When it comes to retail marketing, the final quarter of the year is crunch time. They need Black Friday and the subsequent holiday shopping season to go well in order to keep their head above water and finish the year enough into the black to invest in new ideas and different initiatives in the coming year.
Each year there are winners and losers. Companies and brands that do well, and others that tend to fall flat. This past season’s winners included some familiar faces like Lego, Star Wars, and Barbie. Hatchimals started off really well, but short orders frustrated some buyers, who opted for other toys.
Some toymakers had an outright rough Q4. Near the top of the list? Mattel. In a story reported by CNN Money, the sales for Mattel during the holiday season were “lousy,” and the profits were even worse. Mattel’s CEO pointed the finger at “significant toy category slowdown” in the fourth quarter. Sales were down about 4 percent as compared to the same time frame in 2016.
But, while that report is accurate, that finger really isn’t pointing at a reason as much as a result. Sure, sales were sluggish, but that’s not why Mattel ended the year on a sour note.
From a meta context, Mattel – and other international toy distributors – were negatively impacted by the stronger dollar, which cuts into their profits in foreign markets.
Another tough blow has to do with branding. Disney, which owns the successful “Princess” toy line, chose to pull that line from Mattel and give it to rival company Hasbro. Not being able to market Disney Princesses was a huge loss for Mattel, because these items are perennial sellers, even when there’s not a new movie out to push them.
But that’s not all of the bad news. Remember what we said a moment ago about Barbie? Well, the original Material Girl did sell pretty well, but not nearly as well as last year. That, coupled with falling sales numbers across the Fisher-Price toy line pushed sales and profits down.
Another reason listed by CNN? Promotional activity at the point of sale. Stores cut prices in order to drive up sales in a web-happy buying environment. These days, fewer people are shopping in stores, and an increasing number are shopping online, from the comfort of their own home. Retailers need incentives to bring in customers, so they go back to old faithful, they slash prices and offer BIG DEALS to get people through the door.
Stepping back, it’s tough to say that move worked. Major retailers like Toys R Us saw in-store sales fall overall, affecting Mattel and many other brands, including Hasbro, which had a rough Q4 as well.
There’s been a lot of talk about this, and a lot of hand-wringing, but that won’t lead to any changes. These retailers and manufacturers and marketers all need to find a way to address the elephant in the room. If they can’t figure out a way to compete online, they can expect sales to continue to fall.