An insider’s look at the first Toy City store that Party City opened this week; the strategies behind new brand divisions formed Mattel and Netflix; NBA beats to a new partnership; plus other key licensing deals of the week.

Licensing, marketing and retail expert/opinion leader Tony Lisanti, provides insight and perspective for the top headlines of the week. “Licensing and Merchandising Report” is a must read for top execs who want objective, straightforward and authoritative analysis. 

An Inside Look at Toy City

Party City, which previously announced it would open 50 Toy City stores this fall, debuted its first location in New Jersey this week a few miles from its corporate headquarters.

After a visit to the Rockaway, N.J., store that shares the site of a former Babies ‘R’ Us with Halloween City, it was not overly impressive from a merchandising and design perspective, but functional and easy to shop.

The combo store featured Halloween City on left side taking about two-thirds of the floor space with Toy City on the right side, with three aisles of merchandise extending about half way to the back. In total, Toy City has about 5,000 sq. ft. of the original BRU box of about 30,000 sq. ft on average.

The storefront of the newly-opened Toy City in Rockaway, N.J.

Toy City, scheduled to be opened for the holiday season, looked like a temporary store. It featured a simple warehouse style design with products displayed on white wire shelving with overhead signage. It lacked any functionality or experiential component that would allow shoppers to touch or play with any of the toys. The primary element of design, other than the specific brand signage, was the focal point at the entranceway featuring a giant Jurassic World dinosaur built with Lego pieces.

The new Toy City is in many ways a throwback to the “stack it, sell it” mindset of TRU and other retailers. And this approach should work well for the holiday toy season—customers want to grab the hot toys and head to the check-out.

Princess toys were abundant at the Toy City store, among other items.

Despite its basic look, the store featured many of the current licensed products and brands that top many of the hot toy lists for the holidays. The brands were organized in vertical displays next to one another based on categories, themes or age related. Licensed products include: MGA Entertainment’s Num Noms and LOL Surprise!, NBCUniversal’s Jurassic World, Disney’s Star Wars, Marvel, Princesses, Hasbro’s Transformers, and Warner Bros.’ Harry Potter and DC, and Hello Kitty. Other brands included: Mattel’s Barbie and Hot Wheels, Hasbro’s Nerf, and Lego, plus sections for Arts and Crafts, Family Games, and STEM.

Jurrasic World display at the Toy City store.

Shelves of Marvel, DC and Harry Potter products at the Toy City store.

The challenges for Party City’s test and expansion into the toy category will be maintaining in-stocks on popular products, marketing effectively during the holidays, and being price competitive with the major retailers—Amazon, Walmart and Target in particular, that will all be aggressively merchandising toys this holiday season to grab a share of the $11 billion-plus pie left behind by TRU.

It’s likely that the Toy City will expand into the Halloween City space in November when that season ends adding additional toy and holiday merchandise.

The pop-up Toy City approach is an excellent strategic move by Party City to expand its merchandise assortment and grow its business. The specialty retailer has had excellent results from building its Halloween business and hopes it can do the same with toys. Remember, TRU generated the highest percentage of sales in the fourth quarter and struggled to maintain a stronger year-round toy business.

Mattel and Netflix Make Major Moves

Two very different licensors which are at very different periods of their existence made game-changing moves this week that reflect the importance of brand licensing, content development, sponsorships and events as well as leadership.

Mattel, which has been in a turnaround mode for several years and since it first revamped executive management in 2015, created a film division and a global franchise management group in the same week. It certainly took a long time or the better part of decade for Mattel to make these strategic moves considering rival Hasbro began the transformation from toy company to entertainment company in 2008.

Mattel formed a theatrical film division, called Mattel Films, to develop content based on its popular franchises. The company named producer Robbie Brenner as executive producer of the new division, reporting to Ynon Kreiz, Mattel’s chairman and CEO. Brenner was nominated for an Academy Award for Best Picture for Dallas Buyers Club, and her film Burden won a Sundance Film Festival Audience Award in 2018.

In addition, Mattel created a global franchise management group and named former head of Saban Brands and Sanrio, Janet Hsu, to the newly-created position of chief franchise management officer. She will report to Richard Dickson, Mattel’s president and COO. According to the company, Hsu will be responsible for “developing and implementing franchise strategy across the company’s portfolio of iconic brands and extending the company’s brands to new commercial opportunities in key areas including content development and distribution, consumer products, digital gaming, live events and strategic partnerships.”

Meanwhile, Netflix, which has recreated its business from service provider to also become a major producer of exclusive content, appointed a new exec to lead its global consumer products initiatives. Former Disney retail and merchandise exec Christie Fleischer was named global head of consumer products overseeing retail and licensee partnerships, publishing, interactive games, merchandising and experiential events across the Netflix portfolio and all categories.

Both of these timely and essential strategic moves, which reflect a commitment to brand extensions by both Mattel and Netflix, will have a major impact on licensing over the next several years as both companies develop new content and launch related global licensing programs. 

Story’s New Story

Specialty retailer Story, which was acquired by Macy’s in May, unveiled a new merchandising initiative in its New York flagship store. Story partnered with the Peanuts Global Artist Collective to create various products influenced by the seven contemporary artists. Once again Story has exemplified an innovative merchandising approach focused on an iconic brand. More importantly, it will be interesting to see how Macy’s incorporates the retailer’s approach in its stores. It’s worth a visit if you are in New York, but you can also see some store photos here.

NBA Delivers a New Beat 

The National Basketball Association and Beats by Dr. Dre announced a new marketing and merchandising partnership. Beginning in October, Beats will become the official headphone, wireless speaker and audio partner of the NBA, Women’s National Basketball Association (WNBA), NBA G League and USA Basketball.

“Beats revolutionized the music industry and has become one of the most innovative and culturally influential brands in the world,” said NBA Commissioner Adam Silver. “Through our partnership, we have an exciting opportunity to merge sports, pop culture and technology to deliver unparalleled experiences and premium products to our fans.”

As part of the deal, Beats will provide product to players and activate during marquee events including NBA All-Star, NBA Draft presented by State Farm, international NBA games in China and Europe, WNBA All-Star, WNBA Draft presented by State Farm and USA Basketball men’s and women’s national team exhibition tours.

Beats will also collaborate with and establish separate deals with NBA teams and launch a line of its audio products for fans around the world, including NBA team-branded headphones.

Quote of the Week: Jeff Bezos, Amazon, in Forbes cover story

“I very rarely get pulled into the today. I get to work two or three years into the future, and most of my leadership team has the same setup. Friends congratulate me after a quarterly-earnings announcement and say, ‘Good job, great quarter,’ and I’ll say, ‘Thank you, but that quarter was baked three years ago.’ I’m working on a quarter that’ll happen in 2021 right now.”