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Opportunities in the US market

by Daniele Caroli, editor-in-chief, Giochi & Giocattoli, ITMA’s Italian member magazine (International Toy Magazines Association)


The last few years I have regularly met Carter Keithley, President of the Toy Industry Association, at the Nuremberg International Toy Fair for an interview on the US market and the association’s activities during the previous year. This time he is not alone and he introduces the TIA managers who accompany him: Paul Vitale, Vice President, Finance and Administration, and Alan P. Kaufman, Senior Vice President, Technical Affairs. Vitale, with the TIA for about four years, is in charge of the association’s operations; Kaufman has thirty years of experience in the toy industry especially in the quality assurance and operations areas, with companies like Mattel, Disney and Toys ‘R’ Us.

Two-way traffic
After confirming that the Nuremberg fair, as the most important event for the global toy industry, represents a great occasion for the TIA management to extend its international scope, Keithley adds: “We are trying to make it clear to companies who want to bring their products into the US market that the path is through our New York Toy Fair or our Dallas Fall Toy Preview.”

However, is there room in the US market for toy products of European origin? “It is part of the magic of the toy business that there is always room for new creative toys to come to any market”, Keithley replies. “ It does not matter how big a company you have, what matters is how creative and playful the product is. Even the smallest company, if it has a good idea and a creative and appealing toy, can break into a market the size of the US and do very well."

"One of the advantages of the US market is that it is a single market of 300 million consumers. We still have a growing demographic of children 0 to 5 years old. As a consequence, the US market for toys is a very attractive one: I do encourage companies with good ideas to take a look at our market and I suggest them to try to find distributors in the US by participating in the New York Toy Fair. TIA can help them to assure their products meet the regulatory requirements.”

Asked about the US toy market results in 2011, Keithley reports that according to NPD it was down by about 2% compared with the previous year: “The data still have to be completely analysed but we know that some companies did very well. As it often happens, it depends on the value and creativity of the product. Even in a down market, if you have a creative product it will sell well. We are very excited with all the products we have in our Toy Of The Year competition. "

"We, as the toy industry association of the US, encourage companies to send us their new toys, because we are often called upon by the consumer media to talk with them about the new products being introduced into the marketplace and we can help to give them visibility. And of course, if it is important to get on the shelves of the major toy retailers (60% of toy sales goes through the three largest toy retailers, Target, Toys ‘R’ Us and Wal-Mart), the remaining 40% of the distribution network should not be underestimated. One more aspect concerns the opportunity of taking advantage of the experience that sales reps in the toy industry have: often, that is the way small companies break into on the retailers’ shelves. The sales representatives who are independent of any company spend their careers establishing relationships with good retail customers and they have a credibility which could help a brand new toy vendor with a valuable product to reach the market.”

The importance of licensing
As in most international markets, in the US building sets were huge hits during 2011, says Keithley, adding that educational toys registered increases too (he quotes the LeapPad) and that new creative toys appeared, such as the Xia Xia crabs by the same company which launched the Zhu Zhu Pets [Cepia]: “It is that kind of creative products which has captured the imagination of the public to some degree. In 2011 there was no one toy which took off and everybody talked about in the US, but a lot of different toys were successful. "

"The link between toys and licensing is getting stronger and stronger. In February 2011, the licensing and entertainment executives who attended our Toy Fair increased by something like 200% and this year we expect a further 100% increase. We are in touch with our colleagues at LIMA, the Licensing Industry Merchandisers’ Association, proposing them to have an official presence in our shows and to work together in order to find ways to facilitate the networking between licensors and licensees at the Toy Fair."

"Licensing is increasingly an important driver of toy sales, also because it has become clear that enduring toy sales result from having a storyline: think, for example, of the durability of Elmo and the other Sesame Street characters, or of the Star Wars toys; it is also interesting to see it go the other way, with the Transformers which started as toys and then became movies, because there is a storyline behind them too. "

The issue of environmental sustainability
As to the technical affairs that Al Kaufman is in charge of, they do not concern the product safety aspect only: “One of the other important areas where we are working with the industry is environmental sustainability; we have a dedicated committee which is very active and TIA has recently joined an organization which is called the Sustainability Consortium, whose goal is to develop metrics for how to measure the sustainability of a product and also to put together some priorities.”

As concerns this point, Keithley comments: “US consumers are sensitive to environmental issues – at least, we hear a lot of that – but we are not hearing yet that that sensitivity is driving toy purchase decisions. So, it becomes very difficult for retailers to decide to put a toy on the shelf only because of environmental sustainability considerations: they want to put a toy on the shelf which is appealing to children, basically. We applaud the green toy companies that are working on bringing sustainable toys to the marketplace and we know that all of our companies are looking for options to do more in this regard, as to packaging and materials for instance. But is it driving sales at this point? It does not seem to be. "

"On the other hand, the environmental impact of toy products is very small relative to the environmental impact of so many other product categories; so, the very fact that many environmental activists like to point at the toy industry as a target for that kind of consciousness is often misplaced and unnecessary.”

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