The playbook has changed. Retail is concentrated, margins are tighter, and risk sits earlier in the cycle. So how are serious operators actually making decisions right now? For this Melbourne Toy Fair edition, senior leaders from privately owned businesses speak plainly about leverage, discipline, and what will separate winners from survivors in the next phase.
What has fundamentally changed in how you assess opportunity today versus three years ago?
Compared to three years ago, increasingly we’re seeing product success being driven by the influence of societal changes and trends. Both consumers and retailers are more concerned with climate change and the environmental footprint of products, which is impacting packaging choices but can also be seen in a greater emphasis on ‘heirloom’ products that will have a longer lifespan.
We’re also seeing industry-wide changes in how suppliers and wholesalers engage. During the pandemic there was much more digital engagement and more sophisticated virtual product guides. With in-person fairs well and truly back, now it’s about finding the right balance between the wealth of digital information available on fair participants, and the importance of seeing things in-person and having the opportunity to touch, feel and play with products.
With retail so concentrated, where do you now see genuine leverage—product, brand, relationships, or execution?
I see product, brand, relationships and execution as all being important. Having the right products – including identifying exciting new products – is foundational to our industry. The execution side of things – making sure customers know about our products and can get access to them without friction in the ordering process – is also critical.
But brand and relationships can sometimes streamline things – when a long-term supplier who’s delivered great products in the past has something new, I’m already onboard because of my trust in their ideas, and I know my customers will trust the brand and be interested in this product.
What’s the one thing suppliers consistently underestimate about working with independent retailers today?
At Divisible by Zero we work predominantly with independent retailers, many of whom are owner-operators with industry experience and very high product knowledge. One element that I think can sometimes be underestimated is the depth of understanding these retailers also have about the demographics of their customer base, which can vary significantly from store to store. I’ve often found myself surprised that a customer doesn’t want a particular popular product, but ultimately, they know what their customers’ priorities and price points are much better than we do.
Are we in a defensive cycle, or the early stages of a new growth model for the industry?
There will always be some growth in our industry. There are always going to be toddlers, and children’s birthday parties. During points in the cycle when consumers are more price sensitive, they might go for lower cost items or invest in products with a longer lifespan.
We’ve also seen growing interest in open-ended products that are fuelled by a child’s creativity and can be played with myriad different ways – because in addition to supporting development, for consumers, they’re getting more for their money.
Looking ahead 3–5 years, what capability will most clearly separate winners from survivors?
The ability to select products will continue to be the key capability differentiator. Identifying what will perform in market is a combination of experience and industry expertise, as well as an in-depth understanding of our customers, end consumers, current trends, and different pricing models.
If you can spot great product, this will support brand building, relationships, and distribution channels. If the product isn’t right, it’s a non-starter.
This article also appeared in Edition 20 of The Toy Universe Magazine
