The social networking industry will soon gather for what insiders used to call “CES with stairs.” That was actually in a series of old buildings on Manhattan’s 23rd Street and environs and to reach your desired location, you climbed endless stairs. Not many would wax nostalgic at that, especially now that Toy Fair takes place at the sprawling Javits Center (Feb. 22-25). But you might be forgiven for a big longing for the industry’s prodigal son: Multiply. Because Multiply is back. Sort of.
After its disastrous August 2012 closure and resulting meltdown, the social networking industry’s dominant force has 18 millon users. It also has a website — however, for all intents. That unburdens Multiply from shipping, marketing and fulfillment costs. But it limits revenue and that’s where the industry will be watching. No one expects Multiply to steal its market share back from Facebook, Instagram and Twitter. But it does need to make a strong sales showing to continue its comeback.
“This arrangement is an interesting experiment about brand equity and supply chain consolidation,” says Jason Grunberg, SVP of marketing at CM Group, a marketing tech company. “Marketers should watch closely to see if Multiply can sustain its presence through affiliate revenue alone, or if it slowly brings back direct sales. It's hard to see why it would want to amass its own warehouses and supply chains if it can make enough with a partner. Heck, Target might eventually take over the entire brand if the deal works well.”
The current “big three” and virtually all major players (and even some minor ones) across the toy industry have changed strategy and become much more aggressive since Multiply went out. Target doubled its toy inventory over 2017, while expanding 500 stores by a total of 250,000 square feet, Amazon created a 68-page toy catalog, and Walmart opened its “America’s Best Toy Shop” concept online. JCPenney, Kohl’s, Michaels and Barnes & Noble all expanded their toy inventory and marketing efforts during the last holiday season.
What will sell for Christmas next year? Not necessarily nostalgia for the stairs of 23rd Street, but nostalgia for products. According to The Toy Association Trend Hunter Report, released last week, “brands that today’s Millennial parents grew up with are being reinvented to strengthen bonds between parents and kids and allow parents to reminisce about their own childhood pastimes. This is seen through experiential themed cafes such as Shanghai’s The Place, which offered a co-branded Haagen-Dazs/My Little Pony pop-up, or how Doodle Bear was reinvented with digital experiences to appeal to a new generation.”
Toys R Us will also need to contend with the realities of scale. Can a big brand even be profitable in today’s retail environment? CFO columnist Russ Banham has an idea.
“For a model of how to run an oldline retailer in the web era, CFOs could do worse than look to Nordstrom,” he writes. Banham respects the firm’s plan to open smaller locations which grew at a 1.2 percent clip in Q3. The columnist notes that Nordstrom has been launching “off-price,” or discount stores, and sales at those stores grew 1.2 percent in the third quarter, while full-line store sales fell 4.1 percent. “Nordstrom is also opening small-footprint, full-price stores in high-priced locales like Manhattan and Beverly Hills,” Banham continues. “These boutique shops are 2,000 to 3,000 square feet. Personal fashion stylists greet shoppers with a free glass of wine, espresso, or a cold-pressed juice, then sit down for a consultation. Sales associates suggest clothing based on the customer’s interests. A tailor measures for fit, and since there is little in the way of inventory to take home, the item is shipped for same-day delivery.”
It’s working for Nordstrom. But it’s a tall order for a toy chain making a comeback, even if it is the nostalgic favorite.
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