shelf," she adds.Friedman of Fisher-Price and the TIA says his view of the potential growth for interactive toys "depends on what you consider 'interactive.' Interactive, meaning that the child does something and gets a response from the toy, yes. If you mean the child is expecting an answer from the toy, not necessarily." Fisher-Price has rolled out try-me-on-the-shelf options for nearly a decade, Friedman says. "If it's a product that is unable to be a try-me-on-the-shelf, for whatever reason, then the displays work well." Often that is because the product needs more explanation, he adds. "It varies depending on the need of the product."Today's parents see toys as one answer to how children might get ahead educationally. Friedman says parents always have wanted to find ways to combine fun and learning, but until recent years, "The toys were very bland because when you got done putting in the curriculum, there wasn't any room to do anything else. Now, you're able to put a lot more fun into the toy. If it's a toy the mom brings home, and the child plays with once and doesn't play with it again because it's not any fun, they don't get the educational value, and nobody's satisfied."Interactive yet EducationalThe Story Reader electronic books published by Publications International Ltd., Lincolnwood, Ill., provide both fun and educational value, says Kerry Cunnion, executive vice president, who likens them to LeapPad and PowerTouch. "It's a hybrid, somewhere between a book and a toy," he says. "This is a product that will entertain her for 20 or 30 minutes at a clip. From that standpoint, I think parents are looking for products that will engage their children on a number of different levels."Cunnion says Publications International's displays use corrugate and depend on the natural interactivity of Story Readers to engage kids and parents. Creating displays on which people can test the product "costs more, but it really pays for itself because you can convert a lot more people," he says, adding that the company spends $40 to $50 per display and has placed 700 at Toys "R" Us, about 1,200 at Target and another 1,000 at smaller retailers. "We're ramping it up pretty dramatically," he says, adding that the company anticipates having 10,000 by year's end.The educational niche is woven into the DNA of Brainy Baby, Alpharetta, Ga., which markets videos, licensed books and electronic toys, says Jill Denlea, director of marketing. Entertainment is no longer the core concern among their target market -- mothers of children under age 6 -- Denlea says. "When you see the Leap Pads coming out, it is getting more of that educational or intellectual spin. It seems like the grandparents or the friends buy the entertainment stuff."Wild Planet Toys, San Francisco, figures its Spy Gear line has educational value in the role-playing games it inspires. "We try to make it kid-cool but mom-approved," says Liz Cantwell, senior trade marketing manager. "Moms want to get toys that kids are going to get something out of educationally, but kids don't want to feel like they're doing a science project."Not all new educational toys have electronic elements, either. Minneapolis-based Magnetic Poetry, which sells alphabet tiles that kids can arrange on refrigerators and other surfaces, grew its children's line by 1,000% last year, says Michael O'Halloran, president. "Parents want to provide the best for their children and make sure that they're at the top of the class," he says. "When kids are playing with words, they develop a love of language."To simulate the experience of playing with Magnetic Poetry tiles in a friend's kitchen, the company designs its displays with a play surface, O'Halloran says. "If you go into a store, you'll frequently see a wide range of poems and verses that people use to interact with the display," he says, adding that the company encourages such creativity -- up to a point. "A few of the times we went out and weren't impressed with the quality of the poems out there," he says, which prompted the company to print display magnets that illustrated what it believes "a nice poem" should look like.Such interactivity seems worth the cost for increasing numbers of manufacturers. Brian Mitchell, director of marketing for Christian publisher Thomas Nelson Inc., Nashville, Tenn., figures it can bump up costs by as much as 40%. "You have to make the decision on where you are in the life-cycle of the product. Does it need it at this point?" Mitchell says. A Balanced AudienceNewly marketed toys aren't necessarily brand-new. Manufacturers are turning to the toys of yesteryear for nostalgia and collectible purposes. Sesame Street, for example, is celebrating its 35th anniversary by introducing "nostalgic products like a 'Sesame' version of 'Monopoly,'" Kearns says. "They're not intended for our current preschool market. I'm sure your little one couldn't care less that 'Sesame Street' has been on 35 years."While Sesame has a special push this year for that reason, marketing to the young-at-heart is nothing new, Kearns says. "We get calls all the time from college students who are looking for a Cookie Monster poster for their dorm rooms," she says.Yet college students certainly are not the focus of in-store displays in Toys "R" Us and other retailers. Manufacturers must strike the right balance for each brand -- between marketing to children and marketing to mothers or other grownups. For the most part, the younger the child, the more likely mom is to be the target, marketers say. "We're thinking more of the moms, really," says Denlea of Brainy Baby. "Where the children help our sales is after the item is purchased." Publications International's Cunnion says the level of influence "rises dramatically" among children toward the upper end of the 3- to 6-year-old range targeted through Story Readers. "We're tying our P-O-P to focus on adults, not just parents, and less so to kids," he says. "But having said that, all of the products we have are licensed products featuring popular children's characters." He adds, "Your 5-year-old is saying, 'Dad, I want this. Dad, I want that.'"To revamp its packaging and displays to appeal to the 4- to 7-year-olds for whom the First Words product is meant, Magnetic Poetry hired an art director "who had a very kid-like, storybook approach to illustration," O'Halloran says. "Our adult packaging had a very museum-like look to it -- it was very literary looking, with words playing a predominant role. Our kids' packaging for First Words looked that way, too."The biggest differences in the new packaging and displays are the font type and imagery. "We have four kids on the front of the package. They look like 7-year-olds, and they're holding up our tiles," O'Halloran says. But mom remains the main focus, given the product's educational benefits, he adds. "We try to quickly get to a benefit message related to the educational side of things. Usually, if you can please the mom and address some of the fun elements that the child enjoys, you've done a lot to please the buyer."Sesame Workshop works with licensees to target packaging and displays strictly to adults, based on its corporate philosophy, Kearns says. "It goes back to the fact that our target audience are preschoolers," she says. "They don't often understand the difference between a TV spot and a television program. They don't understand the difference between the reality of a sales pitch and a story line."Francie Berger, project manager for the in-store department at LEGO Systems Inc., Enfield, Conn., says her company's display materials are aimed at parents, while the three-dimensional model cases communicate benefits to both audiences. While Berger could not provide exact cost figures, she says, "It's definitely more expensive because you're actually building up a product, as opposed to creating a piece of cardboard. But once you get the product out of the box and built in three dimensions where somebody can touch and feel and see it, that sells the product."Thomas Nelson, which produces videos and toys that spin off its book lines, including Hermie & Friends, targets a 35-year-old mother of two children with displays that feature "the kinds of things they're going to want to run up and hug. That's going to be a deciding factor for mom and dad in many cases," Mitchell says. "It's got to be high-color, high-value. It's got to pop. The character placement is going to be key." The company is also testing an inline display for bookshelf units in which the child touches a picture of the product and causes a video to play. "My gut tells me that you're engaging the consumer by doing so," Mitchell says. "Let's face it, we're in a TV generation."Policy and ProcedureAnother consideration for toy manufacturers -- as with any industry -- is the array of policies and procedures they face from all retailers. Target, for example, long has had a "clean-floor" policy, and both Wal-Mart and Toys "R" Us have their own requirements. Smaller specialty retailers tend to face space crunches.While Toys "R" Us declined to participate in this article, Warren Kornblum, executive vice president and chief marketing officer of the 1,600-store, Wayne, N.J.-based retailer, spoke with P-O-P Times before his December key-note address at The P-O-P Show/New York. "Our goal is to make sure that our messages get out there, but it's also very much to make sure that we are speaking with -- as opposed to screaming at -- people," says Kornblum. "We're open to ideas. Those who really want to work with us have to try to get out of the paradigm and find a way to differentiate. But most important, they have to do something that's cool for the end-user and shopper."Toys "R" Us has given LEGO the most to build upon in terms of P-O-P, Berger says. The company enjoys a permanent endcap with a shadow box on top displaying a three-dimensional graphic of that quarter's featured product. Overall, LEGO probably produces about the same amount of P-O-P as five years ago. Now, however, there is greater emphasis on "opportunistic" campaigns that come up quickly. One such initiative is a 450-store home site program with KB stores, Berger says.Wild Planet also has been designing mostly with Toys "R" Us in mind for about two years, Cantwell says, working with a merchandising team from the chain to ensure approval. Yet Wild Planet places displays in smaller retailers, too. "We try to use the demo unit in both places to help cover our costs," Cantwell says, adding that as its toys have become more technologically advanced, Wild Planet has produced more demos. "Once you put it in their hands, they get it," Cantwell says of consumers.Working with Toys "R" Us, at least for a specialty company, is challenging. Carlsbad, Calif.-based Upper Deck Entertainment, for instance, produces trading card games (such as Yu-Gi-Oh!). Katherine Minc, merchandising specialist for the company, says the retailer usually does not dedicate an entire display to one company. "They don't want a display, typically, that's just branded as Upper Deck." Her colleague, merchandising specialist Suzanne Lombardi, says Wal-Mart has "very strict" height requirements for endcaps. This holiday season, for the first time, Upper Deck will be placed in Target with a header display.Thomas Nelson, which works mostly with smaller retailers, limits displays to big launches or proven bestsellers, Mitchell says. "We're still being urged to reduce the header, keep the footprint as small as possible. You know you've got the support of the store, but you can't monopolize all their space." Overall, the company is using fewer and smaller displays. Five years ago, he says, the company could get a floor display in. Now, though, it might utilize the shelf itself, or use counter mats or door clings.Magnetic Poetry, which focuses on a similar market, sees the same thing first-hand at two smaller gift and toy stores near its offices."You can't come in with something that might hold 50 of your product," O'Halloran says. So, the company designed a narrow display that spins and rolls on wheels, so retailers can move it into "advantageous areas during major holiday periods," he says. Fisher-Price, on the other hand, has been producing more displays "because we have more products that warrant it," Friedman says. "We're much more heavily into learning. We do them only if they're needed. If there's a lot of content and a lot of information that needs to be given to mom, we do a display. The issue becomes, 'How much space does it take up?' and 'Is the product itself going to generate enough volume to justify the space used?'"

Not Just Child's Play

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