Monday, December 28, 2009

The Bittergeeks 2009 Best/Worst of list begins

Because everyone loves to publish ‘Best/Worse of’ lists this time of the year, here’s one that came to mind while the Bittergeeks reflected upon their shopping experiences of 2009.

Worst Toy Retailer of 2009: Target

It’s difficult to call the exact point that Target ran off the rails this past year. For years Target was THE mass market retailer producing year after year market share gains in toys for most brands and vendors. They were also the undisputed first stop for toy collectors. The exclusives alone in brands such as Star Wars and Transformers were always innovative and exciting ‘must haves’ for any collector. These exclusives always seem to sell through quickly and continue to find life on the secondary market. They also had a good handle on chasing inventory for the more popular toys and compared to other retailers, managed turnover in action figure assortments well throughout the year. This important feat needs to be carefully managed quarterly in the bread and butter collector lines such as die-cast vehicles like Hot Wheels and Disney/Pixar Cars as well as in action figure lines such as Star Wars or GI Joe to name a few. In 2009, Target seemed to loose just about all of these skills.

Summer movie tie ins (Wolverine, Transformers & GI Joe) were lack luster. Slow sales caused stale assortments to pile up for too long. Exclusives were overall boring and included a lot of repainted toys we previous purchased. Bad decisions to carry poor performing brands such as Star Trek and Terminator were made despite a long history that confirms otherwise. (Although all retailers made that mistake. Buyers are too young and don't look back on historical data. Too much work. Still, they were bad calls.) We also understand from industry pals that Target lost market share to it's competition in several toy categories it once easily dominated.

We’d have to guess the fall of the Target toy team started at the last Toy Fair in February where Target’s buyers passed on the offering of Zhu Zhu Pets. How do you pass on cute hamster toys that also perform tricks and retail under $9.99? Especially in the girls plush category that really hasn’t had anything interesting since Webkins died off. How is that even a risk? Not only did they pass on it, they didn’t pick them up until well after the fall transition in July when both Toys-R-Us and Wal-Mart had been garnering free press coverage and brisk sales while they had been already selling them for a few months. By the time someone in the buying dept at Target finally convinced themselves they needed to be on board with the hamsters, it was far too late to lock up any significant inventory for the majority of the Christmas shopping season. They had empty shelf space dedicated to the line starting in October if for no other reason than be able to say to guests: “Oh we carry them too, we just don’t have any right now...”. Meanwhile both TRU and Wal-Mart had been placing orders for the fall season all along.

Pricing issues and control plagued the Target toy aisles in 2009. Target’s own exclusive line of DC Universe super-hero figures under the Justice League Unlimited banner started off the fall transition with a major blunder. What should have been a $19.99 6-pack set of figures rang up at $4.99. Well below even Target’s cost. They sold the initial order’s inventory within a week as collectors were quick to take advantage of the mistake. Later, not only would the Target buying team correct the mistake, they then raised all the retails of all scales of the struggling DC Universe lines significantly even though they were sitting on dead inventory they already couldn’t sell off at the old retail prices! This move, as always, then halts the need to order new inventory which of course means fresh assortments the collectors are waiting for, rarely arrive. This is a delicate dance in the industry Target’s team lost its edge on in many key brands and not just the DCU. They had to drive a lot of toy industry brand managers at companies like Hasbro and Mattel crazy all throughout 2009.

The great Holiday retail price wars are another battle Target lost. I’d like to say fought and lost but it was clear early on that Target was not going to take an aggressive stance on capturing the consumer’s attention early in the most important quarter of the retail year. Short and simple: Wal-Mart, Toys-R-Us and even kicked Target in the nads, then kicked them again when they fell and took money out of their coffers while they were down. This isn’t just blame that the Target toy team should take as all areas of company clearly had a failed strategy to not get involved in the pricing wars until it was too late. I don’t know how they thought they could navigate any season without being super competitive when the previous year’s history should have taught that same lesson. But Target was the major player that posted a negative comp in November against the same time last year. Think about that…a negative number in Nov 2009 against the worst November in decades when the economy had just tanked and all of America was griped in fear and panic. Retailers not only had a full year to recover from that nightmare but adjust all aspects of doing business and attract the consumer through the doors. Every retailer was ready with strategy, pricing, inventory and marketing. Well, almost every retailer.

Speaking of marketing…our last example is a doozy and pretty much exemplifies just how flawed, no wait… stupid is a more accurate term…how stupid the current leadership of Target really is. Target’s TV commercials were pretty awful again this year. Once again going for a cute theme over actually trying to convey any reason why shoppers should spend money with them rather than anyone else. You know, they type of message Wal-Mart was hammering home successfully all year. Price, family, entertaining, sick children, quality brands, etc. Unlike the Target spots showcasing buffoons. You’ve seen them, spots that confuse you upon first viewing. Typically some couple is having a disagreement about gifts they purchased for Christmas, cannot assemble properly or some such nonsense. Of this series, there was one spot featuring a couple of parents on Christmas Eve discussing how there really is no Santa Clause. This spot ran all over prime time and was seen by countless children who then turned to question their dumbfounded parents. Target’s guest service center lit up after a few of these spots ran and that specific commercial was pulled off the rotation.

How does this happen? You are a major retailer who makes the majority of your sales of the year based partly on the myth of Santa Clause delivering a shit load of gifts to children everywhere. It should be a theme baked into the DNA of any marketing team any retailer uses during the Christmas season: "Do not let on that there is no such thing as a Santa Clause!" So here comes Target, too cute for their own good shooting themselves in the foot. Again.

I would not want to be any team within the company recapping the past quarter as they try to figure out what happened and where they need to go next. As in any large, overblown corporate culture, we imagine a lot of finger pointing will be going on within the bullseye right now and for the next few months.

Better luck in 2010 gang. You obviously need it.

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