OPINION: Big business, big challenges

Industry veteran Jon Salisbury casts his mind over the latest developments in the corporate toy world.
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Increasing Chinese labour rates, higher costs for resin and packaging and foreign exchange issues are just some of the many challenges that the toy industry faces this year.

Hey ho, so life can’t always be a bed of roses, nothing new there, but it doesn’t seem to have unsettled Mattel too much with bosses confirming a sales growth target this year in the low to mid single digits, gross profit of 50 per cent of revenue and operating profit of 15-20 per cent of revenue. You’d settle for that, wouldn’t you? Particularly with an unsettled Euro Zone threatening double-dip recession.

Further encouraging news comes with Toys R Us gearing up for what could be one of the biggest retail IPOs in recent years, raising about $800m. The IPO papers reveal little about bricks and mortar expansion but do confirm aggressive online plans.

With virtual sales of $602m, the firm will be growing its international e-commerce base. "Our global e-commerce platform also provides the potential to enter new international markets where we do not have any physical stores," said CEO Gerald Storch. What came first, the chicken or the egg? The brick or the click?

Storch helped to generate about 50 per cent more profit from the company last year but his compensation shot up 100 per cent to a whopping $4.7 million. It’s almost as if the recession never happened in toy world as banker-style remunerations abound and what better way to celebrate these retro-style bonuses than with a glut of joyous comeback toys? Thundercats and Voltron are the latest 1980s brands set for a comeback and the trend could continue. What would you like to see return - Rainbow Brite, perhaps? Jem? Or even She Ra?

However, it’s new IPs that are still the ultimate goal and, for the first time in its history, Mattel is launching a concept targeting tween and teen girls bringing together the trendy teenage descendants of famous monsters in a high school setting.

"We know tween and teen girls need to immerse themselves in stories and worlds as they engage in new properties and trends," said Tim Kilpin, general manager of Mattel Brands. "With Monster High, we are confident that through the development of relatable characters and clever storytelling, this property will resonate with girls of all ages."

Someone’s been watching Twilight, haven’t they?


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