Australian toy retailers and suppliers discuss the business of play, delving into its opportunities, challenges and changes.
Joining the roundtable is Divisible by Zero managing director Sue Brennan, Johnco Productions owners Claire and Steve Ball, The Therapy Store owner and director Nick Taylor and Dizzy Toys owner Kerrie Byron.
Imogen: To kick things off can you all please describe your business’ main functions. What products does it specialise in (if any)?
Kerrie: Dizzy is primarily an independent, good-old-fashioned, retail toy store. We try to steer away from toys that you will find in the majors, but that is becoming increasingly more difficult.
We aim to provide good-quality, good- value toys. I place a very high emphasis on ‘play’ and would like to think we are well known for educational toys, wooden toys, creative toys and something ‘a bit different.’
Out of our 8,200 products currently active in our stock listing, a very small handful are battery operated, because as a parent that was something I found very frustrating – flat batteries.
Nick: We specialise in educational and sensory toys, as well as therapy resources for children and young adults with challenges such as autism spectrum disorder (ASD), ADD/ADHD and other developmental hurdles. We work with families, schools and hospitals to make as many fantastic and effective products available as we can.
Claire and Steve: We supply quality educational toys to Australian retailers. Our main focus is science, technology, engineering and mathematics (STEM) learning which is a main factor in the decision process when introducing new products to the Australian market.
Sue: Divisible By Zero (DBZ) is a wholesaler that specialises in exclusive ranges of products that are unique to Australia and suit the independent market. Our ranges cover indoor and outdoor games and toys, puzzles, plush, models, construction, brain teasers, musical instruments, bubbles, crafts and infant toys.
Imogen: What are some key changes that have occurred in your business in the last three years? How have these changes shifted the way you do business?
Sue: If we ignore the significant shift brought about by technology and changes to reporting, then the most significant ongoing change is the new and exciting products we see entering the market.
We continue to be impressed every year by the innovation and creativity shown in the industry.
For our business, sourcing new product now happens both at the international fairs and digitally all year round. Introducing new products doesn’t specifically change the way we do business, but it does allow us to provide more variety and can give us the chance to work with new customers.
Kerrie: As we all know the retail platform has changed dramatically. Consumers shop in a different way now than they did three years ago.
Online presence and social media are now essential. This means less time in shops for me and more time in the office taking care of the tech side of things.
After floundering around for a couple of years with a mixture of casual staff, I have finally put full time managers into the shops this year, which has created a much smoother operation, but increased costs.
Claire and Steve: We have focussed a lot of our efforts on streamlining all parts of the Johnco business.
By dramatically reducing the number of steps required to complete a process, we can invest further time and effort into providing a higher quality customer experience and product offering.
Nick: Most of our changes have been growth related and how you balance those costs while keeping up with and maintaining the growth.
Imogen: What technology have you implemented in your businesses in the last three years? What were the reasons for introducing this technology and how has it changed the business?
Nick: Our entire business is cloud-based and fully mobile so as long as we have an Internet connection we can work from just about anywhere. That flexibility is a must for us and gives our staff the ability to work flexible hours as well.
Claire and Steve: The main technology initiatives we have introduced include; a cloud-based inventory and accounting system; new fully functional website; and, updated ordering system for our sales force.
We introduced these changes to add to customer experience and business efficiency.
By offering systems which; provide relevant up to date information; are easy to use; and, can be accessed from almost anywhere, we believe we are providing our customers, staff and sales force with both flexibility and confidence that information is correct and up to date.
These changes have positively impacted the business with outcomes such as; faster turnaround times for customer orders; speed to market with new product initiatives; improved data accuracy; and, flexible working arrangements for staff.
Sue: We have become much more involved in social media during the past three years, including adding Instagram and building out the use of influencers/bloggers.
We have been fortunate in working with one supplier who researches and regularly engages with online influencers, which has been a great asset to us. Increasingly suppliers, retailers and end consumers are all using social media to engage with each other and identify products, so we think it’s important to join this conversation.
Additionally, while the results from social media are not always immediately measurable, most online channels do provide metrics which are incredibly helpful for our future planning.
Technology has also helped us to maintain a more regular dialogue with suppliers. We’ve used Skype for years, but the wider adoption of WhatsApp has enabled us to more easily stay in touch with international suppliers.
Kerrie: We invested in a shopfront website in 2017.
Until then we had a static website, but it was becoming increasingly obvious that this was not going to fulfil the needs of our existing customers and it was certainly not going to introduce us to the wider customer base of Australia.
We have discovered a twofold effect from the introduction of the website.
Firstly, our customer base is now Australia-wide and secondly, we find now that many of our local customers will come into the store having already ‘shopped’ the website and many of them already know what they are going to purchase before they walk in.
Imogen: What wider industry/governmental changes have impacted your business?
Sue: For a small business, the biggest changes have been the introduction of Superstream and Single Touch Payroll (STP).
Both required a fair amount of research and STP also required the upgrading of equipment to support the accounting system upgrade.
Fortunately, we had both systems up and running before the due dates!
Both systems actually require more time to submit than what was previously in place, however we acknowledge the need for these changes.
Also, changes to standards within the industry are ongoing and we are grateful for the work the Australian Toy Association does in keeping members informed of these changes.
Kerrie: I was very happy running my payroll system on an excel spreadsheet that I designed 12 years ago and I was pretty unhappy having to adopt a payroll software package and link myself to the ATO.
When I think of industry changes – where do you start? Some global and local players have left the arena, the online stuff continues to gain momentum, bricks-and-mortar stores face increasing rents and wages.
How do we overcome these changes? We get on with what we can control!
Nick: Most of [the changes] are business admin changes around payroll, super and awards.
We all get the emails and phone calls from our accountants at a similar time so conversing with other business and our suppliers and helping each other out has always worked for us.
Claire and Steve: There is a continual shift in how consumers become aware of a product or brand, research that product/brand and then transact.
Distributors and retailers who are up-to-date with these buying trends and who tap into a wider range of marketing initiatives and sales channels are ultimately the ones who the consumer will trust and transact with.
Imogen: What are some of the challenges in the industry on a local and global scale?
Claire and Steve: The [openness of the market] can be a double-edged sword as the Australian toy market becomes more accessible to overseas suppliers and retailers.
Therefore, the threat of inferior, copied, or potentially unsafe products being introduced into the market needs to be closely monitored more now than ever before.
We believe that distributors, retailers and industry associations need to work together to identify these potential risks.
Nick: The global market has made almost everything available for a price.
Competing with overseas businesses as well as catering for overseas customers challenges your business priorities and where your focus should be.
The other is the swing in direct purchasing. Whether that’s a retailer being able to purchase stock without a wholesaler, or a wholesaler able to sell direct to the market without a retailer. If you can’t add value to the chain, it no longer needs you.
Kerrie: Competition is a massive challenge. It’s very difficult to offer a competitive price as a bricks-and-mortar store when it is essential for us to consider our overheads when setting our prices.
On a local scale, our physical location was a very coveted spot several years ago as the shopping precinct was well known for its unique retail opportunities and independent stores.
A few years ago unrealistic rent increases in the area started a massive diminishment of these types of businesses, with an increasing number of nationally recognised stores taking over the shopping precinct.
Unfortunately, the ongoing struggle in retail in general has seen an increasing number of empty shops available for lease over the last few months.
We definitely notice there are a lot less shoppers in the area based on the number of customers through our doors, but also the number of car parks available in a street that was once notoriously hard to find a park in.
Sue: Remaining competitive is probably one the biggest challenges in our industry. Consumers are easily able to compare products and pricing online, both locally and worldwide, which can lead to confusion about margins.
Careful consideration needs to be given to the RRP of a product to ensure both for value for money for consumers and ROI for both retailers and wholesalers.
Comparison to pricing in other countries is also important, as this information is readily available to consumers.
Between the declining Australian dollar against the US dollar, the difference in shipping costs and in some cases the variance in the cost of goods, online comparisons can make Australian pricing appear less competitive than it is.
This is an important trend for suppliers and retailers to be aware of, so we can react positively and promote understanding in the market. Another key challenge is keeping up with ongoing changes to the way business is done, including everything from technology and changes to standards to new emerging trends.
Technology – both in product and for in-house processes (website upgrades etc.) – can be confronting for small to medium businesses that don’t have in-house experts.
Imogen: And what are the opportunities in the industry on a local and global scale?
Nick: That’s a really broad question. Amazon is an opportunity. Instagram stores are an opportunity. Really good retail spaces and trained staff are an opportunity. Whether you take them and whether you can make them work in your market is the tricky part.
Claire and Steve: With improved technology and transport, worldwide trade is quickly changing. In years gone by a toy distributor’s main channel to source new products/brands was by travelling long hours by air and attending global trade fairs.
This is not necessarily the case now. Trade fairs are still very relevant and integral to the toy industry, however, it is becoming more compelling to conduct product research and source products from overseas suppliers without having to step foot onto an aeroplane.
This makes for a much more dynamic and fast-moving Australian toy industry which is exciting.
Sue: The opportunity we see in the industry is always being part of the next ‘big thing’ – whatever product or range is going to capture the attention of the market and make a big splash.
This is where industry experience becomes so essential – working with toys and games for so long you develop a good instinct for spotting something customers will love.
Kerrie: The world has become a very small place because of the Internet. The opportunities are limitless depending on your personal ambition, an understanding of your own personal limitations and the ability to finance your dreams.