Spielwarenmesse: 2018 FIFA World Cup Russia merchandising opportunities

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WM 2018 Fussballspieler aus Holz


2018 FIFA World Cup Russia merchandising opportunities

from Steve Reece

The FIFA World Cup is one of very few truly global sporting events. Much of the world will have eyes glued to television screens during the soccer tournament. In terms of global viewing audience there are very few regular global events which compare in terms of reach. For the 2014 World Cup in Brazil, TV reach was estimated at 3.2 billion viewers, with the final alone being watched by more than 1 billion people round the world! The viewing audience for the World Cup in Russia is expected to reach similar numbers.

World Cup of merchandising

Moreover, when we look at the glamour and aspiration of this event, with the multi-millionaire sportsmen, their aggressive combative managers and the exciting atmosphere of the games it is not hard to see why the FIFA World Cup is held in such high esteem around the globe.

Therefore it is clearly a significant merchandise opportunity, both for toy companies and those focused on other categories of merchandise. We can expect to see world cup branded items in filling station forecourts, super markets, kiosk channels, electronic channels and just about everywhere else across retail and entertainment!

High-scoring world cup mascot

The official world cup mascot this time round is Zabivaka, a Russian wolf (Zabivaka apparently means “the one who scores” in Russian). Looking at this super cutesy and dynamic animal, we can clearly expect record sales of Plush Zabivaka’s across Europe and beyond!

The question though is how much further can merchandising go, and what are the key success factors for those looking to derive commercial benefit from this out of Christmas season sales opportunity?

Goal scoring opportunity for toy companies

Among the named licensees for the world cup in Europe are Playmobil, Mondo, Kayford Holdings and many others. The Playmobil product is a real feature item – a themed football field toy which includes four action figures, a trophy, decorative sticker, four footballs and two goals.

Traditional toy industry thinking suggests that a toy company should embrace a big sales event outside of the Christmas season, however, the major risk factor is the limited time of the selling window. For a relatively short of time there is nothing bigger on the planet, and during that time you can expect comparatively huge sales for that time of the year.

The major trick though is how to ship in, sell out and leave both your warehouses and customer shelves clean by the end of the tournament. Even when a product sells at a genuinely ridiculous ration of units per store per week for a very short while, the residual stock hardly moves at all after the selling window. Sometimes this is easier to manage in principle than in practise!

Maximizing the score

This brings us to the key success factor for licensees for the 2018 FIFA World Cup: managing the risk while maximising the upside! I generally recommend tight but not frugal stock ordering in general for toy companies.

Keep in mind you can’t ship a product you don’t have in stock. In this case, clearly stock shipments need to offer the opportunity to make the license really payoff while not needlessly tying up cashflow as peak season orders start to be committed. The trick in this case is to account in advance for a markdown situation as a standard operating practise on short window products.

If your initial financials still justify the license with a markdown allowance of higher than usual e.g. in the vicinity of 20 per cent, then you should be well prepared to effectively manage the launch and life cycle of the product.

Prepare for what is sure to come

In actual fact, this type of opportunity can have more in common with the news and kiosk distribution channel, where it is presumed in advance not all stock will sell through perfectly.

Be prepared for the dreaded trading term ‘sale or return’. Some retailers will ask for this, or at the very least request a committed in advance markdown allowance to allow them to clean up while the product can still be expected to sell out.

Manage the downside risk

For the toy company that manages FIFA World Cup 2018 well, we can expect to see a significant boost in their Q1 and Q2 shipments and a boost in their annual profits accordingly.

For those who don’t manage the window quite so well, we can again expect a boost in Q1 and Q2 shipments, but without such a positive profit benefit.

So, in summary, like with everything in toys, some people will do good profitable business on the FIFA Wold Cup 2018…and some won’t. Managing the downside risk is the key to being successful.

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