If you’ve been reading many of the doll blogs or paying attention to the news, it seems there is a LOT going on at American Girl lately. First there was a change in leadership. Lots and lots of sales going on. Layoffs. Recent news that AG and their parent company Mattel had a significant drop in sales. And now they have announced that they are going to close the outlet store in Wilmot, WI. Sounds a little bit scary at the moment. But let’s take a closer look.
As for the reduction in annual sales, I think that AG in particular has reached a crossroad. There are several things to consider: price point, competition and market saturation. Unfortunately right now, AG is dealing with all 3 of these. They continue to raise prices without improving quality. If anything, quality has been reduced. Competition from Our Generation, My Life As, Madame Alexander and other companies is at an all time high, and it’s fierce. Throw in all of these fantastic Etsy folks, and I don’t doubt they are seeing a bit of a pinch. Add market saturation: let’s face it, at some point, most people say “enough” and stop buying, or at least slow down. I personally know that I’m not buying as much because I’m not only running out of space, but low on ideas/interest for some of the new items they have come out with. Brand loyalty can only go so far sometimes. Just about everything experiences a high point and then tapers off.
Another factor to consider is the way play has changed, particularly for girls. When I was growing up, I was considered unusual because not only did I love my Barbie stuff, but I also loved Hot Wheels/Matchbox cars, Johnny West and other things that were considered “boy” interests. Nowadays, it’s become much more acceptable for girls and boys to play on the same level as well with the same toys. Factor video games into the equation and you can no longer ignore that the demographic has changed tremendously over the 30 years that American Girl has existed.
Should we be concerned? Maybe. I say maybe for several reasons. Barbie has had her shaky moments, but she has managed to survive. When you have a company the size of Mattel, there is almost always another toy line that keeps the cash rolling in until the storm has passed. Plus, you have to consider that while sales may be down, that doesn’t necessarily mean that the company isn’t turning a profit and that particular lines are no longer profitable. They may be less profitable than before, but still making money. There are also rumors of Mattel being purchased by Hasbro. That could be good or bad, hard to say.
I have noticed several things over the past few months that are starting to make sense. First, the lack of American Girl offers on Zulily. This could be for several reasons, one being that Zulily is no longer a privately owned company, they are now part of the same brand that owns QVC. At one point in time QVC carried American Girl, but that stopped suddenly with no explanation, so perhaps there was an issue. It could be something as simple as the end of a contract. There also hasn’t been a Jill’s Steals and Deals/Today Show offer in quite a while. That one really puzzled me until the recent announcement in regards to the outlet store closing and how they felt that they had a “robust e-commerce site”. I often wondered how they could make enough money to justify having a storefront vs. internet sales. Apparently someone there has come to the realization as well. JS&D’s sales were nothing but frustration for buyers. Which brings me to the hopeful conclusion that perhaps we are going to see more discounted items available on their website instead. Fingers crossed! I’m sure the Ebay sellers who relied on the outlet for inventory are freaking out, but I for one think that if it does happen, it will be a good thing for the buyer. We will no longer be subjected to the overpricing politics that seem to go on in the secondary market.
Another thing I have noticed is a very large reduction in the amount of items being offered on Ebay. A year ago at this time, if you did a general search on “American Girl”, you would pull up somewhere between 80,000 and 90,000 items. Now it’s somewhere between 40,000 and 50,000. That’s a huge drop! I think Ebay re-sellers priced themselves out of the market as well, and as a result, fewer of them are mass-buying at the outlet store. The reason I have come to this conclusion is I check Ebay every day, and I can’t tell you how many times I see the same items re-listed over and over and over again. Over-pricing is a huge factor in this, and I think what has happened is consumers have balked at these prices. That in turn reduces the number of items the Ebay sellers buy. Just like any company, they don’t want their money tied up in inventory that isn’t going to move. Another reason for the drop in Ebay sales may be because of the high rate of fraud that has been going on as well. People no longer feel comfortable in spending their money and either not getting what they were expecting, or worse yet, not getting it at all!
It used to be that companies could sit on their brand recognition and not do anything about it. That ideology all went out the window with the invention of the internet. People are way more savvy about things, online reviews and the ability for us all to exchange information quickly has changed the way we buy tremendously. Make a wrong step and everyone knows about it! Not good for companies sometimes (just ask Chipotle!) but good for consumers. I think it’s time AG takes a look at how the company started and which changes have been good and which ones haven’t.
Here’s what I hope to see happen in the coming months/years:
Price stabilization. No more price hikes and more reasonable pricing on some items.
Better quality: American Girl used to be known for making some of the most detailed accessories. Now it is all plastic. Plastic is cheap. I feel like I’m being ripped off when I get something that I’ve paid a lot for, only to discover it’s plastic. 😦
Clearance items available TO ALL! If they truly believe that the website is robust, then show us. Make it possible for everyone to buy these items at the sale prices, not just those who lived in Wisconsin. I really believe that this could be a massive turning point for sales if offered to everyone, not just a small part of the population. This would have another upside to it to: faster turnover of clearance inventory! Instead of waiting for a small percentage of people to come through their outlet store, they would now have a global audience. To me it’s a win/win.
No more Jill’s Steals and Deals offers. These were nothing but frustration for many and I wonder how many customers were lost because of it. I honestly think that the package deals we’ve been seeing since just before Christmas is taking the place of this as that is about the same time these stopped. Yeah, once in a while the package isn’t what you want, but JS&D’s had the same issue. It’s always going to be hit and miss, but at least now when it’s a hit, you stand a chance of possibly getting in, and not being stuck in the internet “waiting room” for all eternity! I especially liked the fact that the package deals they offered on the website were available for several days instead of a 24 hour period, reducing the “black Friday” mentality that seemed to go with the JS&D’s offers.
All in all, I think these recent changes are a step in the right direction, it will be interesting to see how it all turns out. The outlet store is set to close at the end of July, the annual sale there is coming up this weekend. I suspect it will be all out mayhem as Ebay re-sellers try to stock up one last time. I’ll be curious to hear though if there is much new to buy, it wouldn’t surprise me if they are holding stuff back to put on the website.
Any ideas on recent news and changes at AG? Please feel free to comment!