Pay to Play

Creating toy displays that appeal to kids and meet the needs of retailers is anything but child's play. Heightened competition among toy manufacturers and consolidation within the retail arena -- not to mention the increasing sophistication of many of today's playthings -- challenges toy merchandisers, marketers and display designers to produce P-O-P materials that generate excitement for kids and sales for retailers.The toy industry totaled $21 billion in sales in 1998, according to NPD Group's Toy Market Index. With the economy booming and the recent healthy holiday season for retailers, 1999 figures should come in even higher. Toys are distributed through a variety of channels, ranging from mass merchants to toy store chains to specialty retailers and gift shops. Leading toy sales in '98 were discount stores, with 41.5% of total industry sales. National toy store chains accounted for nearly 22% of sales. Competition among the various channels for consumers' toy dollars continues to be intense, especially as Internet toy sales soar.Stopping traffic in the toy aisle is tough these days, and interactive and motion displays are coming to the fore as the most effective way to attract customer attention. Both large and small toy manufacturers are striving to engage shoppers and communicate the unique 'playability' of their products. Given the high-tech features of many of today's toys, and consumer interest in experiencing products before they purchase, hands-on merchandising displays sell products, according to most marketers."Toys are definitely more complex these days, so the displays need to tell a bigger story to explain the functionality and the benefits," says Marilyn Hnatow, marketing support manager for Lego Systems Inc., based in Enfield, Conn. "Along with these toys comes the price tag, and before consumers are going to spend that kind of money, they want to see exactly what they're getting. Our direction is definitely toward more interactive and hands-on P-O-P displays."Leading Lego's 2000 line-up is its line of soccer toys, which is made up of six different sets of Legos that create a mini soccer field, complete with moveable players and goalkeepers. A merchandising unit in development will demonstrate the kicking action of the Lego soccer players. "We have to call that moveability out to consumers as a point of differentiation and uniqueness," Hnatow says.For the much younger set, Lego actually markets to parents through its P-O-P displays. "People's immediate thought is that Lego means small bricks. We need to show that our product line also includes large round blocks that are safe for pre-schoolers," Hnatow explains. A shelf display unit for Winnie the Pooh Duplo Lego that rolled-out for the holidays features a tethered Pooh figure that allows customers to place the figure on the various blocks. "Shoppers can see for themselves that small hands can play with it and that it is safe and fun," Hnatow says.On the high-tech end, Lego has utilized computer kiosk displays to demonstrate its Mindstorms line on a limited basis and Hnatow envisions that the company will continue the practice as it rolls out five new products this year. In addition, interactive demonstration displays will likely be created for new PC, Nintendo 64 and PlayStation games from Lego Media and the High-Tech Preschool line that will debut this fall. These displays will be placed in the electronics and computer/software sections of stores, as opposed to the construction areas where most Lego products are found.User-friendly demonstrations are a key component of the P-O-P display now being rolled out by Knowledge Kids Enterprises Inc. for its line of 30 LeapPad software titles. The Emeryville, Calif.-based company produces a range of educational playthings directed at children between the ages of one and 11 under the Leapfrog brand name."Customers need to walk up to the display and immediately get a feel for how to interact with the product," says Tim Bender, vice president of sales. "Our approach is to not have a lot of copy or a fancy design, but to simply convey how the product works." The 48-inch piece is shaped like a large lilypad, with quick copy blurbs communicating the key curriculum points and the fact that additional software is available. Customers young and old can work quickly through a tutorial module that demonstrates how the product works.No Plug, Lots of PlayKnowledge Kids distributes its Leapfrog products primarily through specialty toy retailers such as Zany Brainy and Noodle Kidoodle as well as through mass merchants and the major toy chains. The company designs its displays to be user-friendly for the retailer as well as the consumer, Bender says. "'Assembly required' is the kiss of death for any display, especially an interactive one. Retailers don't want to have to set it up or maintain it," he says. "Also, we don't rely on the retailer to provide the power source. Most of them don't have permanent display areas anymore and they're not about to run a line just for your display."The displays are delivered to the distribution centers of the mass retailers and direct to the specialty retail locations with lantern batteries installed. The units are designed to be flexible -- they are intended to be endcap displays for the product's launch and can be moved in-line after the initial promotional period ends.A newcomer to the U.S. toy marketplace, GP Toys of Lincolnshire, Ill., will roll out a motion display for its Walking Tanya doll this fall. The doll will be suspended in a clear, 12-inch-high cylinder that attaches to the edge of the shelf. "Customers will be able to press a button and see her walking action," says Rich Mazursky, president of the company, which is a wholly owned subsidiary of Giochi Preziosi, an Italian toy company. The display will be intrusive enough in the busy retail environment to catch customer attention and demonstrate this exciting toy, but it won't take away from product space on the shelf."Interactive and motion P-O-P displays will play a major roll in the company's merchandising plans for Walking Tanya as well as its radio-controlled robot, electronic collectibles and interactive plush toys. "Sound, lights, motion -- anything that adds excitement and shows the product is important," says Mazursky. "The display has to add excitement as well as inform the consumer. In our case, we're working to attract the child because we find that's who makes the purchasing decisions regarding our products."Toy collectors and nostalgic adults are the target market for specialty toy manufacturer Schylling Associates of Rowley, Mass. The company distributes a line of licensed products including Classic Pooh, Curious George, Thomas the Tank Engine and Madeline, as well as classic toys to independents and specialty toy retailers and gift shops. Merchandising units are designed by the company to demonstrate each toy's unique attributes, according to Steve Medina, sales associate."Having displays that move and show that toy in action works well with the idea of a small, independent toy store," says Medina. "People walk in expecting to see things moving and making noise. Essentially, they want to be able to play with them, not just pick up a box and look at a picture."For example, an electrical device attached to the wall continuously moves a string up and down, enabling a Curious George figure or Ernest the Balancing Bear to ride a unicycle back and forth. Schylling is also developing an electrical device to demonstrate the flapping motion of its TIM Flying Bird. Schylling charges its retail accounts for these more complex displays -- typically its own production cost of $25 to $75 each -- and retailers have to set up the units themselves."Some work does need to be done, but these units are typically popular with the retailers because they really add to the excitement level of their shops and catch the customer's eye," says Medina. "Retailers are looking for something new, and also looking to conserve space. These are overhead display pieces, so they don't take away from merchandise space."Toy manufacturers today are expending considerable resources into studying the effectiveness and viability of interactive displays. One company that's delving into such research is K'NEX Industries of Hatfield, Pa., which markets the K'NEX system of construction toys."The question is how to effectively and efficiently exhibit an interactive display on the store shelf," says Katie Needham, trade marketing associate. "Because the standard shelf fixture and store layout is not conducive to electrical hook-ups at the shelf, you have to consider your power source and make sure it will last for the lifetime of the display unit. If batteries need to be charged, you have to figure out who will do it, when and how."Many larger companies, including K'NEX and Lego Systems, deploy field personnel or hire third-party merchandising companies to handle installation and maintenance of displays. In some cases, retailers are involved in the process, but manufacturers typically design displays to be as easy as possible to install and maintain."We strive not to develop anything that will be overwhelmingly difficult to maintain or might interfere with the retailer's systems," says Needham. "We don't want them putting it out of operation for any reason. Also, consumers would think it's the retailer's responsibility to maintain the display, even though it's not. So, if the display is not working or appears messy in some way, it reflects first on the retailer and then on our product. We don't want that to happen."The bottom line is that it's my job as the manufacturer to worry about ease of installation and maintenance, not the retailer's. We have to do everything possible to help the retailer maintain the environment they've developed for their store," Needham says.Not all products call for hands-on or motion displays, and not all companies have the resources to create P-O-P units bursting with bells and whistles.For many manufacturers, a simple, well-executed, display enables the product to sell itself. Schylling created a metal rack for its Magicloth Magnetic Play Boards last year. The 6-foot-high by 2-foot wide rack holds 12 styles of 24 each from the line-up that includes Arthur, Richard Scary's Busy Town, Thomas the Tank Engine, Curious George, Madeline and other licensed characters. A counter display rack is also available."The customer can really see the product, and it doesn't take up much floor or counter space because it's a vertical tier design. The rack is more effective in showing the product and allowing shoppers to access it easily, and it's more efficient for retailers than stacking the Magicloths in a box somewhere," Medina says.Ohio Art, based in Bryan, Ohio, creates shipper display units for its Etch A Sketch family of products and its Betty Spaghetty fashion dolls, which are distributed through chain toy stores and mass merchants. The shipper displays are designed with an eye toward making the retailer's job easier and ensuring that its products make an impact on the shelf and in floor displays."A company our size really has a difficult time competing against the larger suppliers that blanket the retail market with in-store merchandising programs that we cannot afford," says Guy Thomas, vice president, domestic sales. "Without such hands-on support at the store level, it is uncertain that our P-O-P will make it to the shelf at all. Clearly, the best alternative is to focus our attention toward retail packaging that properly tells the tale of the product, which is then supported by an easy-to-use shipper display."Ensuring that toy P-O-P displays actually make it to the sales floor challenges manufacturers and designers on many levels. As toy distribution expands, toy marketers are finding that different retail channels can have vastly different needs with regard to merchandising units. "In specialty toy chains, interactivity is important because it enhances the consumer shopping experience to interact with the product on some level. Interactivity is also conducive to the store environment," adds Lego's Hnatow. "Mass merchant retailers, on the other hand, are looking for displays to be clear, concise and simple. They have more messages in their stores because they have more departments, and they don't want to add to the clutter. It's important that their stores be easy for the consumer to shop."While developing a single toy display that can be used in all retail channels would certainly be the most cost-effective approach, toy marketers are finding that retailers are increasingly seeking customized merchandising units. "You almost have to customize to some degree today. We find the retailers' needs vary more from chain to chain than from channel to channel," says GP Toys' Mazursky. "We offer suggestions about what we think will work and the retailer decides what will work best for them. Often, we customize the physical design or the graphics to their recommendations. This does affect our cost of operations, but we're dealing with large retailers, so the distribution we get is worth the effort."Most toy marketers agree that retailers are seeking more control over what P-O-P goes on their toy shelves, especially mass merchants. These chains often create their own P-O-P displays or require marketers to create units that work within their specs for color, graphics and size. This can create a unique good news, bad news scenario for marketers, says Needham of K'NEX Industries. "We can't just go ahead and develop something without key account input because chances are they won't take it," she says. "The bad news is that it can come down to just the product sitting on the shelf. The good news is that it can allow you to focus all your efforts on the product and packaging and reallocate the resources spent on P-O-P to other channels, like price promotions. But, if you have an excellent product and can work with the retailers to create P-O-P that meets their specs, then you've got a win-win situation."The key to ensuring that displays will be accepted is in developing strong working relationships with retailers. "You need to be in a situation where you really know them well enough to know their needs. This is definitely the case with operations like Target and Wal-Mart," says Needham.The Price of Doing BusinessRetail display allowances (RDA) are another crucial element in ensuring a toy P-O-P display makes it to the shelf in many chains. RDA programs typically vary from retailer to retailer, and most toy marketers consider them to be part of the cost of doing business. However, the issue of fairness is often paramount in the minds of toy marketers as they approach the RDA issue."One of the 'biggest and best' retailers is extremely fair to work with on such promotional opportunities and truly opens the door, which has seemed to benefit both parties and ultimately the consumer," says Ohio Art's Thomas. "The 'a la carte' approach used by many others within the industry makes it extremely difficult for us to compete with the larger toy companies."Schylling Associates will make its debut in the major chain stores, including Toys "R" Us, this year and, in doing so, will have its first dealings with RDA programs."RDAs are not part of the independent toy store business, so it's new for us. But we want our products to look the best that they can in the store, and RDAs are a means of ensuring that we hit the major chains," says Medina. "It's part of that business."Not all manufacturers are quite so accepting, however, and take umbrage at the proposition of paying for display space."If we have to pay to put our display into the stores, we're not putting it in," says one executive. "That's our policy and it's not been a problem for us. If you have a great product that will sell and an effective display, they want you to put up the P-O-P. We've never paid for space."Toy marketers are not only being asked to assist with the promotional efforts of retailers, but also to streamline the logistics of getting P-O-P into stores and onto the sales floor. Many toy marketers predict that their companies will work more closely with retailers to address these issues in the near future."The loud and clear message to us is the need to couple merchandising with replenishment strategies," says Ohio Art's Thomas. "The ability to marry the push of products through a store with the virtues of P-O-P will be a key to success in any merchandising strategy."Lego Systems is concentrating its efforts on creating a smooth flow of merchandising materials into the store. The initiative includes steps as simple as color-coding display boxes to differentiate them from product boxes. "Often the display doesn't make it to the floor because it's lost in the stock room. Ultimately, the retailer wants it on the floor and is looking for us to help them get it there by assisting their staff to make sure the display isn't lost in the shuffle," says Hnatow.Other toy marketers see more cooperative promotional efforts among competitors. For example, Knowledge Kids' Bender reports that the company has worked with V-Tech, essentially a competitor, to host simultaneous promotions. "While we compete with them, we also compete against the entire industry. We coordinate on our display timing," he explains. "Why not let our entire category benefit from our efforts? A cooperative effort among the category leaders can draw more customers into our aisle and create a strong presence for the entire category and drive sales. I think this type of cooperation will happen more often in the future. It's good for everyone, including the retailer who can concentrate his own effort in one place and also watch product move."As competition increases on all levels and toy retailers become more demanding, toy manufacturers and marketers are working to keep their eye on the prize. "Retailers are going to consider the nuts and bolts issues of any P-O-P display you bring to them. But they're also going to look at the sales message and ask, 'Will this help my consumer buy this product?' They know we're the experts at selling our product -- they just want to make sure that what we're doing helps move product off their particular shelves," says Hnatow. "That's what we're all after."

Pay to Play

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

Market Segment