Barbie in Shanghai

Mattel is opening a Barbie store in Shanghai, according to People's Daily:

World's premier toy company Mattel is expected to open its first Barbie flagship store in Shanghai next month in Shanghai, the country's economic hub, in hope of a market expansion in China when its global sales contracted.

The 3,500 square meter, six-floor Barbie flagship store along Shanghai's trendy Huaihai Road, is expected to open on March 7 to celebrate the brand's 50th anniversary, said Julia Jensen, Mattel's vice president of Public Relation and Communication International said in an e-mail to Xinhua.

A number of major brands and retailers seem to be looking at international expansion as a way of growing through the hard times. Mattel's sales in 2008 were down 1%, but Q4 was down 11%. Mattel has been in China for seven years now, according to the article, but this is their first major store.

The competition doesn't sound frightened:

"The market positioning of Barbie is quite different from Chinese toy brands. I don't think the flagship store would have much impact on the sales of Chinese toys," said Xie Min, the business department head of Huaihai Youth Articles Store, several hundred meters away from the pink Barbie flagship.

"China's toy market has long seen foreign brands including Winnie the Pooh and Mickey. Compared with them, Barbie is still less competitive in terms of its franchisers and product chain," says Xie.

Mattel gets court order against Bratz

How nice would it be to get a court order forbidding a principal competitor to sell their products? Mattel just pulled that off, being granted an order forbidding MGA to sell its Bratz dolls..

U.S. District Judge Stephen Larson in Riverside, California, yesterday granted Mattel’s request to stop MGA from making most of its multiethnic fashion dolls that have contributed to a drop in Barbie sales since being first sold in 2001. A jury earlier found that a Mattel designer came up with the Bratz name and characters and secretly took the idea to MGA.

“Mattel has established its exclusive rights to the Bratz drawings, and the court has found that hundreds of the MGA parties’ products, including all the currently available core female fashion dolls Mattel was able to locate in the marketplace, infringe those rights,” Larson said in his ruling.

Mattel had earlier won an award of $100 million in damages. MGA is appealing both that decision and now the injunction.

Trouble in teddy-bear land

There's a bit of mystery surrounding the firing of the President/COO of Build-A-Bear Workshops.

Build-A-Bear Workshop Inc. has fired Chief Operating Officer and President Scott Seay, and the company said it won't be paying him a severance package.

The Overland-based stuffed toy animal retailer said Monday that the board of directors terminated Seay's employment effective Friday. The company would not disclose why it fired Seay, 45, who has held the two jobs since January 2007.

"The circumstances (of the firing) are not related to business operations or the company's performance," said Molly Salky, Build-A-Bear's director of investor relations. Seay, who was earning a base salary of $368,324, is not entitled to a severance package under termination provisions in his employment contract, and there will be no charge to Build-A-Bear's earnings, she said.

Gee, I usually expect, "We jointly agreed that now was a good time for both ______ and the company to seek new directions." Or at least, "He wants to spend more time with his family."

Our Christmas gift: A toy price war?

It looks like one of the things on the horizon this holiday season is a price war in the toy aisle.

Here's a Meijer press release announcing cuts on 300+ toys:

The price reductions are part of the retailer's ongoing Price Drop program, where thousands of unadvertised items - ranging from health & beauty products to garden supplies - are reduced in price every day.

The Toy Price Drop program includes virtually all toy categories, with discounts up to 30% off Meijer's normal low prices. The Meijer Toy Price Drop includes everything from Hannah Montana and Playskool to Star Wars and Disney Princess toys. Other reduced-price items include toys from such popular brands as Lego, Bratz, Barbie, Monopoly, Fisher Price, Batman, Indiana Jones and Leap Frog, plus the ever-popular Hot Wheels cars available for just 88 cents.

And here's Wal-Mart announcing a $10 toy program, with the responses from Toys R Us, Target, and others:

Wal-Mart Stores, accounting for more than one-fourth of U.S. toy sales, has sent a clear message that it doesn't plan to be undersold when it announced 10 well-known toys, including some Barbie dolls and Hot Wheels car sets, for $10.

KB Toys, the nation's largest mall-based toy seller by stores, told Wal-Mart to bring it on. It cut prices to $10 or less on more than 200 toys, including other Hot Wheels sets, Matchbox cars and classic games such as Yahtzee.

Following Wal-Mart's cuts, which were 25 percent to 40 percent below the prices of Toys "R" Us and Amazon.com, Target began matching prices on three of the four toys it shares with Wal-Mart's $10 list.

Just as a guess, I suppose some retailers are planning to sacrifice margins on toys to lure shoppers in and hope to make it back on other sales -- a "loss-leader" strategy. Given their selling costs, though, I'm not sure trying to match Wal-Mart on low prices is a healthy strategy.

FAO Schwartz: Coming to a Macy's near you

It looks like FAO Schwartz will become a leased department within Macy's stores:

Macy’s announced this morning that it will open FAO Schwarz stores in up to 275 Macy’s stores this fall, and will expand the FAO boutiques to all 685 Macy’s stores that sell children’s clothing in the next two years.

There was an FAO Schwartz department in Macy's State Street store here in Chicago last Christmas season as a trial. Apparently it worked well enough to be rolled out across the chain.

My opinion generally is that combining two faltering brands (e.g., Sears-Kmart) does nothing for either of them, but I'm wrong a pretty good percentage of the time, so we'll just have to wait and see.

Quick notes

It looks like Cannon may be replacing the (apparently) departing Martha Stewart line at Sears and Kmart. Martha's exit is not official yet, but it seems to be a done deal (the contract is up at the end of 2009). Cannon is a good brand name and while it may not have the cachet of the Martha Stewart name, it may be a better fit with the Sears/Kmart customer base.

Lionel has come chugging out of bankruptcy:

Lionel, which has been in business since 1900, sought bankruptcy protection in 2004 after a trade-secrets dispute with MTH Electric Trains.

As a baby boomer who loved my electric trains, I wish them well.

Strange-sounding line extension

Not that I claim to be any kind of expert in this area, but this sounds like a very strange idea -- Mattel is licensing the Barbie name to a company to market a line of cosmetics.

Mattel Inc. said on Wednesday that its Barbie business will partner with cosmetics company MAC (Make-up Art Cosmetics) for an "adult-targeted project" that will be unveiled in the spring of 2007.

The toy company declined to give more details on the partnership. Mattel does not currently sell Barbie cosmetics in the United States, although it does sell Barbie children's cosmetics in markets such as Europe, Latin Americas and Asia.

It said the collaboration is the first time that Barbie has partnered with "an adult prestige cosmetics company."

Mattel, the No. 1 U.S. toy maker, has been working to revive sales of its Barbie business amid difficult market conditions and stiff competition from MGA Entertainment's Bratz fashion dolls.

I understand that the women they are targeting grew up playing with Barbies and presumably have strongly-positive feelings toward the brand. But still ... does that mean that they want to wear Barbie perfume?

Still, what do I know? Next year Barbie cosmetics may be all the rage, and I'll be sitting here looking dumb.

Mattel: A tale of two dolls

Or two doll lines, actually. Here are a couple links I came across concerning the fortunes of Mattel's Barbie and American Girl brands.

Barbie has been steadily losing ground to Bratz, so Mattel is trying some new approaches. They've worked a deal with Universal to upgrade production of Barbie's direct-to-DVD (which appear to be a nice little money-maker on their own -- 27 million units at about $14 bucks each).

The two companies also discussed the possibility of a Barbie tie-in with Universal's theme parks and theatrical premieres for upcoming Barbie animated films.

American Girl, meanwhile, has a nice problem, but one that sometimes afflicts fast-growing elite brands -- how do you grow fast and stay elite?

"When something's value is wrapped around its uniqueness, it's hard to exploit that in scale," said toy industry analyst Sean McGowan at Harris Nesbitt Corp. in New York. "The specialness of the product is a big part of its appeal — if it becomes available to everybody, it loses some of that."

The company is currently opening its third store, in LA, after operating only one, in Chicago, for several years, and then adding one in New York. For the present there are no plans to expand widely -- in fact the company president indicates that they may never go beyond five stores. The idea seems to be that there's no reason to mess with something that works so well.

In 2005, while Barbie's sales slumped 13% worldwide, American Girl's revenue rose 15% to $436 million. Oppenheimer & Co. analyst Linda Bolton Weiser pegged American Girl's operating profit at about $100 million, meaning that the division accounted for 8% of Mattel's gross sales and about 15% of the parent company's operating profit.

I hope they don't mess up a good thing. As a parent, I spent a ton of money on those books and dolls (my daughter has Felicity, Samantha, and Kirsten) -- and I don't regret a dime of it.

The amazing disappearing toy store

The toy sector,which has already witnessed the near-total disappearance of former giants FAO Schwartz and KB Toys, is now seeing the continued shrinkage of former category leader Toys R Us.

The Chicago Tribune reports that TRU will close 73 stores this spring, in addition to converting twelve other stores to Babies R Us outlets. This will leave 587 Toys R Us stores.