Lessons Learned From Mattel’s Rough 4th Quarter
Established in 1945, Mattel is responsible for some of the most famous household names in the toy industry. From the institution that is Barbie, to Hot Wheels, and WWE action figures, right down to the Fisher Price brand, in 73 years Mattel has positioned itself as the go-to for reliability in the toy industry.
Sadly, over the last few years Mattel hasn’t lived up to prior success. Up until last year, Mattel’s renowned Barbie line saw losses pile up as an increasingly body-positive and inclusive consumer base moved away from the Barbie brand. In 2014, the iconic toy saw sales drop for the third year in a row. That same year, Mattel also saw an 11 percent decline in sales of its Fisher-Price line and a 4 percent dip in sales of American Girl dolls. This prompted a turnaround plan and a restructure starting at the top of the corporate chain which, by 2016, had paid dividends. Soon, the toy company saw Barbie’s sales grow by 23 percent in the second quarter and 16 percent in the third. This was based on the work of Chief Operating Officer Richard Dickson, a brand development genius who turned the faltering company around by understanding the consumers they were selling to.
Toy companies are struggling…
Unfortunately, this rebound was short lived. In the earnings release, CEO Christopher Sinclair was reported as saying, “Our results were negatively impacted by a number of industry wide challenges, including a significant U.S. toy category slowdown in the holiday period.”
The rise of e-commerce has had a major impact on the toy industry. To combat this, brick & mortar retailers have been forced to create incentives to lure consumers into the physical store spaces by by slashing their prices. This type of “slash sale” mentality has trained consumers to wait longer and longer to make their purchases because they know the sales will eventually come. But it gets worse: the same stores that are slashing prices are also competing for the e-commerce dollar, offering savings through their websites. As a result, Mattel (and the toy industry at large) has a deck of cards stacked against them.
…but with the right attitude, they can turn things around
Fortunately for Mattel, despite the many slumps coming their way, they have been here before. They know well enough to admit when things are not working, as proven by their last financial shake up. Mattel refuses to go down without a fight, an attitude that every business owner (whether of an established or up-and-coming brand) should take note of. As for Mattel’s latest plan of action, they’ve recently appointed Margret Georgiadis to CEO. Georgiadis has served as COO for Groupon, Chief Marketing Officer at Discover Financial, and serves on the boards of McDonald’s and Amyris. She is well aware of the ins and outs of e-commerce and the digital realm of the business world. Make no mistake, Mattel is also sticking by all those who helped “right the ship” during their last downturn – namely, President and COO Richard Dickson, and former CEO Christopher Sinclair (who will now be Executive Chairman of the Board).
Part of being a good business owner is being able to admit when things are going wrong and knowing when to ask for help, which is what Mattel has done. If a toilet is broken, you call a plumber; if your e-commerce numbers aren’t where they should be and foot traffic to your physical store(s) is on the decline, sometimes that means you need to bring in the experts. Once again, Mattel is actively pursuing solutions to the problems they currently face and that is all any business can do when backed into a corner. Assess, reassess, pinpoint the weaknesses you have the power to strengthen, then look for solutions from people who know more than you do.
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