Home Sweet Toy Fair

There's little doubt Toy Industry Association President Tom Conley's life would have been made infinitely simpler if the entire U.S. toy industry had just picked up and moved out of New York City lock, stock and barrel. It would have been Dallas next month for the American International Fall Toy Show—the mass market show—and likely Orlando, Atlanta or even Vegas for February's American International Toy Fair.

Then it would have been a lot easier to pull companies into the February show—with clearly fewer issues involving the showroom versus exhibit floor conflict that traditionally formed the massive divide between big and small, have and have not, mass and specialty. The San Andreas Fault has nothing on the toy industry in that respect.

But when the International Toy Center was sold earlier this year (Playthings, March, May 2005; playthings.com) passions flared among tenants looking at being displaced from what had been the industry's home for decades. As threats of a splinter group running a competing toy show became loud, the Toy Industry Association's (TIA) board of directors would have none of it. Both shows would remain in the Apple indefinitely, the board ruled, and TIA would partner in the search for a new showroom building. As association president, Conley had his mandate: Toy Fair would remain at Javits.

“Those of us that worked on this project for two, two-and-a-half-years, sometimes wonder why the board rejected it,” he ruminates. He theorizes the showroom-based companies didn't want to split the October and February market locations. Two shows. Two cities. Two showrooms? Mucho dinero.

And it was, after all, an intended hook to draw the showrooms in. It's too much money to justify a second showroom, so come onto the floor of the exhibition. The logic seemed infallible. If only…

“Frankly, if we had a board made up of Javits exhibitors as opposed to a board made up of people who are in the showrooms primarily, we'd be in a different city right now,” Conley opines. “But the leadership of this industry has traditionally been showroom exhibitors and they like the showrooms—and they want to keep the showrooms. It's their industry. It's their prerogative,” the TIA president adds.

That left the Javits toy show, with all of its challenges, dumped squarely in Conley's lap. One of his biggest headaches now is finding ways to grow the exhibit venue—at least in part, by luring over more ITC showroom tenants to Javits, many of whom are TIA members.

It's a “Beat Yesterday” problem. Successful and high energy, Toy Fair at the Jacob K. Javits Convention Center last February covered 323,000 net square feet. Conley says he's budgeted 325,000 this year and if they hit 340,000, it will be a cause for celebration. Sixty-five percent of the booth space had already been committed by early August and a telemarketing effort was about to get underway. Getting the showroom operators to come in remains the golden ring.

But how do you do that? How do you entice otherwise happy showroom exhibitors accustomed to the privacy of behind-closed-doors previews and relatively intimate meetings with their retail customers? Why would they opt for the noise and commotion of what they might consider an all-too-public exhibition space?

Meeting that challenge was central to the TIA's floor space allocation strategy for the '06 show. But instead of uniting the competitive interests of the industry, it created the newest controversy pitting the interests of longtime exhibitors against those of longtime non-exhibiting TIA members. Along the way it created a tempest in a teapot with complaints of unfairness and preferential treatment. It's clearly not what Conley had in mind.

But just as clearly, when significant new players come into the show, someone's going to get angry about their location. It might be either a longtime exhibitor nudged from a priority location, or a first-time exhibitor who is a longtime association member.

Moreover, it's the third allocation system Conley's used since he began his TIA tenure September 10, 2001. His predecessor intentionally changed the way the show was laid out once every three years. The current point system has also been something of a moving target in its short evolution:

• One point for every 100 square feet of requested booth space.
• Three points for every year of participation at Toy Fair by TIA members.
• Two points for every year of participation at Toy Fair by non-TIA members.
• Three points for each year of TIA membership.

The award for TIA membership has fluctuated as Conley tried to balance competing interests. First it was three points. But following complaints from exhibitors, he lowered it to one point for each year of TIA membership since the Javits show has been running (This year the cap would have been 19 points). But that wasn't satisfactory, either. Finally, it was returned to three points, but consideration was still being given to dropping it again to the one point, he says.

“We are desperately trying to provide some consistency from year-to-year and yet find a system that respects and recognizes the changing market environment, which was really the source of some of the controversy this year,” Conley admits. “With the Toy Center being sold, we felt there was a potential for a fair number of companies from the ITC coming over to Javits. And we wanted to try to recognize those companies who were in the association for a long period of time.”

That came at a cost to established exhibitors, though.

That's precisely what happened at University Games—a company that only recently joined the TIA on advice it would gain a better position on the Javits floor. A Toy Fair exhibitor for upwards of 15 years, the company also has a showroom in the ITC, but was bumped over several spaces at Javits to make way for another TIA member, according to CEO Bob Moog. He complained that companies that never supported the show are now getting preferential treatment over long-time exhibitors. At last report, though, Moog's situation had resolved following new calculations.

Still, there seems to be no easy way to make everyone happy while balancing those competing interests. Yet, despite considerable back channel grumbling by several companies, of the more than two dozen Javits and ITC companies contacted by Playthings, only a handful would speak for attribution. Others simply didn't respond or stated executives were unavailable or on vacation.

“[The TIA is] in a tough spot,” offers Heidi Genoist, senior editor for TradeShow Week, an industry publication owned by Reed Business Information, the same parent division of Reed Elsevier that owns Playthings. She suggests that many trade show exhibitions allocate space based on a combination of a point system and an on-site space draw, a process that often ameliorates many fairness issues. The devil is in the details: precisely how the points are awarded and the draw conducted have a direct bearing on the perceived fairness.

Indeed, TradeShow Week's 2004 Management Survey found that 65 percent of trade show organizers—overwhelmingly associations—use some form of priority point system based on seniority, association membership, booth size and other factors. On-site space draw by appointment or on a first-come, first-served basis is used by 18 and 16 percent, respectively. Some of those numbers overlap since many organizers use more than one system.

The on-site space draw is something Conley says he intends to begin using with the next Toy Fair. It will involve setting exhibitor appointments during Toy Fair to physically select their booths for the following year, based on the priority points, from a marked-up floor plan. Conley believes it will further democratize the process, lending it further transparency.

Greg Topalian, a group vice president for Reed Exhibitions, another Reed Elsevier company, has expansive trade show experience, mostly in the book industry. “There are a million ways to [assign booth space]. But it's hard to do from a standstill,” he says. “You've got to create equity for everyone. Sometimes it takes a few years for everyone to fully understand the rules and know what's going on. In the book industry we were always confronted by a David and Goliath situation” in terms of company size.

All that said, efforts so far to pull companies from the ITC into Javits have come up short, Conley says, despite all his attempts to sweeten the deal. Of the 200 or so toy companies with showrooms in the buildings, roughly a dozen have committed to first-time booths at Javits—about five percent.

“I think what we've learned is, by and large, it hasn't worked out,” he says. “We have not seen a significant number of folks who are in the building decide to come in.”

Somewhat ironically, Conley says the ultimate pull would have been the ITC closing. But that issue became a non-starter when the new owners of the building committed to keeping the showrooms viable for February's Toy Fair. Short of getting kicked out, companies have no compelling reason to show at Javits, or so they reason.

MGA Entertainment, which is not a TIA member, moved its showroom in the toy building from the 12th floor to the lobby a couple of years ago and enjoys high visibility there. An executive at the company says it likes the more personal feel of the space, likening it to entertaining at home. There's no way to recreate that in booth space, even if someone asked. Just the same, no one from the TIA had asked by mid summer.

The problems for the TIA are both real and perceived. The Javits show is viewed by the showroom companies to be dominated by small mom-n-pop specialty retailers—business they don't routinely embrace.

Conley says he largely believed that, too, but was surprised to find that only 21 percent of the retailers walking Javits identified themselves as specialty toy stores. The rest, he suggests, were drug and convenience store chains, along with a variety of alternative retail channels.

“That number was shocking to me,” he says. “I think we've made a mistake, perhaps, in how we've defined retail. Maybe instead of long lead [time] and specialty, it should be long lead and seasonal.” That more accurately defines the retail buying patterns and needs. Seasonality merely recognizes the importance of the fourth quarter; it's really a euphemism for short lead time buying, suggests Conley.

Another real and perceived issue involves booth placement on Level I or Level III—more commonly known as the basement or main floor. And that is the problem: Exhibitors think of Level III as the place they need to be and, with rare exception, try to avoid Level I.

There, too, Conley falls back on the numbers. TIA scanned badges for the very first time last year and found that attendance on each floor was within five percent of the other. Nearly identical, he proclaims, while admitting that selling those numbers to exhibitors will be tough.

For the most part, the showroom companies want none of it. “What happens at the Javits Center, stays at the Javits Center—and that's how we like it,” quips one executive of a showroom-based firm, parodying the Las Vegas TV commercials.

That lends credence to the flip side: smaller retailers routinely complain of being unwelcome—and often turned away—by many showrooms in the ITC. As a result, some refuse to set foot in the buildings, Conley notes. Yet, that's the way most of the showroom operators choose to come to market and it can happen at Javits also, he admits. Still, the perception is that a booth show is much more open and inviting. Moreover, continuing retail consolidation among the biggest retailers is prompting some toy suppliers to reassess their strategies, Conley argues.

“When Kmart and Sears merged, that was a scary situation. KB going into bankruptcy, that was a scary situation. Toys “R” Us being sold, that was a scary situation,” Conley continues.

“Wal-Mart owning so much of the market, that is a scary situation,” Conley ticks off, suggesting that more and more suppliers are seeking to “bifurcate” their market strategies.

“You have a bunch of national companies, and the care and feeding of those folks is critical to your survival. But if you have a hiccup, you can lose a huge portion of your business and it can jeopardize your own enterprise in the long term,” Conley tells Playthings.

“I think over time we're going to see more and more folks decide that they've got to think a little bit differently about how they can reach that [new, shorter lead time] customer,” and that might drive more exhibitors to the Javits Center.

But on balance, Conley believes this is as good as it will get—at least for now—although the systems will continue to be tweaked each year for the foreseeable future. “It'll never be perfect and we will never satisfy everyone,” he says. “But it is really important to us that our process be fair and transparent, so that if anyone gets a position they don't like, it's fully defensible.”

—This story has additional reporting by Maria Weiskott and Colleen Bohen