Mattel's annus mirabilis

A year ago, a toy industry watcher would have been excused for thinking that 2010 would be Mattel?s year ? the year when they were going to demonstrate to everybody that Auntie Mattel could be as hard hitting and innovative as the next guy...
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After all, it had WWE and Thomas on the launch pad; it had in Alice, Avatar, Toy Story 3 and Tangled a superb movie line-up; it had beaten Bratz to a pulp and had no recall since 2007.

In short, it was looking forward to its Annus Mirabilis.

We are now in the middle of the fourth quarter and this is as good a time as any to look at what Mattel did with these goodies.

WWE: It clearly did a first-class job with the brand it had taken over from Jakks. For most of the year, WWE had more shelf space than any other action figures at the big three US retailers. It broke into the UK and Continental Europe and grew the brand to an extent nobody would have thought possible. On the negative side, it appears to have a little too much inventory at European retailers and will need to do something about that. I give 90 points out of a possible 100.

Thomas and Friends: While it had hard sledding for non-wood-license products at the beginning of the year – due to excessive inventories offloaded by RC2 at the end of last year - it finally did get distribution in the second quarter and is now doing very well. Again here, I would look to significant growth for the brand compared to last year. Also in this case, I would give it 90 points.

Alice in Wonderland: Mattel’s treatment of this license was something of a puzzler. My friends in Hollywood had told me well beforehand that this movie would beat all box office expectations and with a worldwide achievement of more than $1bn it clearly did.

The audience overwhelmingly rated it positive [A+B combined 69.9%]. The audience was female [77%] and young – 12.47% of the audience were below 18 compared to the US average of 9.80%. You would have thought that a company whose main consumer group is young females and whose main brand is a fashion doll would have considered this movie as a really important vehicle for a toy range targeted at girls.

However, Mattel clearly didn’t fancy it and only brought out one toy SKU, the Mad Hatter, at a retail price of $59.99 and put it only into TRU.

Avatar: Also here, we are faced with a puzzler. Again, there was no question that this movie would be a massive success. Its box office result bore this out - $2.7 billion this year. The audience was overwhelmingly positive – 75.9% “A”s and 12.1% “B”s. Its demographics were ideal for a boy/girl toy range.

The age component was also positive – 14.08 per cent less than 18 years old. Avatar got better treatment from Mattel than Alice did – there was distribution in all three majors of about six to ten figures each. However, the inventory back-up was clearly lean and all three ran out of stock just about when the movie broke. It was the same story when the DVD came out in April – thin distribution in the three majors and little inventory back-up. No end caps, no aisle caps, no in-store promotional efforts as far as I could determine.

Toy Story 3: Here it did a very good job – excellent shelf presence, excellent end cap and aisle cap efforts, a fantastic flagship corner at Toys R Us. it did justice to a very good and extremely successful movie. it ran out of inventory for about 10 per cent of the SKUs for a while but corrected this in good time for fourth quarter. All in all, I would rate the effort in the high nineties.

Tangled:  The movie is still a week away but we already now can tell that it will be a success – not in the same street as Alice or Avatar but eminently respectable. Its demographics are good: 57% girls:43% boys. Mattel has a very good presence for the toy range at Toys R Us and Wal-Mart. So far, high marks.

Bratz: The verdict of the court came as a major surprise to all. Well, not quite all. Back on 7th May, 75 days before the Appeals Court rendered its judgment, Isaac Larian, the CEO and owner of MGA Entertainment, told me in an email that: “the likely result of the court ruling is that it will throw out all of Mattel’s case”.

In the end, this is not good news for Mattel particularly since the judge seems to have felt that motives other than a pure-hearted quest for justice was the main driver behind Mattel’s legal moves.

"Unlike the relatively demure Barbie, the urban, multiethnic and trendy Bratz dolls have attitude,'' Chief Judge Alex Kozinski wrote in the ruling. "This spunk struck a chord, and Bratz became an overnight success. Mattel,which produces Barbie, didn't relish the competition.”

The Fisher Price Recall: Now that was bad news. Not only because of the recall itself even though it is serious enough. It is bad news for two reasons – at least in the eyes of people I spoke to at large retailers. They thought that this recall was in many ways worse than the ones three years ago because it affected a very much younger age group. Their theory was that any mother of a two-year old whose trike had been found faulty was somewhat unlikely to buy another Fisher-Price product for that child for the rest of its pre-school years.

As some of my contacts termed it: “The recalls three years ago were acceptable as a one-time event. We know that these things can happen. As long as the manufacturer learns his lesson and puts controls into place to prevent recurrence, there is a silver lining. However , this recall now suggests that the lessons three years ago were not learned and this concerns us greatly.”

Lutz Muller is a Swiss who has lived on five continents. In the US, he was the CEO of four manufacturing companies, including two in the toy industry. Since 2002, he has provided competitive intelligence on the toy and video game market to manufacturers and financial institutions coast-to-coast.. Read more on his website at www.klosterstrading.com

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