Plush with ideas

Among the innovators is the Build a Bear Workshop phenomenon. This growing franchise—which has spawned a host of copycats—provides an interactive experience for consumers, who create their own plush bears and other animals. This do-it-yourself plush workshop is not only an 'experience,' it is a destination.

Another driver of change is coming from retailers who have added manufacturing to their persona. The selection of 'private label' plush featured in chains like Toys R Us and FAO Schwarz has definitely cut into the market share of the traditional plush manufacturer.

The ability of the retailer to go direct to factories and agents to purchase plush directly at a cost plus basis has a big impact, explains Jay Foreman, president of Play Along. He says that it cuts out the traditional manufacturing/marketing companies. The retailer still works on the same markup, but has a lower cost basis "thus degrading the retail value of the plush," Foreman adds.

But in spite of a diminishing share of the toy market and the realities of a changing retail arena, some major plush manufacturers refuse to even acknowledge, let alone address, the category's year-on-year fall in revenues.

Other major players, however, are developing solid strategies to bring strength back to the soft market. This should come as good news to retailers looking to boost plush sales. In fact, some manufacturers are projecting an increase in sales this year of about 25 percent compared with last year, which bodes well for retail.

Still, the numbers are well off the mark for a solid year, considering plush revenues have taken a dive of about 50 percent since Y2K.

"Whew! This is the hardest plush interview I've ever had!," one manufacturer quipped when asked for specifics about the potential for a market turnaround.

Developing new channels of distribution is a key element for driving a turnaround, several manufacturers tell PLAYTHINGS. While they believe that plush has always been divided among niche categories—such as infant toys, soft dolls, educational toys and collectibles—they now believe the market also demands that they find new channels of distribution within each of the niches.

"We are looking for new areas of business development and channels of distribution," explains Emily Van Auken, vice president of sales and marketing for Fiesta. "We are challenging ourselves to look 'outside the box' for new product development."

Other manufacturers are investing in licensed product driven by partnerships with talented artists or well-known organizations. Agreeing that licensed products can be "pretty risky," manufacturers, nevertheless, see partnering as a more stable practice in today's business climate.

"Our primary business is licensed-based products, so we are always investing more," says Play Along's Foreman. "There are great opportunities in the market," he explains, making particular note of Care Bears and The Cat in the Hat.

Still, others are creating a whole new 'box.' "We have pioneered a new category of plush and we have named it the 'Signature' category," says Chris Herrington, founder and head artist, Herrington Teddy Bears. "We develop co-branded plush: our brand together with well-known global names like Giorgio, Hard Rock and The Cheesecake Factory. This gives consumers more reasons to make a purchase. They are buying plush that is linked to many of their favorite consumer brands," he says.

"We are honing in on creating a unique variety of plush," says Ken King, executive vice president of sales and marketing, Van Group. "Our lines are artist-driven, often produced as part of a story," he tells PLAYTHINGS.

At the same time, some manufacturers are taking a risk by expanding into a particular niche category concurrent with developing an enhanced distribution strategy. Aurora, for one, is expanding into baby and holiday plush. "We believe in the basic nature of plush and expect sales to pick up after the economy improves. In the meantime, it's creativity, price and quality that retailers want and we intend to keep delivering," Paul Roche, Aurora's senior vice president says.

Using a similar approach, Russ is creating more 'occasion' plush, products that focus on personal relationships. "Consumers won't scrimp when they are purchasing plush for a special person or a special occasion," said Jennifer Monson, vice president product development, Russ Berrie. "In some cases, the occasion is an overt part of the design. In other cases, the message is more subtle, as when plush is merchandised alongside other types of gifts that deliver the same message."

Bob Solomon, president and CEO of Applause, also sees plush as being occasion-driven. "When I hold up a piece of plush, I view it as a gift not a toy," he tells PLAYTHINGS. "Our strategy is to drive plush into the marketplace where it is purchased as a gift, not a toy. It is crowded in animal alley, so I am looking to create a different type of purchase and products that are exclusive to Applause."

Other plush makers, though, stress that the 'stuff' of the plush market is still in its play value. Ann Nelson, director of product development for Bestever, says that the company will continue to concentrate on "unique plush concepts that have play value and innovative features." She adds, "To combat the downward spiral of plush in general, we continually introduce new and innovative designs and we make sure we are competitively priced."

Folkmanis, another company known for play plush, stresses play value as key to its sales strategy—especially these days. "While we're situated in a time in history where fear permeates the marketplace, Folkmanis puppets draw out the creative spirit and offer comfort and delight," explains Elaine Kollias, the company's marketing director.

Manhattan Toy is also counting on the whimsical to drive sales in the current flat market. The company is introducing plush in larger variety and wider price ranges. "We're increasing our 2003 product line by 25 percent over 2002 and targeting specific categories such as 'charming'—dogs, cats, bears, in whimsical forms and colors and 'show piece'—fantasy characters without traditional shape, form or color," said Amy Cathey, Manhattan Toy's marketing coordinator.

North American Bear Co. (NABCO), says company spokeswoman Lorene C. Shiraiwa, will continue to "push the design envelope," even in the current flat market. Noting that innovative design and trend watching has enabled NABCO to create a lasting niche in the market, she tells PLAYTHINGS that the company will continue this approach. "Our high quality designs continually push the envelope of traditional toys and gifts to new heights. By keeping a watchful eye on other fashion-forward industries, NABCO has been able to identify trends and incorporate them into new designs," Shiraiwa says.

Other manufacturers, like Beverly Hills Teddy Bear, Preferred Plush and Wild Republic, also note that they will continue to pursue innovation as a means of securing niche positions in the plush market.

John Trenta, Wild Republic's director of marketing, says the company is more cognizant today "regarding our merchandising strategies to make sure we get the consumers attention at the retail level."

Consumer attention is also part of Preferred Plush's focus in the current soft retail market. This means new collections, expanding sales programs and emphasizing customer contact, says the company's marketing director, Cynthia Tom.

New distribution channels, niche marketing, innovative products—it's the stuff plush makers are hoping will spur a market turn-around. And no matter which strategy they pursue, the manufacturers agree on one thing: Plush is here to stay.

"Without question, my great-great-grandchildren will have plush," said Applause's Solomon. "Nothing is going to replace plush."