Toys R Us plans to sell a selection of American Girl dolls
For years, American Girl stores were the kiddie version of a luxury boutique: well-appointed, filled with pricey merchandise, and offering frills such as spas and salons.
Now, the doll brand is going decidedly mass-market. American Girl said Wednesday that some of its products will line shelves at Toys R Us stores nationwide. The toy chain will also open at least 97 American Girl mini-shops within its own locations.
The deal struck between Toys R Us and Mattel, the owner of American Girl, marks the first time that the doll brand will be widely available outside its own stores and website. There are currently 20 permanent American Girl stores, along with seven pop-up shops.
The move comes as Mattel has been fighting to turn around years of poor performance. The El Segundo company has been shaking up its marquee toy brands. In January, for instance, Mattel announced three new body types for Barbie — petite, curvy and tall — and seven new skin tones to better reflect the diversity of women.
Despite the slow progress, investors have been cheered by its efforts thus far, pushing up Mattel’s stock 67% since it hit a five-year low in October. Shares closed Wednesday at $33.13, down 44 cents, or 1.3%.
Mattel is now trying to revamp American Girl, which suffered an 7% sales decline in 2015. A key part of the strategy, analysts said, is attempting to reach more eyeballs by expanding the brand’s retail footprint.
“You are missing out on a lot of demographics by not being in any brick-and-mortar stores besides your own stores,” said Jim Silver, editor in chief of toy review site TTPM. “Just by having a presence, you will increase sales.”
By going into Toys R Us, Mattel also has a chance to reach new customers who may shy away from the more ritzy American Girl stores. The mini-shops will carry WellieWishers, the newest American Girl line offering $60 dolls — about half the price of many other American Girl dolls. The Toys R Us stores will also feature an exclusive collection of Truly Me dolls and accessories, which come in a wide range of skin tones and hair colors.
Analysts said differentiating the merchandise available at stand-alone shops from that offered at Toys R Us will be key in not diluting the American Girl brand. Shoppers will still have to visit American Girl stores, for example, to pick up the BeForever line, which features dolls that also appear as characters in books set in different eras of American history.
American Girl stores will also, presumably, offer more services than will be available at the mini-shops in Toys R Us. Many American Girl stores contain restaurants where kids can dine with their dolls, and salons with stylists who do the dolls’ hair and pierce their ears.
“This will make it more accessible without really dumbing down the brand,” said Jaime Katz, a toy analyst at Morningstar. “The high price points are still staying in the boutique-y, niche-y area where people will go and spend a whole day and have tea with their dolls.”
American Girl President Katy Dickson said the move would increase consumer access to the brand.
“Partnering with a top retailer like Toys R Us allows us to meet our customers where and when they want to shop and to take our timeless life lessons to even more girls,” she said in a statement.
Silver, of TTPM, said getting that extra retail space will be crucial during the holiday season. He said that about $16 billion, or 75% of total annual toy sales, still occurs offline in stores.
Toys R Us, which is fighting off online retailers such as Amazon.com, is gaining a recognizable brand and exclusive products that will entice shoppers into stores. The toy chain has tried mini-shops before: In 2014, Toys R Us started adding mini-shops featuring Claire’s, the mall staple that attracts young girls with ear piercing, inexpensive jewelry and accessories.
“The majority of parents are still shopping the old-fashioned way,” he said. “When you walk into a Toys R Us store in December, it’s very crowded.”
Mattel has focused on reviving each of its key brands. Barbie got that huge makeover earlier this year. The toy maker also recently hired interior designer Jonathan Adler as creative director of baby and infant brand Fisher-Price.
Its turnaround efforts have so far been bumpy.
Mattel fired Bryan Stockton, its chairman and chief executive, in January. Under new CEO Christopher Sinclair, Mattel posted higher earnings and revenue in the fourth quarter of 2015 — breaking a streak of eight straight quarters of sales declines.
That was followed by two quarters this year in which sales dropped again — although sales improved in critical areas such as Barbie. Mattel has also been more aggressively pursuing licensing agreements for entertainment properties, including the rights to make toys for the “Jurassic World” films.
“It’s a pretty slow and steady progress,” Katz said. “They are not out of the woods yet.”
For more business news, follow me @smasunaga
ALSO
Tesla Autopilot upgrade is imminent, Elon Musk says
Strawberry grower who demanded kickbacks from Mexican workers is fined $2.4 million
How a hot start-up that made kids’ apps went bankrupt: Inside the ‘stress cage’ that was Fuhu
UPDATES:
4:25 p.m.: This article was updated with additional reporting.
3:28 p.m.: This article was updated with additional reporting.
This article was originally published at 12:50 p.m.
