How does successful toy retailing mirror an investment portfolio? I learned 2 important concepts early in my career at A. C. Nielsen while servicing a very smart client, Planters/Life Savers, a division of RJR/Nabisco. She helped me learn 2 things;
1. Importance of allocation of assets/products(all the flavors of Life Savers)
2. Time horizons (base vs. seasonal sales)
Fast forward to today in the current retail toy climate and these are absolutely critical components to our strategy.
First, we always want to balance stock across a myriad categories with no reliance on just 1 or 2. Arts/Crafts is a bedrock but very stable every year. We look at fads/hot products (eg;Fidget spinners) as gravy and never count on it.
Secondly, we don’t like back loading or timing sales just to holidays like Christmas (which Toys R Us did more than most) in hopes they will perform. Rather a more fluent sales pattern throughout a year helps balance the ups and downs and spikes you do see. Just like investing, a little risk each month is better than betting the farm.
Yes just like financial markets there is more risk creeping into the business based on many factors, however, these 2 concepts, implemented properly allow a retailer to find the right balances. Smart lady she was. #nielsen