Mattel Pixar CARS: The Retail Situation, Our Buying Habits and Next …
This is going to be a long post so pour yourself a foamy one, a cold one, a hot one or have an energy drink. Or one after the other …
Because this is a story that is interesting, amazing, thrill-a-minute, filled with cute kids in peril, strong women who can down AND fix helicopters, and men who dress up in smocks all in an attempt to foil the most dastardly villain of all – EMPTY PEG … He uses Lex Luther as a toothpick and Galactus to shine his shoes. He is a mean one, Mr. Grinch and was fired from the DMV.
Let’s start with a clean slate and imagine a Toy Line … What elements would you need …
How about one based on a movie that people seem to have a fond affection for?
Something that is EVERGREEN and perfect for kids who are turning 2 will enjoy
for the first time? Not to mention from a company that is full of kids of all ages?
But that’s all fine and dandy … What about some diecast cars so we have a little memento to take home … you mean something like this?
Uh, no … we actually like our fans and want creativity, craftsmanship and a sense
of the characters …
And Mattel stepped up & delivered – sure, I could show you McQueen or Mater but those are the main characters … you want those great but on the minor characters, just as brilliant. Details where there should be but the most elusive quality of all – capturing animated characters into inanimate metal – the word is artistry … but of course, the design is one phase, if you skimp on the mold and the materials – you end up with a deuce in a blister card.
But Mattel delivered on both counts.
Quality of materials?
Oh, and BTW, in 2006 – most people not only thought the diecast market was winding down to just an old guy collectors market – the thinking was that kids just want RC cars or it had to have some interactive element … AND that a licensed lines tied to a film? Just chalk up a few months of sales and kids are onto the next time …
And then there CARS …
Not just 4 months of sales, not just 6 months of interest, not just 12 months of frenzy and now 2.5 years later, 30 months later – the craze is GREATER than April 2006.
How is that even possible?
Great film, great characters.
Artistry of Design.
Quality of materials …
How many other lines have sold out shelves after 30 months? … And after over 150 characters released? What other line sells out a $299 item in 2.5 hours to see the secondary market price increase to $1,500 in TWO WEEKS? What other line has every exclusive item sell for about 10 times it’s original price?
How about that – quality sells.
Go figure. What a concept.
And when you deliver quality – people don’t spend a lot of time fixated on just the price … ask Apple, Porsche or Krups how nice that is – when you deliver quality at an appropriate price, people recognize the value … so while whole stores and companies are slip sliding down the slippy slope during these inflationary-recessionary times, when you have the quality, people are willing to step up. But as soon as you compromise on that principle, you can see it in companies that fail or face tougher times in these tougher times. All Mattel has to do is look not very far at the Speed Racer line they tried to foist on consumers to see where that when you cut corners, what you do is cut out customers. At the time of the Speed Racer movie release, both CARS & Speed Racers were @$2.99 but CARS – detailed, crafted and quality through and through. Speed Racers cars? Not so much. The hideous plastic Hot Wheels tires and lumpy plasticky bodies …
For one, people are more than happy to pay $2.99 – the Speed Racer one, not so much. What’s sadder of a comparison is that the Mach 6 was the supposed CENTERPIECE of the new movie while Tow appears in the film for :25 seconds? Good luck finding a TOW on the shelf … and the Mach 6 … how many are in your toy section/stores?
So, the first part of the sales equation is an easy one to call.
Mattel’s CARS offer great and fun designs and made with care & quality.
The quantity of choices?
Outstanding. Again, give the people what they want and you have the STAR WARS of diecast. 30 months later, there is no letup on the demand side … however …
The supply side?
THE BLACK HOLE OF RETAIL
“What Happens if You Fall Into a Black Hole?”
“A black hole is a place where the force of gravity is so powerful that you would need to be traveling at a speed faster than the speed of light to escape its pull. Since nothing in the universe is faster than the speed of light, nothing that falls into a black hole can ever escape.”
Ad if you look, closely, that is a photo of space taken with a special CARS retail lens showing the 4,000 Wal-Marts, 1,500 Target’s and 700 TRU’s – with the minor stores of Kmart, KB and Fred Meyer circling the outside …
CARS go from Mattel distribution to retail shelves and in a matter of hours or days, CARS are unable to escape the tremendous gravitational pull of wallets, credit cards and screaming 40-year olds … and the occasional 3-year old. Everything – gone into the event horizon and maw of the thing called CARS COLLECTOR – nothing can escape its clutches – not cars, not cards, not variants, not error CARS and except for some exotic Earth metals like Bug Mouth McQueen, Lightning Ramones, Green Ramones and Boosts – it’s as though they were never there.
In the words of every cliched disaster movie …
(no, not, “I’m too old for this for this sh******************!)
No, it’s time for to scream, “What THE … hell is happening?!!!”
Like any good science story, we must have several theories to offer up and mythbust …
MATTEL IS NOT MAKING ENOUGH CARS
Well, it’s true only the sense that they will make what retailers will order. Mattel is not holding back production because of any other reason. But we’ll circle back to this one later.
MATTEL MAKES TOO MANY OLD CARS
Mattel has released about 65 cars on WOC cards so far – about 40 were carried over Supercharged … so about 25 new ones. If theory #2 were correct, you would see about 40 DIFFERENT CARS on the shelf because people would not be buying ‘older’ CARS but just the new release CARS. While I have not personally visited 6,000 stores this year, I can say of the 100 or so that I have visited, if you discount the most current box and its inventory on the pegs if you happen to arrive just as it’s been stocked in the last hour, 4 hours or 24 hours – it’s safe to say there is very rarely more than about 10 DIFFERENT CARS on the pegs. Of course, in some cases, these less than 10 DIFFERENT CARS might represent 50-60 CARS on the shelf but clearly, there are not 40-65 DIFFERENT CARS on the shelf.
* Yes, there are about another 10+ new ones coming but clearly, they won’t stay around on the shelf for long.
And of course, 25 “New” CARS and 40 “Repeat” CARS is a 2 to 1 ratio – hard to really quibble with that AND if you add in the 10+ that are still coming for 2008 (just in the singles mainline), you’re almost at a 1 to 1 ratio of ‘new’ to ‘old’ so really, it’s not a problem of too many older CARS or a poor ratio but simply about 5-10 CARS that are log-time pegwarmers giving off a poor impression.
Yes, this is not 100% true across the country. But I think it’s safe to say that most CARS collectors generally agree with this statement for most of the stores they visit, “The pegs tend to offer fewer than 10 DIFFERENT Car Choices …” So, this is clearly not a stagnant market where people are only buying the new CARS, people are clearly buying 50-55 of the 65 available CAR choices/models – leaving only a few behind …
So, who’s fault is it?
Well, let’s list everyone who has a hand in this:
Mattel Department Responsible for Deciding on How to Pack CASES?
Retail Inventory Control?
Mattel Sales Reps?
The Oil Companies?
Case Assortments Decisions by Mattel?
We did a post a few weeks back on all the CARS released in 2008 (through CASE T) and sure, you could quibble over somethings like why out of 14 CASES for 2008, why these particular CARS made the most number of appearances at 8: Bling-Bling Lightning McQueen, Bug Mouth Lightning McQueen, Dinoco Helicopter, Pit Crew Member Fabulous Hudson Hornet & Pit Crew Member Fillmore. (For instance, if you bought all 14 CASES, you’d have 18 x 14 CARS or 252 CARS and you’d have 8 of each of the following above). And while Bug Mouth & Bling Bling are often pegwarmers, in most cases, you’d be hard pressed to find more than a couple of the other “8″ CARS (Dinoco Helicopter, Pit Crew Member Fabulous Hudson Hornet & Pit Crew Member Fillmore) …
AND a major key point is of course, this ratio is based on the presumption that each store gets 1 case … of EACH CASE … and that’s the other problem. Store ordering is not consistent. Of the 14 CASES, some stores might skip 5 of the 14 cases or get 5 of one case and NONE of the next three and if you look over the case assortment for 2008, clearly some cases have lots of new CARS and others are sort of “catch-up” cases. So, while it might seem easy to blame the way Mattel packed each case, when they pack the cases, they do not know how the retailer is shipping to each store … in an ideal world, the store gets one of each case (or more) but for instance, if a store received/ordered 5 G CASES and then waited 3 months and ordered 5 K CASES, you might wonder why the store went from 10 Bug Mouth McQueens to mostly empty shelves for 3 months only to see another 10 Big Mouth McQueen’s?
The other problem is again out of Mattel’s control, retailer geographic distribution is not very logical … for instance, WM has twice as many stores in California as Illinois which makes sense except if you look at it deeper, there are 3 times the number of people in California (37 million) as there are in Illinois (12 million) so if every store gets the same amount of stock, clearly, in California, you have more people and less stores – ratio wise. There are parts of the country where there are 10 WM’s in a 20-miles radius while in CA, in a 20-mile radius around me, there are 3 and probably a solid million people … of course, not everyone is buying CARS but you can see store stock perception is also a matter of CARS to people to stores …
Which leads us to retail ordering & buying. While we value CARS, to retailers, it’s just another SKU (Stock Keeping Unit) … it’s just another thing … they have over 200,000 in each store to keep track of – some are high margin items like jewelry, others bring in traffic (new DVD releases) and others in everyday traffic (diapers) – CARS is an insignificant thing to them … sad to say. This is the part that’s difficult to say precisely where the problem might be – but to this store below, it could look like they have plenty of CARS on the shelf.
By the broadest measuring stick, this store has over 60 CARS on the shelf … how fast will sales be? VERY SLOW so why buy more of these CARS – they’re not selling very fast …
Retail Merchandiscing & Inventory Control
So, who’s fault is this?
Bad ordering? Bad return policy? Bad employee hoarding & then returning? (You definitely cannot blame Mattel assortments – the blimp on a single card has appeared in only ONE shipment) on WOC and for some bizarre reason, every WM card blimp has ended up at THIS STORE).
Mattel Sales Reps?
I know each region & stores have sales reps but of course, Mattel has tens of dozens of product lines and these reps not only have to service all the lines plus how many stores? But clearly as evident by the photos above and these below – there is a problem that needs to be resolved – again, hard to say who is to blame but CLEARLY, once it reaches the store shelves, there is a HUGE SUCKING SOUND going on.
The next three photos are all from the EXACT same Target store in Walnut Creek, CA on 9/5/2008:
Yep, what’s wrong with this situation?
Hot Wheels & Matchbox sales not that great?
Stores not buying enough CARS?
Mattel Sales Reps monitor HW & MB cars much more than CARS?
Stores buy Hot Wheels & Matchbox more frequently?
These are answers only Mattel and retailers can answer or sit down and try to answer if they’re interested …
Oh and for those who still think Mattel packs poorly? Lightning Ramone was only available 4 times in 3 CASES – H, J, & K. So, presuming they got 5-6 cases with some Ramones selling, that’s over 108 CARS from 6 cases with only 6 left, that’s a sell through rate everyone would kill for.
AND … oh yea, that Walnut Creek store … here are the exact same pegs on 9/13/2008, a little over a week after the photo with the 6 Lightning Ramones was taken …
Yep, ZERO CARS on pegs … guess that sell through rate is now 100% … it doesn’t take a retail genius to figure out that’s a pretty good number
(there were a few Movie Moments and a few Mini’s)
Matchbox for comparison on 9/13/2008 – about 10 days later at the exact same store?
The actual number of Matchboxes either is about the same (a few sales or they opened another box to restock but in either case, Matchbox either gets restocked and attention from Mattel/Target or sales are not very fast (stock just shifted around a bit) so take your pick? with CARS, it’s pretty easy to tell … Lightning Ramone not the first to go but eventually it ALL GOES …
Bottom line it?
Retailers should order more CARS.
That circles back to Theory #1 that Mattel is not making enough CARS … D’uh … but why isn’t Mattel making more CARS? Because retailers aren’t ordering more – not because Mattel doesn’t want to make more CARS (aka: make mo’ money) … but again, the solution is not that simple.
Maybe retailers don’t want to order anymore?
Yea, sounds stupid but to them, CARS are cars are toys – it’s like they don’t care which Barbie – they figure as long as they have some diecast cars on the shelves, people will buy it so whether it’s HW, MB’s or horrors of horrors – Marvel cars from Johnny Lightning … to retailers, a car is a a car is a car … to us, that would be like saying, I came for Sarge but I’ll buy that Dukes of Hazard car from above … or if run out of Lavender TIDE, you’ll probably still buy Fresh Spring TIDE, right? Well, at least that’s the theory.
(or as noted, if you combine this attitude along with their general inventory count – we have 60 CARS on the shelf, how many more do you want to shove on us?)
Another point that we wouldn’t consider but they simply budget X amount for Mattel and so as long as there’s X amount devoted to Mattel inventory, they don’t really care if they get an 2 boxes of Barbie accessories or another case of CARS.
BUT let’s not let the Mattel sales guys 100% off the hook, are they pushing CARS hard enough? I have no idea but it’s possible they are not really aware of the sales and traffic power of CARS buyers and so, hey whatev … as long as they’re still ordering Hot Wheels, Matchboxes or other boy toys, hey whatev … when in reality, they could double, triple or quadruple CARS sales? That might actually be more work though :-/
At the end of the day, there are three problem groups when it comes to retail stock & merchandising issues for CARS:
#1 – No Selection – well, that one is easy to solve, buy/sell more cases.
#2 – Imbalanced Selection – consumer gets 5-10 out of 65 possible CARS choices. This is a combination of poor inventory, & poor ordering. The stores & Mattel should work together in getting this imbalanced fixed. If it’s closer to 10 different CARS on the shelf, it’s not a huge problem but could be better with another 5-8 CAR choices – a reasonable and easy fix. 5 choices is a little too few so that needs to be fixed faster.
#3 – Just plain Poor Selection – when a store has 50 Blimps or 60 Boost’s, clearly there is a massive breakdown somewhere. It’s really the stores fault but ultimately, Mattel’s sales rep need and want to figure this out because it’s hurting the bottom line.
Other than the stores with low or no stock, the solution is not always obvious other than that someone needs to take action and/or of course, care.
TakeFiveADay Retail Survey
A few weeks back, we posted a retail survey on EDITGRID and asked people to fill it out … of course, the relative low number of responses across a huge country means that it’s not statistically very valid but the results are pretty much in line with I think what most everyone here knows and is familiar with – in terms of the retail situation … on average, the respondents have about 7 stores that they normally circle shop at (Target, WM & TRU and usually one other place) – of those 7 stores, they stop an average of 12 times a week to look for CARS – in most cases, people continue shopping though for TRU, about 30% of the people who upon finding/not finding a CAR leave – the “leave straight away %” for the other stores are all under 5% which makes sense as who doesn’t need vitamins (thanks PirateDad) though I remember when I was a kid, I had to actually use my teeth to eat vitamins, now they’re gummied already!
And of those 12 trips, they managed to score on average 3 CARS … a further breakdown is on average, 40% of the trips nets ZERO CARS, 40% 2 CARS or less and 20% more than 2 … AND from our respondents, 85% of their collection is from the stores, @11% from eBay and ‘other’ for the rest (gift/trades/etc).
The comparison is how many trips “normal” people in the US make trips to Target/TRU & WM in a given week? The “best” WM shopper in 2003 made about a trip a week – our small survey shows 4 TRIPS on average to WM – but presuming that WM trips are up since 2003 for what they consider their best shoppers and we’ll round up to 2 – does that means CARS buyers are making TWICE as many trips to WM? We don’t have the resources to actually do an accurate or comprehensive survey but that’s a number retailers want to know more about … pulling people into stores is a CRITICAL NUMBER for a retailer – that’s why they have loss leaders and sales – they are FOREVER trying to figure out what draws you back in … price? design of the store? merchandise? CARS?
I don’t have weekly traffic trips to Target but from our survey, it’s just a hair under 4 also with TRU just under 2 trips a week.
Bottom line? CARS seems to drive people on average at least TWICE as often as the rest of America to Target & Wal-mart and probably Toys R Us … (that’s a powerful and powerhouse brand if we had a survey of 1,000 buyers across the country – right now, it’s interesting but not statistically applicable across the country).
But according to the survey, only 3 out 12 trips are they finding a CAR to buy … or 25% of the time … now, you could cynically say – 75% fail rate and yet, they keep coming back – maybe they can’t buy a CAR but they buy something else? Bwahahahaha … I think virtually every retailer would like you to buy what you came for and not go to their competitor but that’s what’s happening here – one of the three here is losing a sale everytime … those 9 empty pegs at the Target above represent $220 of LOST revenue (7 CARS per peg x $3.50) per day they sit empty … retailers measure sales per square foot … that’s ZERO revenue per square foot right now.
Maybe the retailers don’t care? Maybe they don’t know?
Everyone is doing quantitative research to better understand the motivation and buying habits of their customers – everyone is leaving money on the table by either applying the “other diecast” buying/shelving template but just like there’s no template to base Star Wars buying – and to mix movie metaphors, where CARS has been and where CARS is going, there are no roads and it’s time to invent some new ones or invest in some new ones.
THE FINAL SUMMARY
The design, quality and selection released are all great.
GRADE: A, A & A
The packing selection could be slightly better but honestly, it’s hard to be 100% perfect there because if I asked you to configure 65 CARS into 14 boxes representing 252 releases over a year, will you be perfect? It’s clear that people will buy EVERYTHING in this line given time … (like the Lightning Ramones) … and what’s too much and what’s too little (as people complain they can’t find Lizzie).
So CARS as it leaves Mattel’s warehouse is pretty much an “A.”
That’s when our troubles start …
For some stores, the problem is easy to pinpoint – not enough CARS … but for most stores, it’s a weak imbalance that can be fixed by better ordering, more ordering, store inventory control and/or adequate attention from Mattel’s sales reps.
For the remaining really poor stores – (the 50 blimps/60 Boost stores) they really need a reset in more ways than one. The got trouble and it starts with a capital T …
… So while retailers are the ones really fouling up the situation, the real, real bottom line – Mattel’s sales & retail servicing sector is also costing Mattel revenue through their indifference or inattention to the line … how much revenue is being frittered away? It’s safe to say sales could double … but maybe it’s much more?
If your child just turned two and saw CARS for the first time … and you see this …
Or you see this …
How psyched are you to start collecting these?
Each person that walks away is costing Mattel revenue today or delaying the revenue … (after all, who stops at one? ) … or of course, where else do you find a lot of CARS that are NOT on the shelves?
There are rare opportunities in the marketplace where consumers appreciate the art and quality and strip the shelves virtually clear … for Louis Vuitton, Fendi & Ferrari, they appreciate and understand that exclusivity is the price they pay for that and cannot do anything that is not limited … however, here is the rare opportunity where consumers are willing to buy in mass quantity – how much is Mattel leaving on the table? Not because they want to but because between the warehouse and the store shelves, there is a black hole maw?
The Golden Age of CARS is upon us – we have a bountiful showcase of CARS coming – all artisan crafted and gilded … we are all ready to pay and buy – eager – cash in hand … and yet, the road to the Golden Age is paved by broken blister packs and retail indifference.
But maybe there’s hope for us yet … MattyCollector.com might return from the living dead and who knows, maybe Mattel can just ignore the retailers and offer up everything there …
[DISCLAIMER: Of course, this just applies to the U.S. International distribution and sales are handled differently]
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