The Massive Volume Driving Potential Of Off Shelf Placement In Toy Retail
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This newsletter instalment follows a recent edition where we looked at 3 ‘old skool’ retail concepts which are still critical to success in Toy retail today. If you haven’t read that instalment, you can read it here: https://www.linkedin.com/pulse/23toy-retail-three-old-school-fundamental-practises-which-steve-reece?lipi=urn%3Ali%3Apage%3Ad_flagship3_series_entity%3BDc5KsoZzTvOrE6RgD5camg%3D%3D
In fairness that article tended to favour Specialist Toy retail, and so I wanted to follow up with a look at off shelf placement which on the right brands and products can be a ridiculously powerful sales driver for Toy companies in Mass Market retail.
FOOTFALL: THE LIFEBLOOD OF PHYSICAL RETAIL
You will have seen really good retail stores who flounder and fail because their location (perhaps just tucked round a corner, or just off the main drag) denies them access to the same number of passing eyeballs as their weaker competitor located in a better place. Footfall is everything for physical retail. The same applies within a store – if your products are tucked away in a distant rarely visited corner, or on a higher or lower floor than the access level which gets far less ‘traffic’ you are going to sell less in that store than you might if your placement was higher prominence in a location where more people see your stuff.
What normally happens in mass market retail stores is that products are very carefully and strategically planogrammed, so that the in-store people often don’t get a big say in what happens on shelf in each department or product category area. However, they do sometimes have a bit more leeway with the space closer to where you enter the store and around the checkouts. Good retailers plan big national initiatives, but also allow some flexibility for stores to give a bigger push on products which suit their specific local consumer base best. So to get good placement away from the shelf it can help to work both angles – work with the head office team, but also where it’s allowed by the retailer offer to help merchandise on a store-by-store basis to maximise your placement & sales.
FORMAL OFF SHELF PLACEMENT
There are two examples of formal off shelf placement I remember clearly from the early days of my career:
Firstly, way back in the 1990s I worked for a discount retailer who ran a fortnightly promotion via a magazine packed full of special ‘once it’s gone, it’s gone’ deals. This was a massive traffic driver for the store, and needless to say while the special offer items normally sold out quickly & offered great value for customers, nearly everyone buying one of those items would buy multiple other products (normally delivering higher margin for the retailer) from the store.
The special deal products were stacked on pallets at the point of entry to the store, giving shoppers the highest visibility and ease of locating the products on special offer. Needless to say these items drove the highest volumes while stocks lasted.
The second example I remember was the massive success the Irish team had at a corporate Toy company I worked with. The talented and tenacious sales team in the Emerald Isle would not take no for an answer and persuaded a major grocer to take a seemingly imprudent quantity of stock on key iconic Toy brands on pallets in the run up to Christmas. The heavily laden pallets soon began to look decimated and for a relatively modest trade marketing/promotional spend vast quantities of products sold through retail. When the program was implemented across the same retailers UK stores the results were genuinely impressive. Needless to say soon after EVERY Toy co wanted that pallet space & the terms of securing the pallet deal became less and less commercially viable as a result as the competition became heavy, but nevertheless as a pure sales driver the pallet program was ridiculously successful.
INFORMAL OFF SHELF PLACEMENT
One of the most successful off shelf placements I encountered happened entirely randomly. I was managing a major new product range initiative which incorporated home entertainment elements. This was in the heyday of Blockbuster, home entertainment via video & DVD, CD’s and all of that pre-download stuff. My boss was particularly keen to push our new products out of our usual Toy focused distribution into home entertainment distribution channels to a). Grow distribution for other entertainment based licensed products we had in the range and b). To hit the right consumer in the right frame of mind for our new products.
The challenge we faced though is that Home Entertainment retail at that time had two basic product sizes – CD or DVD, and that was pretty much it. And despite the Buyers liking the concept of our new products they found the thought of having to work out where and how to merchandise a product that was 5 times bigger than their usual product ranges to be too difficult to entertain among all the other tasks and challenges they were facing. Our products appeared to be in the ‘attractive but too difficult’ box for them.
Eventually we persuaded them to place a trial order for one box (!) for their flagship, highest footfall store. That single carton of products sold out in about 5 minutes, so they called and asked for 5,000 units to be delivered asap, and so we duly obliged. The product arrived with them on the Thursday and on the Monday, the now desperate Buyer asked us to ship them 50,000 units asap, which we sadly couldn’t fulfil as the product was now our best-selling item, a hit across retail and a sell-out success. For those in the U.S.A. these volumes won’t sound big, but in the market I was working in they would be equivalent to ten to twenty times the stated volumes in the U.S.
The point of this story is not how successful the products were, or how retailers should commit to inventory on hot lines earlier than they do – no, the point was how the products were merchandised. Because the products didn’t fit on any shelving or racking the stores had, they were instead loose stacked on the floor around the checkout queues in stores that were packed on the run in to Christmas. In some stores, 10 checkout stations were fully open and 100 or more people were queuing. Every few minutes another 100 people would walk past our products and many chose to buy, then when the stacks got smaller the law of scarcity kicked in & the sell rate went through the roof until there was no inventory left at all.
Our product was a huge success exactly because they didn’t have space on shelf to merchandise. That one finding increased peak season revenues by nearly 10% across that retailer nationally, because they began to use impulse purchase cues by literally stacking entertainment merchandise all around people queuing to buy home entertainment products. I wouldn’t go so far as to say we found ‘Kidults’ earlier than has been reported due to this action, but it does go to show how breaking out of the standard methods of merchandising can be highly effective!
CLEAR RETURN ON INVESTMENT VIA OFF SHELF INITIATIVES
As a trained blue chip marketer I shouldn’t say what I am about to say, but reality speaks for itself: If I had the choice on whether to spend a £/$/€ on consumer marketing with no direct selling offer, OR could instead spend the same amount on trade marketing with a focus on bringing the product off shelf and to higher in store prominence I would do the latter 99 times out of 100.
Like many marketers reading this, I have wasted a lot of money on marketing where there was no clear evidence of ROI! My career marketing spend is in the vicinity of £50m (many of my corporate colleagues have spent many times more than this, but I moved to work with smaller up & coming companies years back and have thus wasted far less than many of my peers!). I can try to justify my effectiveness by stating career revenues of products I worked on being in excess of £500m…but I can’t tell you how much of that £500m would have been realised if you removed the £50m marketing spend, we will never know whether we would have delivered similar levels of revenues without chucking £50m into the ether…
On the flip side, I can clearly see from sales uplift across the board that whenever teams I worked on invested the money into merchandising initiatives at the point of sale, and where the retailer actually implemented or let us implement what we paid for, then pay back was clear and justifiable 9 times out of 10.
We of course need to acknowledge that today a large proportion of sales happen via online channels, and so digital marketing can be a strong direct sales driver in a way which the old TV advertising model wasn’t really provable to be in terms of tangible, clearly measurable and attributable payback. But while we still look at physical stores as a major chunk of revenues, then investing in in-store merchandising and specifically off-shelf initiatives should always be a priority.
N.B. All trademarks and other intellectual property featured herein are the property of their respective owners.
SPIELWARENMESSE – SPIRIT OF PLAY BLOG
THE GROWING ‘KIDULT’ OPPORTUNITY
Here’s to Adults growing older later! The Kidult market is a major thing right now, offering significant growth opportunities for Toy & Games companies despite the fact that birth rates are dropping in most major markets. Read more in this latest article I wrote published by the Spirit Of Play Blog, which is published by Spielwarenmesse, the world’s biggest Toy trade show. Click the link below to read the full article:
Also here’s a short video excerpt from my presentation at Spielwarenmesse’s Toy Business Forum in 2023 looking at the potential impact of the ‘Kidult’ phenomenon on the future of the Toy business: https://www.youtube.com/watch?v=hE2ZERGW7nc&t=26s
UNCHANGING PLAY FUNDAMENTALS
So often in the world of Toys we look for the big changes, we go trend spotting to find new things to jump on. The reality though is that far more doesn’t change than does. That’s what this latest article I wrote, published by Spielwarenmesse.de looks at. Just click the link below to read:
PLAYING AT BUSINESS PODCAST
EP 102 - Selling A Toy Business: How Mergers & Acquisitions Work In The Toy Biz
Many companies in the Toy business grow via acquisition. Company owners often want to sell up and retire or move onto other pastures. In this episode we take a look at some of the biggest Toy acquisitions of all time, we look at why and how Toy Cos are bought and sold and we discuss the details of the process of buying or selling.
Maybe you have a Toy business you want to buy or sell, or maybe you just want to understand how company sales work in the world of Toys, either way this episode will have something for you.
EP 101 - How To Run A Successful Tech Toy Start Up With HoloToyz
In this latest episode host Steve Reece talks to Kate Scott & Declan Fahy, the Founders of HoloToyz. Their company aims to inspire creativity and imagination via augmented reality technology.
Kate stated "At our core, we believe that children should be able to experiment, play and learn through emerging technologies in a kid-safe environment away from the open web, whilst not losing touch with the physical world."
We discuss this proposition, and the path from starting the business, through raising funding to achieving distribution for HoloToyz products.
This episode is a must listen for anyone interested in or actively pursuing a start up in the Toy business, as well as international distributors looking for new products and new stories to latch onto.
EP 100 – How To Recruit Good People And Find New Job Roles In The Toy Business
Join host Steve Reece in a deep dive into the toy industry's recruitment nuances. Having helped many people to find new roles in the Toy business and having advised many Toy companies on who & how to recruit, Steve unveils key strategies for companies to recruit effectively and tips for candidates to land their ideal roles. Whether you're hiring or job-hunting, discover invaluable insights to assist your recruitment/job search process.
AND FINALLY…
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· Helped several Asian Toy companies to grow distribution in ‘Western’ markets & to recruit key staff to build distribution with new retail accounts opened up.
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· Toured a leading U.S. company around India’s leading Toy factories leading to factory selection, production start & significant cost savings.
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