With her short, wavy red hair and country duds, Strawberry Shortcake is a homely yet wholesome sort of doll that’s been around since the 1980s.
Now Strawberry Shortcake is getting an extreme makeover.
When the latest version of the doll hits stores this spring, Strawberry Shortcake will have long, luxurious, strawberry-colored
locks and hipper fashions.
“We took the property and contemporized it,” said John Sinclair, chief operations officer for Playmates Toys Inc. in Costa Mesa, the U.S. arm of Hong Kong’s Playmates Holdings Ltd., which holds the license for Strawberry Shortcake. “But we didn’t dilute the good values message.”
Playmates won the Strawberry Shortcake license from Japan’s Namco Bandai Holdings Inc., the third largest toy maker, after El Segundo-based Mattel Inc. and Rhode Island’s Hasbro Inc.
Bandai’s U.S. headquarters is in Cypress.
Cleveland-based American Greetings Corp. owns the Strawberry Shortcake brand.
The greeting card company and Burbank-based DIC Entertainment Corp., which handles licensing for American Greetings, were looking to update the line, Sinclair said.
“They approached us,” he said.
Playmates won the Strawberry Shortcake license a year ago.
Turtles, Other Products
The company, one of about a dozen midsize toy makers, also plans to update the Teenage Mutant Ninja Turtles this year.
The turtles, popular in the 1980s, are vying for a comeback with a new TV series and a movie next fall.
Playmates also plans to come out with a more techie toy for boys,REVs, or “radically engineered vehicles” that turn into missile firing robots.
Then there are the Battle Dice game featuring comic book heroes from Marvel Entertainment Inc. and DC Comics Inc., an Amazing Allysen doll,big sister to Amazing Amanda,and Amazing Pets.
Come fall, Playmates plans to come out with Disney Fairies, a line of toys paired with Walt Disney Co.’s line of fairy books and a DVD due out next year.
$170 Million in Sales
Hong Kong-based Playmates counts about $170 million in yearly sales, most by way of the Costa Mesa operation.
The company has about 105 workers worldwide, including about 50 across from South Coast Plaza.
The company’s toys are made by contract manufacturers in China.
Playmates is looking to new products to jump-start growth, which was flat last year. U.S. sales actually slipped last year.
Like other toy makers, Playmates has seen growth stifled by competition and a shift in sales to Wal-Mart Stores Inc. and Target Corp.
The toy business is risky, finicky and seasonal, said Lou Novak, president of Playmates Toys.
Novak has worked in the fashion industry and at several toy makers, including Mattel.
U.S. investors hold about 15% of the company, Novak said.
Big hits are rare in the industry.
They include Bratz dolls from Van Nuys-based MGA Entertainment Inc. or Cabbage Patch Kids, now part of Hasbro.
For Playmates, the aim is to acquire licenses and then develop brands over time. The toys are updated with new designs.
“This business is a living, breathing, dying business,” Novak said. “Everything’s got to be new.”
Playmates buys the rights to make toys, typically ones already popular in movies, games or books. Then the company designs toys in Costa Mesa.
The designs then go to Hong Kong, where a toy is engineered for production.
Engineering used to be done in the U.S. and shifted to Hong Kong to save costs, Novak said.
Made in China
Finally, a toy heads to China, where nearly all of the world’s toys are made. Some board games and bulky items still are made in the U.S.
Playmates sells through distributors.
At first glance, the toy market doesn’t look like much fun.
In the U.S. and elsewhere, people just aren’t having as many kids as they used to. Worse, toy stores are disappearing and are being replaced by a few aisles at Wal-Mart and Target.
Another challenge: “Kids get older younger,” Novak said, meaning they want to graduate from dolls to video games, computers and other fancy toys earlier.
Kids 4 to 11 used to be the target market, Novak said. Now it’s 3 to 6 years old.
“Kids are into many, many other things,” he said.
The challenge is more pronounced for Mattel, Novak said.
For Playmates, with less than 1% of yearly toy sales, Novak sees room for growth.
Playmates only is in about a third of 11 categories of toys measured by the New York-based Toy Industry Association Inc.
Only three categories,learning toys, action figures and building sets,are growing.
Overall, the toy business grew 4% in 2005, according to NPD Group Inc. of Port Washington, N.Y.
Worldwide, it’s a $55 billion yearly industry, including $20 billion in the U.S.
Mattel has about 20% of the market, Novak said.
Playmates is looking abroad for growth. International sales are about a quarter of the company’s yearly sales.
The big markets,Japan and Germany,aren’t easy to break into for U.S. toys, Novak said.
“The toy makers make it difficult for consumers to get American products,” he said.
France, Italy, Spain, Russia and Latin America have the greatest promise, simply because those countries are new to the business.
Playmates recently signed up a distributor for Strawberry Shortcake in Russia.
“You’d be surprised how well the American brands translate outside the U.S,” Novak said.
Playmates used to come out with a product in the U.S. first and then launch in global markets later.
Now it brings out toys here and abroad at the same time.
Teenage Mutant Ninja Turtles came out in 2004 in 40 markets. This year, the toys are set to sell in 60 markets.
Still, the U.S. is king.
“Licensing takes place in the U.S. market,” Novak said.
Playmates’ edge is sticking with a brand and building it up over time, Novak said.
“The big guys get in and get out if it’s not a hit,” he said.
Tech Toys
Like other toy makers, Playmates is turning to technology.
The company’s Amazing line of dolls use voice-recognition software to “remember” things they’re told.
Some of the dolls go for $100.
Amazing Amanda came out in 1997 and stuck around until 2001. The doll won accolades and attention in the media and was a big seller.
This year, Amazing Allysen will join Amanda as her bigger sister.
Playmates plans to do about 15 commercials a year. Each brand has money to spend on TV, Novak said.
The company aims to take a toy from idea to stores in six months.
There are exceptions, such as toys for the film “King Kong.”
“We got that extremely late,” Novak said.
In King Kong’s case, the problem was the timing.
Retailers set their fall shelves in July, Novak said. They’re not going to set King Kong toys out in July when the movie comes out in December.
But Playmates decided to take on King Kong, believing that it has long-term sales potential. The recently released DVD should also boost sales, Novak said.
1982 Arrival
Playmates got its start in the U.S. in 1982 in La Mirada, where it had a warehouse and office.
It moved to Orange County because many of the employees lived there.
Playmates also became more of a marketing company and wanted a more upscale image.
It moved to its current spot in 1996. Playmates has a warehouse in Santa Fe Springs, which is about two weeks away from shipments from China.
Novak said he has a steadfast philosophy on managing people and runs the company on the basis of “meritocracy.”
“Reward everybody up and down the food chain,” he said.
Everyone in the company gets stock options, Novak said.
Playmates is one of the few companies left that pays 100% of healthcare for employees (it doesn’t offer dental insurance).
Instead, employees can use $1,000 a year for dental, vision and health expenses. Playmates administers benefits itself.
