Five Below Performs Well Above Expectations

The Wall Street Journal: Five Below, “which sells everything from Spalding basketballs to Bluetooth headphones and yoga mats for $5 or less, might be the most successful retailer you’ve never heard of. By the end of this year, Five Below’s store count will have nearly quadrupled to 750 locations since its 2012 initial public offering … Five Below uses a formula that has largely insulated it from competition from Amazon.com Inc. The chain keeps prices low by creating products from scratch with hundreds of suppliers around the world and sells them in an environment where children want to hang out. Its own e-commerce sales are so negligible the company doesn’t break them out; shipping often costs more than the entire purchase.”

“At 8,000 square feet, its stores are relatively small, making it easy to wander the mazelike floor plan grouped around eight categories: sports, technology, party, candy, style, create, room and now—the latter filled with seasonal products such as Halloween costumes or Christmas decorations … Shelving is no higher than 5 feet, creating a comfortable space for preteens and teenagers who have outgrown traditional toy stores and are Five Below’s core customers. They are encouraged to bounce the basketballs, test-drive radio-controlled cars and participate in slime-making contests—anything that will help them spend their allowance money.”

“Five Below also has items for grown-ups, including cucumber face-masks, yoga mats, storage bins, greeting cards and vintage candy from Mike and Ike fruit-flavored chews to Goetze’s Caramel Creams. Unlike other bargain stores like Dollar Tree or Family Dollar that focus on necessities such as laundry detergent and toothpaste, Five Below is the place to come to find things you didn’t know you wanted, such as squeezable foam toys called ‘squishies’ that have gone viral on YouTube .. It also is testing ‘Ten Below’ sections in four stores that offer items such as wireless home speakers and skateboards for $10 or less.”

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Lego is Letting Go of Plastics

The New York Times: “Lego faces a more complex problem than other consumer businesses — for this Danish company, plastics are not the packaging, they are the product …. Lego emits about a million tons of carbon dioxide each year, about three-quarters of which comes from the raw materials that go into its factories, according to Tim Brooks, the company’s vice president for environmental responsibility.”

“Lego is taking a two-pronged approach to reducing the amount of pollution it causes. For one, it wants to keep all of its packaging out of landfills by 2025 by eliminating things like plastic bags inside its cardboard packaging … It is also pushing for the plastic in its toys to come from sources like plant fibers or recycled bottles by 2030. The problem with that target, though, is that virtually all of the plastic used worldwide — including that molded by Lego into toy bricks — is created from petroleum.”

“Company researchers have already experimented with around 200 alternatives … Most test materials, both bio-based and recycled, have so far fallen short. Some bricks made with the new materials have broken, leaving sharp edges that could injure a child, or have popped out with ugly, muddied colors. Others have on occasion produced misshapen or pockmarked bricks … The search for a substitute for petroleum-based plastic could yet take years of work … Still, executives argue that, as a company that models itself as a de facto educator as much as a profitable enterprise, it has little option but to keep trying.”

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FAO Flagship To Return to NYC

The Wall Street Journal: “A dominant presence in Midtown Manhattan for decades before its closure in 2015, FAO Schwarz is coming to life again with a new, 20,000-square-foot Rockefeller Center location, set to open in November. ThreeSixty Group Inc., a California-based firm, acquired the retail brand from Toys ‘R’ Us in October 2016 for an undisclosed price … But in an era when bricks-and-mortar retailers struggle to stay competitive as consumers increasingly go online for their shopping needs, FAO is making its Rockefeller Center location as much about the experience as the buying.”

“That means the store won’t just be staffed with traditional sales clerks, but also product demonstrators, magicians and men and women playing various costumed roles, including toy soldiers … the company is going so far as to hold auditions, rather than just the standard interviews, for retail staff.”

“Ultimately, ThreeSixty Brands may not be looking to make a profit on the Rockefeller Center store so much as use it to promote the FAO name, said Jed Wexler, a retail expert who runs 818 Agency, a New York firm. ‘It feels like an advertising play,’ he said. In any case, the New York store, which will be considered the FAO flagship, is part of a larger push. ThreeSixty Brands is also launching a smaller store at LaGuardia Airport this fall and one in China in 2019.”

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Grocery: The New Toy Store?

The Washington Post: “A Barbie by the broccoli? Hot Wheels by the hot sauce? Some toy experts say that stocking toys at supermarkets is a recipe to boost the industry as Toys R Us begins to close all 800 of its U.S. stores. Toymakers could see a bump in sales by targeting grocery stores — and their customers prone to impulse purchases with fidgety kids in tow. That’s the argument of industry experts who say that as the iconic toy behemoth fades away, the country’s more than 38,000 supermarkets may present a bright path forward.”

“David J. Livingston, a supermarket research analyst, said he doubted grocery stores would ‘go overboard’ with toy displays. Moreover, he thinks parents would quickly grow irritated by toys and the distractions they bring. Some parents don’t bring young kids grocery shopping to avoid the begging and the hassle, Livingston said. And for the parents who do bring their kids along, they’re more likely to be swayed by a free cookie from the bakery or a free piece of fruit at check-out, Livingston said.”

“Still, millennials think of supermarkets as a one-stop shop where they can buy cosmetics and other products while fitting in a grocery run, said Steve Pasierb, president and CEO of the trade group The Toy Association. In the wake of Toys R Us downfall, toy makers will be on the hunt for new places to find customers.”

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Fast Fun: The New Fashion in Toys

The Wall Street Journal: “Hasbro Inc., Mattel Inc. and other companies are rushing to collapse production times and capitalize on fast-moving trends such as slime-making kits, and viral videos that can spawn new games and toys. The goal is to spot ideas and get products in stores in a matter of months instead of the following Christmas. Toy companies need rapid turnaround times if they are to profit from these trends, which spike and dissipate quickly. Copycats, usually smaller manufacturers, also can quickly crowd the market.”

“In a sense, the companies are lifting from the playbooks of fast-fashion retailers such as Zara and Forever 21, which can churn out new coats in just 25 days … Mattel has carved out a team of fewer than 10 executives, including toy designers and manufacturing experts, to develop toys that match up with larger trends in the industry. Mattel Chief Executive Margo Georgiadis said in an interview Friday that she gave the team three months and a ‘next to nothing’ budget to create a few ideas to pitch at a January toy fair. Those items, including a plush toy, are expected to be sold later this year.”

“Hasbro last year established a similar team, called ‘Quick Strike,’ hoping to turn social-media trends into marketable products. The maker of Monopoly and Nerf guns has come up with several games inspired by viral videos.”

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Drone Promo: The Kentucky Flying Object

The Verge: KFC’s “new, India-only Smoky Grilled Wings will come packaged in a box with detachable drone parts. Although customers will have to look up instructions online, they can eventually assemble the box and its parts to turn it into a Bluetooth-connected drone.”

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Fingerlings: Too Much Monkey Business?

The New York Times: The Fingerling is “a five-inch monkey that grips your finger with its legs and arms, as it babbles, blows kisses and blinks its eyes. Cradle a Fingerling in your hand and it drifts off to sleep. Press the Fingerling’s head and it passes gas. Created by the Canadian company WowWee, the Fingerling has been anointed one of this year’s hot toys for the holidays, a designation that most toymakers only dream of achieving.”

“How the Fingerling reached this tipping point — when suddenly millions of children cannot do without a $15 farting monkey — is the story of a promising idea’s going viral on social media, a large retailer’s savvy pricing strategy and the science of managing scarcity … This past week, Fingerlings were out of stock on Walmart’s website, while parents complained that they had been snookered into buying counterfeits … WowWee says it did not intentionally create the shortage. But whether by design or happenstance, there is no question that scarcity fuels a toy’s mystique.”

“WowWee had originally planned on selling the Fingerling for $20, but the giant retailer was insistent: About $15 was the magic number … When Fingerlings hit stores across the United States in August, Maya Vallee-Wagner, 7, was overcome with emotion … Her father … shot a video of his daughter’s reaction in the toy aisle of a local Target and sent it to WowWee … (which) posted it on the company’s Facebook page, and it went viral … The video was a marketing coup, just as WowWee was launching its social media push — an effort that in many ways resembled the rollout of a Hollywood movie. Gone are the days when a toy company could simply blitz Saturday morning cartoons with ads.”

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‘Unboxing’ is the Holiday’s Hottest ‘Toy’

The Wall Street Journal: “Taking a cue from the YouTube phenomenon known as unboxing—viral videos in which people theatrically unpack hot new products— companies are churning out tiny charms, stickers and golf-ball-size critters, all tucked away inside layers of plastic. The mystery objects have become one of the hottest categories of toys this season.”

“Unboxing videos, also big with technology and fashion reviewers, have become a key way children learn about new toys, and their popularity has grown exponentially in recent years. A recent search for “toy unboxing” on YouTube, a unit of Alphabet Inc.’s Google, brought up more than 12 million results.”

“Australia-based Moose Toys, maker of the popular Shopkins grocery-store figurines, launched its Pikmi Pops in September. The toy, a plastic lollipop-shaped container, hides ‘mystery items’ such as stickers, lanyards and charms … Each of Spin Master Corp.’s Hatchimals Surprise, released in October, holds plush twin critters in a single egg that cracks open after being cuddled.”

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Disney Brings Its ‘World’ To Retail

The New York Times: “Quietly, like a mouse on tiptoe, Disney overhauled its retail store at the Northridge Fashion Center mall in late July. Out went the twisty Pixie Path aisles, the ornate displays, the green walls and the color-changing fiberglass trees. In came a movie-theater-size screen, a simplified floor plan, white walls and more items for fashion-conscious adults … the Disney Store here was a prototype, and the company has been monitoring sales and consumer feedback as it prepares to revamp its 340-store chain.”

“The redesign makes Disney’s stores a bit more like Disney’s theme parks. For instance, daily parades at Disneyland in California and Walt Disney World in Florida will be streamed live to those colossal video screens. During the parades, store personnel will put out mats for shoppers to sit on and roll out souvenir carts stocked with cotton candy and light-up Mickey Mouse ears. The screens could easily be used to stream other events, such as red carpet arrivals for Disney movie premieres. That kind of programming could bolster foot traffic, and thus sales — while also turning the stores into a more potent promotional platform for Disney’s films, television shows and theme parks.”

“As it attempts a new mall strategy, Disney is also remaking its e-commerce operation. ShopDisney.com is replacing DisneyStore.com. The new site will have a less cluttered look and a vastly expanded assortment of designer merchandise aimed at adults (Mickey-themed Ethan Allen furniture and a $350 Siwy denim jacket with Minnie embellishments will be on offer). The site will also stock more items that previously were available only in stores inside Disney theme parks.”

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Porky Pig: The Anti-Mickey

The Wall Street Journal: “There were essentially two modes of expression in the Hollywood studio cartoon: the Disney style and that of Warner Bros. Disney strove for believable narrative and overwhelming naturalism—even in a fantasy like his 1937 milestone, ‘Snow White and the Seven Dwarfs.’ Conversely, the Warners style, which is often conflated with that of Avery, its most innovative director, came to mean uproarious, fast-paced and often transgressively violent humor in which characters frequently violate the fourth wall and confront you with their artificiality.”

In 1935, “Warners released a cartoon called ‘I Haven’t Got a Hat’ introducing a group of animal schoolchildren, and the one who began to attract notice was a certain pig with a speech impediment. Within a year, he was starring in his own series of shorts, and before 1936 was over, Porky Pig was rapidly becoming the embodiment of a whole new kind of animated film. … By 1938-39, Bob Clampett had become the dominant directorial influence in Porky’s career. On his watch, Porky became considerably cuter, thanks equally to Mel Blanc, who now provided the pig’s voice and made the stutter more adorable than grotesque.”

“Clampett’s characters are like cuddly, bouncy balloons being manipulated by a maniacal genius … Clampett seems determined to contrast exaggerated cuteness with even more extreme violence, as if throwing a hand grenade in the middle of a Disney Silly Symphony.” By 1943, “two characters had already succeeded Porky as the studio’s biggest breadwinners, Daffy Duck and Bugs Bunny. As popular as Porky had been a few years earlier, he was essentially a passive character—like Laurel & Hardy, things happened to him. He couldn’t compete with the brash, aggressive stars of the World War II era, like Bugs and Daffy, who belonged to the age of Abbott & Costello.”

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