Brick and mortar business is being faced with increasing competitive pressure from various sales channels, led by the internet. Changes in the consumer behaviour of target groups are also causing the industry to adjust its thinking. The pace of development varies in the various commercial industries. Here, development in the toy business is of particular interest. Why?
The steps in the rapid evolution of the traditional toy business can be counted one by one. First were the international chain toy store owners, opening large stores on the edge of town; then came the manufacturers, who opened up their own stores; the product range became broader and broader, augmented by the likes of computer games and merchandise articles. The product line extension is also evident in the specialisation of certain dealers in a single line, leading in turn to more competition. Some examples are shops for PC games, wooden toys, kites, outdoor toys, children’s fashion, childcare products.
All kinds of toys have also become increasingly available: Chain food store owners, discounters and furniture stores are expanding their product range and availing themselves of targeted discount campaigns to drive down margins. There has also been a strong growth in sales space in the commercial landscape as a whole over the past 15 years, seen in the increase in shopping centres and specialty stores on the edge of towns. Parallel to this growth, internet trade has become the prevailing purchasing option in terms of product overview and price transparency – with continually increasing growth figures and a continually increasing target group.
New trends change the toy trade
As if all this were not enough, yet another trend impacts the toy business: the used good trade. Everyone is familiar with second-hand markets for children’s fashion and toys on the one hand, and the flourishing market on internet classified ad portals for used children’s articles on the other. Acceptance of used articles is on the rise and becoming a "hip trend". All these commercial megatrends, among other things, have a particularly strong impact on the toy industry, which is why other industries are also looking closely at this market. Because this is the target group of tomorrow, the so-called "digital natives", the target group that would not recognize a world without the internet.
And the customer?
In this day and age, the child target group is particularly subject to rapid change. "Lived childhood" is becoming shorter and shorter, mobile phones, tablets and the like are replacing traditional toys earlier and earlier.
Also, children are generally better informed than dealers about the products they want – the internet has replaced the traditional toy catalogue here as well. The phenomenon of the customer who is perfectly informed thanks to the internet impacts all industries, but its effects are fatal for toy retailers: Children’s wish lists are so closely aligned to articles that can be purchased without limitations online, that searching for the right store to meet the child’s desires can in part resemble a search for a needle in the haystack. The customer is left with the impression that certain products could only be purchased online, considering the difficulties of finding the right dealer.
Ideas for the toy trade
But casting doubt on the survival of retail stores is overly pessimistic. Even some dealers with strictly online operations are beginning to open their own stores. So the retailing industry is looking towards the store of the future as the answer to digital competition. But is the solution to now fill stores with internet terminals? Anyhow, there is no pat answer. The industries and target groups are too different. That being said, nothing has changed in the customer’s basic need for inspiration, social exchange and direct product involvement.
But how to re-invent the toy store of the future? At the product fairs around the world manufacturers introduce many ideas of how to put their products in the limelight.
"Just imagine that the whole world is online and someone seizes upon the idea to open a store!"
True to this motto, following are a number of options for playing off the strengths of bricks and mortar trade:
- Themed presentation & cross-selling
The toy industry in particular lives from quickly changing lines. Star Wars, Minions, Cars, Minecraft, the list goes on and on. Integrated presentations of individual themes create inspiration and a store overview. Selling products outside the basic product range is a retailing megatrend. It surprises customers. In the case of toys, one mostly sees fashion and accessories, stationery and computer games. In combination with a themed presentation it forms the perfect mix.
- Demonstrate and try out
The dealer whose sole focus is on offering products will be reduced to pricing. Those who evoke the benefit of their product range have more in the way of arguments. There is a lot to demonstrate in the area of toys as far as product range and options are concerned, for children and adults alike. Having many areas to try out the toys generates frequency, creating a fixed meeting point of a given store for families.
- Target group approach
Toy stores are not just for children. Young people, grown-ups and even grandparents want to be addressed and inspired. This holds true for store planning, such as the presence of a clear product range overview, orientation and noise level. But there can also be a targeted approach for products, among other things suggesting tips for play between father and son or between grandparents and grandchildren.
- "We do not have it" is no longer an option
A huge challenge, but critical to the survival of the toy industry: Providing products that are not found in the store. A customer who leaves because they do not find the episode of the audio drama they are looking for is quickly lost for the future. The customers of the future will no longer understand why they can obtain anything from online shopping while sitting on their couches and not from specialty dealers. That is why multichannel retailing is and remains the challenge of the future.
- From toy store to recreation building
The term 'toy store' may be overly restrictive in future. The target group must be expanded. Downwards, this has already frequently been the case for the baby and toddler area. A different approach is needed for older children and adults, themes such as robotics, 3-D printing and the like will otherwise be seen to elsewhere.
At any rate, the stores of the future are places for inspiration and for social gatherings. A toy store offers the ideal platform: Carrera race track nights just for fathers, readings, quadrocopter test flights, demonstrations of 3-D printing and other technology and traditional game evenings.
- New product lines
Toy stores are already handling a number of new themes, but is the toy store the customer’s first point of contact for things like party products, robotics or baby shower events? Many children are interested in their favourite regional sports club, why not include a small fan shop?
- Pop-up store
A special area in the store can be dedicated to a specific theme, incorporating other product lines as well, for example a new product or a brand focus. Inner-city retailer cooperation is also a possibility: The toy store inserts a pop-up store at children’s fashion retailers and vice versa.
- Service and added value
Many retailers have been offering added value services in stores for a long time, seeing it as a given. This includes goodies basket service, lounges for adults, special packing service, goods delivery and forwarding of products that are not available in the store. These added services must also be displayed, by such means as a digital presentation at checkout.
- Display window design
For display windows, it is not the size, but rather original and focused design that attracts attention. This can certainly be supplemented by digital play elements, animated installations or light images.
- Digital signage
Small screens with image films and product infos can no longer be done without, especially in the toy business. They help in orientation and selection, but should not be set up in any which way. They must not lead to visual and acoustic chaos to drive adult purchasers away.
- Social media
The expertise of the individual areas of the store must be disseminated on the internet. This can be by way of product demonstrations by individual employees on video portals or through Facebook campaigns. This is how the "online kids" target group is addressed.
- Local internet activitiesThere are some cities or high street advertising associations offering joint online platforms that present campaigns and products. This creates a joint, local presence which is stronger on the whole, offering the opportunity for increased frequency in cities.
The young, digitally-oriented customers will surely like it: additional product information, the chance of personal customer contact, discount campaigns for frequent store visits. This information is transmitted to the customer’s smartphone by way of a transmitter in the vicinity of the product. A great chance for retailers to create a regular customer base.
- In-store photo opportunity
Successful stores are fond of featuring an eye-catching element as background for a photo or a "selfie". The customers then disseminate these via smartphone to their friends, thereby making the store all the more popular. The photo motif does not have to be overblown. It has to be original, perhaps with a local reference, or humorous.
There are many different options for the make-up of the store of the future. Seeking solutions in digital components alone is not expedient. It is an ideal complement to the traditional, analogue elements. Any toy store owner who tries to become a better online dealer by using standard products will probably be limited to price and selection, thereby losing the race.
However, those who put together an attractive, comprehensive package using the various elements in their stores and publicizing it over the internet will become points of reference and win return visitors, thus heightening sales opportunities.
About the author:
Maik Drewitz studied interior design and has been the Head of Brand Design at Shopconsult by Umdasch since 2010. Together with a team composed of architects, interior designers and designers he develops and plans integrated retail concepts for brands such as Bose, Cinque, Mc Trek and Zalando.
Do you need more clear practical tips about store design from Maik Drewitz? Listen to his presentation on 29 January 2016 (1:00 pm) at the Toy Business Forum at the Spielwarenmesse® 2016. Also find out about other presentations on toy know-how, licenses, design and (online) marketing in the Toy Business Forum program.