Walmart Signs Deal with Li & Fung
Walmart Stores, Inc., recently announced a new global sourcing strategy that involves the creation of Global Merchandising Centers, a change in leadership and structure, and a strategic alliance with Li & Fung, the global sourcing organization.
Walmart first announced a consolidated global sourcing structure centered around new Global Merchandising Centers (GMCs) at its annual meeting for the investment community in October, according to the announcement on Walmart’s website. This new structure is expected to leverage the company’s global scale in both general merchandise categories (although specific product categories weren’t listed) and global food sourcing.
The core of the company’s overall global sourcing strategy will be to continue increasing direct sourcing for the company’s private brands. Today, private brand merchandise represents more than $100 billion in purchasing annually, according to Walmart. Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings G.K. and Seiyu, has been promoted to executive vice president and will lead Walmart’s Global Sourcing. Kolodzieski will report to Walmart vice chairman Eduardo Castro-Wright.
As part of this new strategy, Walmart also finalized a series of agreements with Li & Fung. The agreements are non-exclusive and do not include volume or shipment commitments, according to a statement fromWalmart. The strategic alliance between the two companies will allow Walmart to realize the benefits of consolidating a portion of its sourcing portfolio. Li & Fung, which is forming a new company to manage the Walmart account, is expected to build capacity that would enable it to act as a buying agent for goods valued at approximately $2 billion within the first year.
“In sum, we are redefining how we source products that are imported intoWalmart retail markets around the globe,” Castro-Wright said in a recent statement. “By realigning our resources, leveraging our scale, and restructuring our relationship with suppliers, we will enable our businesses around the world to offer even more competitive pricing on merchandise and to provide our customers a clear and compelling assortment of better quality products at lower prices.”
Good News: Toy Industry Was Flat in 2009
The NPD Group announced that U.S. retail sales of toys generated $21.47 billion in 2009 compared to $21.65 billion in 2008, a decline of under 1 percent. In contrast to fourth quarter (October–December) 2008, Q4 2009 sales show that, while revenues were flat due to heavy promotional activity at retail, unit sales were up four percent vs. Q4 ’08.
Looking at revenue sales performance across super-categories, building sets and arts and crafts experienced the most significant increases, at 23 percent and 7 percent, respectively. Action figures and games/puzzles saw respective revenue increases of 4 percent and 1 percent. Looking at the opposite side of the revenue sales spectrum, youth electronics and plush experienced the largest declines when compared to 2008, at 17 percent and 13 percent, respectively.
Counter to what many would expect due to the economy, unit share for toys priced under $5 decreased in 2009, both for the full year and in the fourth quarter. In 2009, while overall unit sales were down less than 1 percent (0.5 percent), the only price range that lost share were toys under $5. In other words, people were buying more toys priced in the mid-range (between $5 and $10).
All channels experienced flat to minimal gains in share of dollar sales, with the most significant changes being experienced by toy stores, which saw a decline of 1 percent mostly due to KB Toy stores closing, and mass merchant/discount experiencing an increase of 1 percent.
Top properties for the year based on total dollar sales (listed here in alphabetical order) included Bakugan, Barbie, Crayola, StarWars, and Transformers. Licensed toys represented 25 percent of total industry sales in 2009, compared to 2008’s 27 percent. Based on dollar sales, Cars: The Movie, Disney Princess, Dora the Explorer, Star Wars, and Thomas and Friends topped the list of 2009’s best-selling licensed properties (listed here in alphabetical order).
Global Icons, Horizon Organic Dairy in Licensing Deal
Horizon, a brand of certified organic dairy, and Global Icons, the licensing and brand merchandising agency, announced an exclusive licensing partnership.
Global Icons will build upon Horizon’s leadership in developing healthy, nutritious products in the organic food space, by creating new strategic licensing partnerships that align with the brand’s positioning and reinforce its consumer promise. The program will further diversify the brand portfolio in the frozen, refrigerated, snack, and supplement aisles.
Horizon says it works with nearly 500 organic family farms across the United States and continues to help additional farms transition to organic practices. Its accomplishments in new dietary improvements, including the addition of DHA Omega-3 fatty acid in its products, endorse a healthy and balanced lifestyle. Horizon’s existing proprietary line includes a variety of milk, cream, cheese, cottage cheese, cream cheese, butter, and yogurt products.
Beyblade to Air on Nick UK
Nickelodeon in the UK has secured the TV broadcast rights from Corus Entertainment’s Nelvana Enterprises for 51 episodes of the new series Beyblade: Metal Fusion.
Set to launch on NickToons in the UK in September 2010, the show will join other titles in its boys’ action block. Co-produced by Nelvana and d-rights, the series offers a fresh take on the original Beyblade, with new characters competing for dominance with their spinning Beyblade tops, battling against an evil organization, Dark Nebula.
Hasbro Names Page VP Production
Hasbro Studios has named animation industry veteran Kathy Page to serve as vice-president of production. She will oversee physical production of programming produced by Hasbro Studios. Much of the content produced by the studio will be seen on The Hub, the new television network launching this fall created by the joint venture between Hasbro and Discovery Communications as well as in international markets.
Page joins Hasbro from Sony Pictures Television where, as vice-president of animation since 2007, she led the television animation production division, overseeing production on such series as The Spectacular Spiderman, and Sit Down, Shut Up.