Boomerang-Toys-RAR

Retail Analytics Report

Boomerang CommerceRetail [email protected]

November 2015

TOYS

Retail Analytics

November, 2015

Consumer Toys

Data Research by Boomerang Commerce

Executive Summary

Key findings include: Jet competes most closely on price with Amazon, Walmart attracts shoppers with the largest assortment overlap with Amazon, and Toys "R" Us is not afraid to be the most expensive while it simultaneously discounts toe-to-toe on a third of their assortment overlap. There appear to be opportunities to generate incremental margins by extending assortments and boosting prices where Amazon chooses to discount minimally or not at all.

In this edition of the Boomerang Commerce Retail Analytics Report, we investigate the toy category, examining price data from Amazon, Toys "R" Us, Game Stop, Walmart, Target and Jet. We use Boomerang’s proprietary indices, the Price Perception Index and Product Assortment Index, to analyze gross prices and weighted basket prices, as well as the uniqueness of each retailer’s assortment, and their overlap.

Toys are a unique category because they are so strongly driven by seasonality, by the popularity of recent movies and by megahit video game sales.

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Retail Analytics

November, 2015

Consumer Toys


Across the 1,200 toy items covered in this month’s report, Jet came closest to matching Amazon’s prices followed by Target and specialist Game Stop. Walmart was priced more than 7% higher, and Toys "R" Us was nearly 10% higher than Amazon, based on their weighted Price Perception Index (PPI) rankings. On the sampled product assortment, Walmart has the largest overlap with Amazon, with a Product Assortment Index (PAI) of 40%. Startup Jet already has built up its assortment impressively to match Target and Toys "R" Us in the 26% to 28% range. Finally, GameStop has the least overlap with Amazon close to 15%.

ALL Products

$100.70

$102.76

$102.77

$107.38

$109.79

26.11%

27.16%

14.64%

40.16%

28.52%

*Based on the sample of 1200 products collected by Boomerang Commerce. Walmart has 356 matching products, Target has 188, Jet has 204, Toys “R” Us has 204 and Game Stop has 112.

Toys "R" Us priced toy items nearly 10% higher than Amazon.

$100.00 100%

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PRICE PERCEPTIONINDEX

PRODUCT ASSORTMENTINDEXRETAILER

Amazon

$110

$105

$100

$95

BUBBLE SIZE REPRESENTS PRODUCT ASSORTMENT INDEX

PRICE PERCEPTION INDEX

Retail Analytics

November, 2015

Consumer Toys


Amazon



HEAD Products

For head (popular) toy products, Walmart has by far the greatest inventory overlap with the Amazon baseline. Toys "R" Us head product prices were the most expensive in the research basket.

Jet posted the lowest average head prices, running only 2.5% above Amazon pricing. Then came Target, 5% higher than Amazon prices. Jet also competed most broadly with Amazon on price; the majority of its head products in the sample are priced below the same products at Amazon.

$102.52

$105.12

$106.86

$108.10

$111.92

31.00%

34.25%

17.50%

46.25%

35.25%

$125

$115

$105

$95

0% 20% 40% 60% 80% 100%

Price of Head Items Compared to AmazonA slight majority of Jet’s head products in the sample were priced below Amazon.

*Based on the sample of 400 products collected by Boomerang Commerce. Walmart has 185 matching products, Target has 137, Jet has 124, Toys “R” Us has 141 and Game Stop has 70.

67

17

63

19

29

6

18

55

104

91

$100.00 100%


4


SAME

LOWER-PRICED

HIGHER-PRICED

33

43 169 12 49

85

Retail Analytics

November, 2015

Consumer Toys




CORE Products

In core (medium popularity) toy products, Jet’s prices were the lowest in the group. Not only was its PPI below Amazon’s, but 2/3 of its core products in the study were priced lower than at Amazon. The others are priced well above Amazon, from Walmart at +7% up to Toys "R" Us where sampled core prices were 22.5% above Amazon’s prices on the same items.

Walmart carried 28.5% of the baseline core products; Jet was next with less than 18% overlap with Amazon. The five retailers’ relatively low Product Assortment Index ranges suggest they might find opportunity to expand core assortments and capitalize on traffic they achieved by competing via price on head products.

$100.00

$107.03

$109.48

$111.92

$122.49

100%

28.50%

12.50%

9.75%

15.50%

Price of Core Items Compared to Amazon

Apart from Jet, the other four retailers were priced from 7% to 22.5% above Amazon on core items.

*Based on the sample of 400 Core products collected by Boomerang Commerce. Walmart has 114 matching products, Target has 50, Jet has 71, Toys “R” Us has 62 and Game Stop has 39.

$98.71 17.75%

5

0% 20% 40% 60% 80% 100%

58

15

47

12

6

3

6

21

44

29

SAME

LOWER-PRICED

HIGHER-PRICED

31

1612 3 24

25

Amazon

$120

$110

$100

$90



Retail Analytics

November, 2015

Consumer Toys


TAIL Products

Across 400 tail (low popularity) products, Walmart was priced above Amazon on ¾ of the [tail] toy products that both retailers carry, Walmart’s Price Perception Index places it at just 1.3% higher-priced than Amazon. The other four retailers, taken collectively, are priced significantly below Amazon on tail products. This indicates opportunity for them to generate margin by raising prices. There is potential for endless-aisle assortment expansion programs, both online and in brick and mortar, enabling profitable growth in tail items.

$34.41

$50.37

$88.44

$100.00

$101.28

0.75%

0.25%

2.25%

100%

14.25%

Price of Tail Items Compared to Amazon



*Based on the sample of 400 Tail products collected by Boomerang Commerce. Walmart has 57 matching products, Target has 1, Jet has 9, Toys “R” Us has 1, and Game Stop has 3.

For items of low popularity, Jet and Walmart under-priced Amazon but none of the retailers had 10% of Amazon's assortment.

$59.13 0.25%

6

0% 20% 40% 60% 80% 100%

43

1

7

1

1 1

SAME

LOWER-PRICED

HIGHER-PRICED

5

16 3

9

Amazon

$120

$90

$60

$30



Retail Analytics

November, 2015

Consumer Toys


0% 25% 50% 75% 100%

TOYS “R” US

GAME STOP

WALMART

JET

TARGET

OVERLAP COMPARED TO AMAZON *0% 25% 50% 75% 100%

TOYS “R” US

GAME STOP

WALMART

JET

TARGET

OVERLAP COMPARED TO AMAZON *

0% 25% 50% 75% 100%

TOYS “R” US

GAME STOP

WALMART

JET

TARGET


Brand Assortment Analysis

We analyzed 1200 items across 479 unique brands, including popular names like Disney and Microsoft. The majority of products in our research basket were prominent brands. We measured how often these brands appeared as SKUs at major retailers relative to Amazon. Nintendo was a major presence at all 5 retailers; Disney was consistently at 4 of the 5. The Vtech selection at Walmart nearly matches (77%) the Vtech choices at Amazon. You could barely find Melissa & Doug at Walmart, but the assortment of Melissa & Doug is plentiful at Jet and Toys "R" Us.

Disney

Melissa & Doug

Nintendo

Vtech

Microsoft

1

2

3

4

5

43

35

30

26

22

Brands withHighest Assortment

RankSelectionCountBrand

7

0% 25% 50% 75% 100%

TOYS “R” US

GAME STOP

WALMART

JET

TARGET


* If Amazon had 100 Melissa & Doug items in its research sample, Jet had 60.

Nintendo, Microsoft, and Disney are in ample assortment at nearly every retailer, while for Melissa & Doug, you’d probably choose Jet or Toys “R” Us.

0% 25% 50% 75% 100%

TOYS “R” US

GAME STOP

WALMART

JET

TARGET


Retail Analytics

November, 2015

Consumer Toys


Category: Video Games

Video games are a key category where a single product can outsell a Hollywood blockbuster. Jet comes closest on price competition, at just 3.9% over Amazon, but had a Product Assortment Index of just 14%. The other four retailers had a product overlap of 38% or higher, showing widespread commitment to the category. Walmart carried nearly half of the video games sampled at Amazon. It may not always be an advantage to overlap with a competitor that has Amazon’s pricing power, but being stocked on traffic-drivers like popular video games is crucial in the holiday season.

Availability of ItemsFound in the Sample

$103.93

$105.29

$106.60

$110.23

$106.28

14.07%

48.24%

41.71%

38.19%

45.23%



Every toy retailer knows it needs to be selling video games. Except for Jet, the group all had product overlap above 38%.

$100.00 100%

8

5+ Retailers

25.1%

4 Retailers

15.6%

3 Retailers

12.1%2 Retailers

10.1%

Only Amazon

37.2%

Amazon

$110

$105

$100

$95



Retail Analytics

November, 2015

Consumer Toys


Category: Action & Toy Figures

In Action & Toy Figures, Walmart has the smallest price differentials compared to Amazon, with a Price Perception Index of 102, and the highest Product Assortment Index at 29.35%. Toys "R" Us stood out in the field with sharply higher pricing at 20.5% higher than Amazon. We found that 57% of the Action & Toy Figure SKUs in the research basket are offered only at Amazon. On those 115 SKUs, Amazon therefore has no major competition. $102.00

$106.26

$107.03

$109.06

$120.48

29.35%

6.97%

16.92%

22.39%

20.90%



Availability of ItemsFound Among Retailers 57% of the Action & Toys Figures

products are offered only at Amazon.

$100.00 100%

9

5+ Retailers

6.5%

4 Retailers12.4%

3 Retailers9.0%

2 Retailers

14.9%

Only Amazon

57.2%

Amazon

$120

$110

$100

$90



Retail Analytics

November, 2015

Consumer Toys


5+ Retailers

Category: Puzzles

In the Puzzles category, Jet has the largest overlap with Amazon’s assortment in the Report sample, and is also Amazon’s toughest competitor on pricing with a Price Perception Index of just 100.3. Toys "R" Us has a higher Product Assortment Index (overlap with Amazon’s sample assortment in Puzzles) at 19% than Walmart does, at 18% -- and pricing that jumps out due to being 18% higher than Amazon’s.

$100.31

$108.63

$113.85

$118.44

N/A

27.36%

17.91%

12.44%

18.91%

N/A



Availability of ItemsFound Among Retailers

Here’s a small puzzle: Jet picked this category to battle Amazon head on, with a product overlap of 27.4% and pricing that is nearly a match.

$100.00 100%

10

5+ Retailers2.5%4 Retailers

7.0%

3 Retailers16.9%

2 Retailers11.9%

Only Amazon61.7%

Amazon

$120

$110

$100

$90



Retail Analytics

November, 2015

Consumer Toys


Discount Analysis

Of the mass merchants, Amazon and Walmart discount widely, at 44% and 42% of their sample inventory. Target limits its discounting on toys to a narrower selection, just 8% of the research sample – but cuts deep with 30% median discount levels. This matched Game Stop, which also discounts narrowly (7% of its sample) and deeply (25%).

Amazon and Toys “R” Us stood out for discounting widely (44% and 32% respectively), and deeply (24% for both retailers). Jet, true to its promise, did not discount.

Discount Frequency

MEDIAN DISCOUNT

0% 25% 50% 75% 100%

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When it comes to selling toys below list price, Amazon and Toys “R” Us discount widely and deeply. Target and Game Stop both discount narrowly and deeply.

42%

44% 24%

8%

32%

30%

17%

24%

7% 25%

NA

PRODUCTS IN INVENTORY WITH A DISCOUNT

0%

Retail Analytics

November, 2015

Consumer Toys


Example Products

On Splatoon by Nintendo, a popular head item, Amazon undercuts its competitors, offering it at $55.99. The closest competitors – Target, Game Stop, and Toys "R" Us, sell it at the list price of $59.99. Jet is substantially higher at $67.24 With such head items drawing traffic online, and guiding customer perception, Jet appears out of step on this SKU.

On a sample tail product, Lego Lord of the Rings from Warner Home Video Games. Amazon’s price is $36.69, not quite one percent below list price, but far higher than the other retailers who stock it. Judging from the number of reviews, this product has a following at Game Stop. Tail products where Amazon barely discounts offer opportunity for other retailers to increase prices without adversely impacting shopper sentiment or unit sales. Core products, with much higher unit volume, may also be ripe for new assortment and margin strategies.

Splatoon By Nintendo

HEAD TAIL

LEGO Lord of the RingsBy Warner Home Video Games

$55.99

$61.11

$59.99

$67.24

$59.99

$59.99

4.5

N/A

5.0

N/A

4.7

4.3

RETAILER PRICE PRICE

508

N/A

5

N/A

109

69

$39.69

N/A

N/A

N/A

$19.99

$19.99

N/A

N/A

N/A

N/A

4.7

4.3

N/A

N/A

N/A

N/A

10

33

This illustrates a fairly common situation: Amazon discounts on a hot product and goes unchallenged price-wise, while on slower-moving tail items, Amazon may be the most expensive by a large spread.

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RATING(OUT OF 5)

RATING(OUT OF 5)

# OF REVIEWS # OF REVIEWS

Retail Analytics

November, 2015

Consumer Toys


Report Terminology

To account for variance in products offerings at each retailer, we chose to use Amazon as the baseline due to its position as the largest online retailer. Our indices are based on Amazon Best Seller items as well as a selected assortment of medium and low popularity products. This creates a broadly representa-tive basket of items to use for measuring each retailers’ product prices, weighted basket price and product availability. For each prod-uct category (toys, electronics, home and garden, etc.), we assume that the top 20% of products are head items, the middle 50% are core items, and the remaining 30% are tail items. Based on this assumption, we select 400 random items from each popularity tier for our analysis, for a total of 1,200 items.

Methodology

We used these proprietary measurements and indexes developed to precisely track price and assortment of a wide basket of items sold online.

Price Perception Index – A proprietary index tracking gross price difference and movements across the six online retailers covering a basket of 1200 products (SKUs). Price Perception Index is normalized to Amazon to establish a relative baseline. It is weighted to accurately reflect the pricing of “head”, “core” and “tail” items across the same six retailers covering 1200 products.

Product Assortment Index – A proprietary index reflecting the selection of products across five major retailers. Product Assortment Index is normalized to Amazon to establish a relative baseline. It is weighted to accurately reflect the pricing of “head”, “core” and “tail” items across the same five retailers covering 1200 products.

Head – This is a description of frequently purchased, popular products list among the Amazon Best Sellers. Head products most strongly influence customer perception of whether a product is expensive or inexpensive.

Core – This is a description of products of medium popularity that are regularly purchased but are not among Best Sellers and are not as popular as head products.

Tail – This is a description of infrequently purchased products having the least impact on customer perception of whether a retailer is expensive or inexpensive.

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Boomerang CommerceRetail [email protected]

Founded in 2012, Boomerang Commerce offers the first prescriptive analytics suite for omnichannel retailers. Six of the top 10 retailers, including Office Depot and Staples, rely on its Retail Solutions Suite, which delivers decision recommendations that enable retailers to proactively compete and boost profits at scale. Built by a team from Amazon, McKinsey, MIT and Stanford, Boomerang applies machine learning and big data analytics to massive data quantities across digital and brick-and-mortar channels, and it derives superior insights and actionable business recommendations to transform business decision makers into retail ninjas.

About Boomerang Commerce

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