How The Factoring Industry Has Adapted To A Changing Retail World

Amid upheavals in the toy market, smaller companies carry on.

The bankruptcy of Toys R Us signals a major shift in toy retailing. This change can make for a bumpy ride, but it is just a distraction to innovative toy companies that vie for the attention of children and their parents.

"Retailers are having their struggles," said Ashley Thompson, CEO of 50 Strong, a producer of sports and bicycling accessories in Lima, Ohio.

Underlying the Toys R Us bankruptcy is a sea change in how toys are sold. The classic model — selling toys in "brick and mortar" retail outlets — is under siege by a surge in online purchases, or e-commerce. Toys R Us, like many firms in retail, has largely clung to the brick-and-mortar model to its detriment. It has pushed into e-commerce, but that thrust wasn't made in time to save the retailing giant. Amazon is the leader in North American e-commerce.

"We're not directly affected because we're not stocked in Toys R Us," Thompson said in a phone interview.

"But we recognize the problems of brick and mortar stores facing the dot-com issue," added Ashley Thompson. "We try to stay ahead and be diverse."

50 Strong has introduced Scooter Stand in time for holiday season sales. The product is a low-profile, heavy-duty polypropylene frame that grabs the front wheel of a child's scooter to prevent it from falling over and cluttering the garage or other storage space. Scooter Stand is modular so it can be interlocked for storing multiple scooters.

> 50 Strong 50 Strong's scooter stands.

Also new from 50 Strong is a new water bottle blow molded from Eastman Chemical's Tritan copolyester. OZ Count bottles are an extension of the company's popular water bottles based on molded Tritan. The 24-ounce OZ Count has molded-in lines at four-ounce intervals to show riders how much water they have added or drunk from the bottle.

50 Strong molds all its products in the United States, a marketing advantage on top of the novelty factor of its sports and play accessories. The OZ Count bottle retails for about $7.99, half or less the cost of rival bottles with built-in electronics to record water consumption.

Selling toys online is having "an unbelievable effect" on the market, stated children's products icon Tom Murdough in a phone interview.

"Consumers are drugged with the ability to buy on the internet," according to Murdough. "This is one of the most unusual years for the retail industry."

Murdough founded child-oriented Simplay3 about a year ago after making his mark on the industry through his previous foundings of Little Tikes and Step2. Simplay3 makes its children's products through in-house plastics rotational molding at the firm's base in Streetsboro, Ohio.

Simplay3 has about two dozen children's products ready for launch at the annual New York Toy Fair in February. Murdough said he and his team are already pitching the products to major, prospective retailers for the 2018 holiday season. The lineup includes entrants in the playhouse category, kitchens, riding toys, sand and water play and more. Simplay3 also offers a broad line of home and garden items, including plastic mailboxes, of which it is arguably the largest U.S. producer.

Murdough said buying toys over the internet has its drawbacks.

"It diminishes the consumer's understanding of products," he opined.

And if a consumer does decide to visit a brick-and-mortar store, she or he can look at a product and quickly check its price against what Amazon and other online retailers are posting.

E-commerce will represent about 11.5 percent of total U.S. retail sales during the 2017 holiday period, estimates eMarketer. For the full year, e-commerce will account for 9 percent of retail sales, according to eMarketer.

About 31 percent of U.S. toy sales are done online, estimates NPD Group. Some toy categories are more heavily bought online, according to the market research firm. Online transactions accounted for more than a third of recent sales for video games, apps and electronics. Specialty stores compete with online channels and the mass retailers.

Electronic technology not only allows flexible approaches to shopping, but also it can be used to start up a business. Crowdfunding is a relatively new and growing trend to raise money.

> BeginAgain Toys BeginAgain Toys uses bio-based plastics in its toy line.

The founders of BeginAgain Toys are using crowdfunding to help ramp up production of toys made from bioplastics. Chris Clemmer and David Bowen started a crowdfunding campaign through the Kickstarter website in mid-November to bankroll production of Sprig Toys products in the United States. Clemmer and Bowen bought Sprig Toys about a year ago from Wham-O and plan to make toy dump trucks and similar products under the Sprig brand name using sustainable plastics.

Clemmer and Bowen actually founded Sprig Toys about a decade ago, but they sold it to Wham-O in 2010. Sprig Toys won numerous awards for its use of bioplastics in toys. After buying Sprig Toys, Wham-O moved production offshore and did not seem to do a good job of exploiting Sprig's early success.

Clemmer and Bowen recently repurchased the Sprig Toys business to expand on their mission to make toys from bioplastics. Several years ago, after they sold Sprig Toys, they started BeginAgain, a Fort Collins, Colo., company that makes bioplastic toys like Eco Rigs under license from John Deere Co.

Clemmer said in a phone interview that the new Sprig toys will be injection molded by Pikes Peak Plastics Inc., the Colorado Springs, Colo., company that molds BeginAgain's Eco Rigs from a bio-derived polyethylene/corn cob mixture.

"The tooling is being made in the United States for Sprig Toys," Clemmer told Plastics News in a recent interview. "Our bioplastic material, too, is U.S.-made."

Clemmer said the new Sprig toys will debut next spring.

U.S. toy sales could grow by 4.5 percent in 2017, according to NPD Group Inc. The Port Washington, N.Y., market research firm based its opinion on activity in the first half of the year. NPD estimates the U.S. toy market grew 3 percent though the first half of the year, according to NPD Group.

"The toy industry is off to a slower start in 2017 than last year, but much of it has to do with the fact that the industry is comparing against strong Star Wars movies sales from last year, as a result of the December 2015 release of Star Wars: Episode VII," noted Juli Lennett, senior vice president and U.S. toy industry analyst for NPD.

Games and puzzles showed the highest growth in the first half, increasing by nearly 25 percent, while building sets, so popular recently, slipped about 10 percent in the January to June period of 2017 compared to a year ago, according to NPD research.

The National Retail Federation predicted retail sales of all types should be 3.6 to 4 percent higher this holiday season compared with the 2016 period.

Looming in the background is a possible merger of toy icons Mattel Inc. and Hasbro Inc. The two companies have discussed the possibility several times in recent years. Recent published reports indicate they were talking to each other again this year before backing off.

Recent merger speculation was fueled by a sudden downturn in Mattel's financial performance and stock price that coincided with a rising Hasbro stock price.

"A merger would certainly have a big impact on the toy market," said Murdough.

"But whether the government will allow it is another question," he added.

Mattel makes most of its core products in company-owned factories in China and elsewhere in Asia and Mexico. China alone accounted for some 70 percent of Mattel's toy production five years ago. Third-party manufacturers make most non-core toys. Typically, Mattel makes toys in multiple locations to offset disruption caused by political instability or other trade risks.

Hasbro's toys are mainly made by third-party manufacturers, mostly in China. Hasbro's last two major company-owned plants were sold in 2015. Cartamundi UK Ltd. acquired the plants in East Longmeadow, Mass., and Waterford, Ireland.

>Read about this year's hot toy, an injection molded animatronic robot called the Fingerling Baby Monkey, developed by a Canadian company.

Source : http://www.plasticsnews.com/article/20171212/NEWS/171219975/plastic-toy-makers-adapt-to-changing-retail-market

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