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Funko, the pop culture lifestyle, and why 2020 is going to be a game changer for its European business

It’s likely the fact that Funko – in one form or another – can be found in most toy shops on the high street or otherwise today, that the firm’s insistence that ‘it is not a toy company,’ takes some time to comprehend.

As the pop culture explosion that Funko found itself at the centre of mid-way through the last decade continues to surge across the UK, it stands to reason that the purveyor of Pop! has found itself an almost omnipresent figurehead of the trend.

It wouldn’t have escaped many people’s attention that year on year, the Funko brand has been gaining shelf space inch by inch across the retail landscape; most recently it compounded its growth within the toy space with the launch of its ‘revolutionary’ Paka Paka platform into The Entertainer’s boundary-pushing Westfield store – a concept that went on to launch in Forbidden Planet’s Glasgow store, and will be followed with launches in Primark and Smyths Toys.

Nevertheless, Funko’s mantra remains. This is more than a toy company, and for the past number of years it has been actively positioning itself as a lifestyle brand, with a portfolio that spans all manner of categories from its vinyl figures, to softlines, bags, purses, wallets and homewares, developed in conjunction with its Loungefly brand.

There aren’t many toy companies, after all, that can lay claim to presence in such a diverse line-up of retailers; and it’s this, diversification, that has just helped Funko’s EMEA operation to one of its better financial years to date.

“We grew significantly in EMEA, it was the strongest growing of the regions internationally,” Andy Oddie, Funko’s managing director of EMEA, tells Licensing.biz. “And it is being a lifestyle company with the lifestyle businesses that we have got, that has helped us in the face of the challenges in the industry.

“We are in a broader channel, and that’s allowed us to tap into many different opportunities at retail and through e-commerce. One of the biggest initiatives for us at the moment is with Primark.

“But with our multi-channel and multi-category approach we can attack in certain areas and defend in other areas, and be in a multitude of places that others would maybe fail to reach.”

It came as a surprise to many in the business when Funko’s US division detailed an eight per cent dip in its Q4 2019 results last month, finishing up at $214 million compared to the $233 million the year prior. It was the challenging retail environment of the US that contributed to the majority of the dip.

The story for Funko’s EMEA operations, however, offers a stark contrast.

“All categories grew and all markets within EMEA – that’s nearly all 116 markets in the EMEA region – grew, and all those sub-markets that look after and feed into them grew,” continues Oddie.

“In fact, we grew the workforce by 25 per cent and we have opened a new distribution centre in Coventry, which is state of the art with logistics systems and hardware meaning that we can be even quicker to market with our product.

“We are famously quick to develop items, but we have been criticised in the past for being poor operationally. I think this will be a game-changer for us, our operational capabilities will be massively upgraded with this facility.”

The new facility sees Funko move its current operations unit out of Essex and into its new Coventry address, from where it will service the majority of its key customers. A portion will continue to be serviced from the Netherlands distribution centre it opened in 2018. Oddie summarises the past year and a half at Funko making preparations for 2020 to be a game-changing year for the firm.

“Suddenly we are not only going to be quick to the market with product, but able to fulfil it and get it to the customer quicker than before as well,” he says.

“We have got growth, growth, growth, and we have got the new distribution centre – so that all sounds fantastic.”

But Funko isn’t totally immune to the susceptibility that hounds the toy, entertainment, or licensing industry. It’s US business already placed blame for its Q4 dip at the door of a weaker movie slate through 2019 compared to the year prior, while many have already lamented a softer line up still for the year ahead.

“The Disney slate is lighter than it has been previously,” states Oddie. “Warner has a good film out with Birds of Prey, but net – we are in a weaker environment in terms of properties for 2020. I think fortunately we are in the multichannel and with multi-categories.

“We are somewhat guarded from the difficulties of a soft movie slate, simply because we have such a broad product slate which is tapping into every imaginable piece of IP and opportunity, but at some point or another you can’t directly replace something as large as Marvel End Game… you need a lot of bits to replace End Game or Fortnite.

“But we do have all of the armoury available to defend from any lack of content, and, by the way, the 2021 IP slate looks awesome.”

Visitors to this year’s New York Toy Fair were offered a glimpse at that armoury that not only spanned the diversity of its lifestyle portfolio, but also witnesses Funko make a concerted step into the toy space with the launch of Snapsies: a toy line developed for the younger market that features snap and match technology that allows kids to collect a diverse line-up of characters.

In a move to offer a fully-branded experience, Funko has even launched the line with content created by its in-house team at Funko Animation Studios.

On top of this, of course, is Funko Games, the tabletop gaming arm to Funko’s pop culture-spanning entity, that brings the brand roaring into the ever growing market for IP-driven board games with a collection that includes the Back to the Future: Back in Time tabletop game, Godzilla: Tokyo Clash, and a left field title that uses the Pan Am license.

With this now all falling under the Funko brand name, it’s increasingly obvious as to how the pop culture specialist is gaining those inches at retail, while the larger – grand plan if you will – for Funko appears to shift into view.

“We will always say that we want more space,” says Oddie. “Space gives us the ability to trade on a linear basis, and we have the product to achieve that. If we have three bays in retailer X, we say if you give us six bays, we will always achieve double what we did in three bays due to the items we have in strength and breadth.

“What we are looking to do is create Funko dedicated experiences and experiential retail execution that is interesting to fans, people spend time looking at it, perhaps there is a TV screen in there and some Funko branding in there, which really supports a much more interesting kind of experience for the customer – which is what everyone is looking for right now.

“The customer needs to be kept in store and needs to be excited about what’s in store. They need to see something new every week, and we can give that. Very few others can put their hand on their heart and say that they are delivering on all of that,” Oddie concludes.

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