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Daniele Caroli interviews Carter Keithley, TIA President

US companies look to overseas markets for growth


In order to be updated on the US toy market and on the Toy Industry Association’s activities and events, I met Carter Keithley, President, at the International Toy Fair in Nuremberg, just a few days before the opening of the New York American International Toy Fair, which is managed by the TIA.

Our conversation starts from this subject: “When the Toy Center buildings were disbanded in New York, it really undercut the importance and centrality of the New York Toy Fair in its global impact”, Keithley recalls. “We are slowly beginning to regain that international attractiveness. In fact, if you are a European or South American or Asian toy retailer and you are only going to the Nuremberg or Hong Kong Toy Fair, you are not seeing at least 75% of the creativity of the America-based toy companies."

“In the past because our market is so large," he adds, “American toy companies were able to be satisfied with the American market and not look that much to exporting; that has changed lately, because all the growth in the toy business has been [happening] overseas: in the year 2000, US toy sales were about $24 billion and global toy sales were about $54 billion but in 2010 American toy sales were about $24 billion and global toy sales were $84 billion. So, increasingly American companies are becoming interested in exporting and they are learning how to do it.”

Toy Fair: getting more and more international
Looking at the US market from a different point of view, I ask Keithley which kind of interest is there in toy products of European origin. “In America, toy retailing is different from what it is in other markets, because it is dominated by three mass merchandising companies; therefore, in order to compete, the small independent toy retailers or toy chains have to find something unique to attract their customers, as the latter know that if they go to one of the large retailers they are going to always see the same things, while the small independent retailer will offer something special, special products that in part can be found among European manufacturers getting into the American market. We know that the price point of Europe-originated toys tends to be higher than the price point of toys originated in America, but the specialty toy stores are able to apply a higher price point because the consuming public identifies them as proposing a better level of quality and originality. The small retailers cannot compete [with the mass market] on price, they must compete on service and on the unique character of their products.”

“I frequently get interviewed by consumer media in New York around Toy Fair time,” Keithley explains, “and they always want to know how the toy industry is doing. For 2012, the NPD data showed that basically the toy industry was flat in the United States: it was $16.5 billion against $16.6 billion the previous year. The reason there was no sales growth is because our industry was working on how best to employ new technology with their toys, since children and families are migrating to using iPads and iPhones as toys. What I have seen here [in Nuremberg] and I expect to see in New York is that our toy companies once again have learnt how to integrate the tablet and smart phone applications with their toys in very creative and successful ways. I think this development is going to drive toy sales growth in 2013 dramatically.”

The involvement of the licensing business
The US licensing business appears to be more and more involved in the American Toy Fair. Carter Keithley explains why: “The stories drive the sales of toys. One of the hot line of products in the US, soon to be introduced into the European markets, is the relaunch of the Teenage Ninja Mutant Turtles, hugely successful because of the story behind it. The whole story has been reintroduced by Nickelodeon and it has set on fire the sales of toys. Similarly, I see many toy companies developing story contents directly or through partnership arrangements with the entertainment business: Hasbro for example in its joint venture with Discovery Channel, or Mattel bringing up the Monster High story first and then the toys.”

The value of play
With Keithley we discuss the fact that in the US, as well as in some European countries, Christmas sales are more and more concentrated within a period of just a few days before the festivity. This is a matter of concern for the industry: “Among the national toy associations we are seeing increasing pressure from our members to try and do something that promotes the value of play in the respective markets,” Keithley observes. “Every national toy association is looking at creating some kind of campaign to communicate to the public about the value of play and the joy of play. Of course, the messaging has to be different in each market because the cultures are different. But we think there might be an opportunity to have some common themes that could be used by each national toy association in their value of play promotion.”

Trends in the US
I ask Keithley about the main trends in the US toy marketplace: “Construction toys have continued being on fire and driving a large part of the market, because they have such a during value. Increasingly, we see the interest in educational and developmental toys, and that is why LeapFrog toys were so well placed in the best selling chart. The First Lady, Michelle Obama, has been promoting active play (the “Let’s Move” campaign) and so active play toys have come to the fore. Probably the trends are much the same in the US as they are in Europe and in other markets. Although the American public is not so environmentally sensitive as Europeans are, the green movement in the US continues gathering momentum. We think that increasingly there will be an emphasis on the environment-friendly nature of toys. The people who are having children are young and they tend to be concerned about these issues."

The TIA’s three-year plan
After being busy with the safety issues for a long time, which are the TIA priorities at the moment? “We have determined we now have an opportunity to become proactive, to help our toy industry and our toy companies grow, so last October we adopted a new strategic three-year plan, after completing our previous three-year plan successfully," replies Keithley. “The new plan focuses on positive initiatives,” as the association is “willing to grow our membership,” now open to “retailers, licensors, inventors and sales representatives.”

The association also wants to focus in “providing new values to members: we have created a new position in our staff, a Director of Research and Strategic Data, and we are soon appointing an individual with many years of experience in this kind of field for other industry associations.” There are two missions for this position: “One is to gather data from outside sources and from within the industry that will help our members make better business decisions,” while the other is “to gather information about our industry that will support our advocacy efforts on behalf of our members.”

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