©Ivan Samkov via Canva.com | Credit: Melissa & Doug
Is the Melissa & Doug Brand Poised for More Success?
Melissa & Doug, a renowned American toy maker that creates wooden and sustainable toys for preschoolers, has launched its first brick-and-mortar retail store. This 1,600-square-foot flagship store officially opened on Oct. 6 in The Westchester, “a premium shopping mall in White Plains, New York, just outside New York City and near Melissa & Doug headquarters in Wilton, Connecticut,” per the company’s announcement.
According to Behavior Analytics Retail, “Flagship stores are the most important stores in a retail chain. The flagship stores are in a prime location, more prominent, and more often promoted.”
Melissa & Doug is known for its commitment to producing high-quality, imaginative, and educational toys for children. Founded in 1988 by Melissa and Doug Bernstein, the company has earned a reputation for its diverse range of toys while prioritizing safety and durability, often using natural materials and non-toxic paints. However, since their products are all made in China, some of their toys have been found to be toxic.
The new store offers a diverse range of the brand’s best-selling toys, spanning categories like pretend play sets, educational toys, baby and toddler products, puzzles, and arts & crafts, per the 35-year-old company’s statement. Bridgette Miller, the chief marketing and sustainability officer, emphasized the company’s aim to create an immersive experience for both adults and children. Additionally, Melissa & Doug has made substantial sustainability investments, committing to plant over 10 million trees by 2030 in partnership with One Tree Planted and achieving 100% carbon neutrality in its operations for 2022 through offset purchases.
The brand has already filled retailers such as Target, Walmart, Kohl’s, and Barnes & Noble with its products, so it will be interesting to see how its own retail store fares and if it will be successful enough to allow the brand to expand its physical footprint further.
The success of modern toy stores has been in question ever since the bankruptcy and now revival of Toys“R”Us and the similar fate of FAO Schwarz. Melissa & Doug will have the advantage of its recent rise in popularity thanks to its viral social media videos (like this parent’s review on TikTok), but it takes more than that to stay afloat.
As previously covered, Bass Pro Shops continues to see unparalleled success with its unique and true-to-brand experiential flagship stores. Although Melissa & Doug’s first flagship store is not as large or grand as others, it’s a start. If the brand’s flagship can offer something similar to its customers, it would be hugely beneficial to the business.
Currently, the location is limited by its size, but it will have in-store activities like “a spot where kids can measure how many ‘scoops of ice cream’ tall they are and exclusive take-home activities.”
This new retail store is not the only announcement surprising Melissa & Doug’s customers. According to Reuters, the Canadian toys and games-maker Spin Master “has agreed to buy U.S.-based toy-maker Melissa & Doug for $950 million in cash, taking the shares of the Rubik’s Cube owner up nearly 8% in early trade.”
This acquisition, including $500 million in debt financing, is anticipated by Spin Master to yield immediate positive impacts on its earnings per share. Spin Master, the owner of the popular children’s cartoon adventure series PAW Patrol, currently boasts a market capitalization of C$3.57 billion ($2.6 billion) as of its most recent stock closing.
Discussion Questions
Do you think more Melissa & Doug stores will open across the nation? With a flagship store and recent acquisition by Spin Master, what else might the brand need to further grow?
Poll
Loading …BrainTrust
Jeff Hall
President, Second To None
Allison McCabe
Director Retail Technology, enVista
As a widely distributed and well known brand, kudos to Melissa and Doug for creating an flagship store. Great way for consumers to interact with the brand and gauge interest of little ones, in this case just in time for the holidays. As a marketing tool, it is very valuable. It will drive sales of their brand in all channels. For those who value price above all else, it will serve as a showroom concept. The ROI of this investment will tell the story as to the value of this approach not only for Melissa and Doug but the universe of Spin Master.
The hands-on experience of playing with toys is what got all of us interested in exploring the world and everything in it. Let’s hope this Melissa & Doug store turns a unique in-store experience into a viable concept for rollout everywhere. Well, by everywhere, I guess I mean other places like White Plains, New York.
This brand is a perfect match for bringing the “retail as theater” mantra and the upcoming generation of young parents together. They have the brand following already, but that didn’t help Toys”R”Us or FAO Schwarz much when online started to take over toyland. They need to learn from the past mistakes made by TRU and FAO and not get caught up in store counts. I hope they’ve learned from that history and run the numbers from every angle before this launch. Also, only open in “A” store locations and keep the number small. Amazon will try to knock you off, but stay true to the brand and think hard before considering a sale to private equity.
I’m still trying to figure out how a store the size of a Starbucks can be a “flagship” store? Yes, you have to start somewhere, but I’d guess that this is more of a pilot store than a flagship—for now, anyway. I’m hoping this plays out well (pun intended).
I believe a single store by definiton is a flagship, tho in this case flagdinghy might seem more apt.
Melissa & Doug toys are high quality and well differentiated from mainstream brands. A store makes sense, especially in a mall like The Westchester. There is probably scope to open a handful mores stores in similar locations across the country. Pop-ups might also be a good idea around the holidays. However, distribution via third-party retailers and e-commerce will likely remain the backbone of the business. Hopefully Spin Master will aid growth while keeping the brand ethos intact.
I don’t know that it makes sense to build out a ton of stores, but a few highly experiential ones like this are a great idea for the brand. This category lends itself to a brick and mortar presence- it will be a nice destination for families.
I think flagship stores are always a great idea for a brand experience. If you do it right, it can serve many purposes all at once, and one key one for an established wholesale distribution model to both major retailers and a bunch of independents will be to demonstrate how some of the more niche products in the assortment can perform with customers. Big retailers want relatively risk-free assortments (which can leave assortment opportunities on the table), and while independent retailers often value the opportunity to differentiate from big chains, they lack the data and buying sophistication to select the right niche products for their customer base. M&D owning their own stores, even on a limited high-experience basis, will help them make a stronger case to both.
Toy shopping by parents and their young kids is about as experiential as it gets. So yes, physical retail is absolutely the way to go. And it doesn’t need to get deeply tech or digital to be a blast for the kids. LEGO and Build-A-Bear provide rich shopping experiences with a lot of fun to follow. Melissa & Doug can be very measured as they open physical locations. It won’t be hard to pick the right malls with the right demographics.
Melissa & Doug must be doing something right. In a visit to Whole Foods last week I came upon a Melissa & Doug drop-in shop (Hadley, MA). If that’s how a grocery store wants to invest a parcel of its real estate at this time of the year, they must be expecting a solid ROI versus all the other choices they would have had.
The new Melissa & Doug store is nicely done. It’s colorful, easy to shop, and fun for kids. It’s comparable to a Lego store; if you like the brand, everything is in one creative place.
But do I think it’s necessary for Melissa & Doug to open stores across the country? Probably not. A few heavily trafficked malls, maybe, but you can already find a good selection of Melissa & Doug products in plenty of stores. I agree with Neil: well placed pop-ups for this brand is a good idea.
Melissa & Doug is on an upward trajectory in brand recognition, expanding market share and a seemingly loyal customer base. The timing of the Spin Master acquisition aligns well with opening a flagship store and perhaps a handful of others over time. Flagships are the perfect environment for creating an important tangible, experiential way for Melissa & Doug’s customer advocates to immerse themselves in the brand, further amplifying brand awareness and adoption.
It’s quite likely that Melissa & Doug will open more stores across the nation, given the success of their flagship store and the brand’s recent popularity. Melissa & Doug’s success hinges on learning from Toys”R”Us and FAO Schwarz. Prioritize quality over quantity, choosing prime locations wisely, guarding against online competition, and creating their unique & immersive experience should pave the way for further expansion.
To further grow, Melissa & Doug should focus on strategic marketing, expanding product lines, enhancing online presence, and creating exclusive in-store experiences. Building on Spin Master’s resources could amplify these efforts.
From inside the industry, there is a much different perspective:
Melissa & Doug made their mark in the Specialty Toy/Baby and Independent Bookstore channels – first by importing and rebranding commodity items from Chinese plants, but in the early 2000s transitioned into thoughtful own-design items that earned much respect and many awards. M&D created “flagships” in concert with key indy toy retailers in key markets around the country to better explore how shoppers interacted with their products and demonstrate an alternative to big-box toy stores like Toys ‘R’ Us.
By the mid-2010s, however, the company was getting out over its skis through oversaturation and overleveraging – while its distribution kept expanding into mass retail (and even places like gas stations), and they started licensing IP, the product quality started to noticeably suffer as the price points big-box stores demanded (and percentages that license holders required) cut into margins. Before the pandemic, the Specialty shops M&D had used to achieve success were already looking for alternatives, and M&D tradeshow booths that used to be 50-foot islands had become 10-foot tabletops. As M&D’s founders stepped away, it was only a matter of time before the brand would be snapped up.
The news that M&D had been acquired by Spin Master (a very mass-market oriented company) and would be setting up its own retail store has gone over like a lead balloon at mom & pop toy and book merchants. The good news is that there are many new US-based toy companies, designing and manufacturing in the US, emerging to take M&D’s place.
Melissa and Doug’s quality toys have become a staple at local and national toy chains. Their toys are a big part of children’s formative years, and their business model has been good with their wholesale/retailer partnerships. However, when I hear about brands turning into retail operations, I throw caution into the wind. Then, there are discussions about scaling the company with hundreds of stores nationwide.
The toy store market has been disrupted for over ten years, with Toys R Us and FAO Schwarz experiencing significant business downturns and bankruptcies and reimagining their business models for the digital age. Both companies had to overcome rising debt loads and increasing operating costs during business downturns. Throughout that timeframe, Camp emerged as the experiential toy store operation of choice, as they focused on the art of discovery, entertainment, and engaging with families.
Camp has also had challenges as it scales up from its flagship stores in NYC, extending those same experiences across the the store fleet. Melissa and Doug, and the Spin Master team should take a cautious crawl, walk, run approach to the brick-and-mortar ambitions. Beyond the flagship store in Westchester, pop-ups are another strategy to scale up and engage with customers without a long-term lease commitment.
Maybe higher birth rates would help.
1600 square feet…in White Plains….that’s realy…uhm…nice. Tho I’m not personally familiar with the name, many of our resondents are, and regardless, a nearly-billion-dollar company doesn’t really need our Attaboy! to validate itself: I’ve no reason to think they won’t continue to do well. But I doubt it will have much to do with this store: of all the recent examples we’ve seen of debasing the term “flagship”, this seems to set a new low. Actually, while I don’t think the opening says much about M&D, that they didn’t choose that large city to White Plains’ south may be saying something about it…and not positive.