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Keithley: Maybe trade center shows are the solution

Showroom 'economics' might not work anymore for U.S. toy industry

By Brent Felgner -- Playthings, 11/13/2006 2:00:00 PM

Last month’s town hall meeting during the Toy Industry Association’s International Fall Toy Show marked the first time since coming on board several months ago that TIA President Carter Keithley had an opportunity to hear the industry discuss and debate in a group setting the myriad issues surrounding its home and future.

Without a traditional showroom building in which to gather, the fall show was splintered around Manhattan, with most companies exhibiting or meeting at the Javits Center, some holding out in their old toy district showrooms and others opting for temporary space elsewhere. The TIA-sponsored portion at Javits, however, was financially accretive, with Keithley reporting a little more than 20 percent net revenues (the loose equivalent of profit), yielding about $400,000 to $500,000 to TIA. Quick to point out that the revenue will go back to work for the industry, Keithley also made a case that, as a service organization, TIA’s role is to support the industry, not necessarily to blaze new trails.

The meeting itself was contentious, with the discussion veering quickly from its intended topic—what was good or not-so-good about the show’s new Javits Center location—to the ongoing debate over whether future TIA-sponsored toy shows should be held in Manhattan or somewhere else perceived as less expensive or more convenient, and who was to blame for the failure of the industry to coalesce around a new industry showroom building. Fueling attendees’ frustration at the meeting was an apparent lack of attendance by TIA board members to hear their concerns. According to TIA, there were as many as four board members in the audience during various portions of that discussion, although when an audience member asked where the board members were, none were identified other than Think Fun’s Andrea Barthello.

Now that the dust has settled, Keithley sat down with Playthings Contributing Editor Brent Felgner to discuss the show, the TIA’s commitment to New York as a venue and its role in influencing whether there will be a new showroom building. Marian Bossard, TIA’s vice president of meetings and events, and Julie Livingston, TIA’s senior director of marketing communications, joined in the meeting. An edited transcript follows:

Playthings: What was your take-away from the industry’s town hall meeting during the International Fall Toy Show?

Carter Keithley: I went into that meeting expecting to have a conversation about what was right and what was wrong with the Fall Toy Show, as it was in this new format at Javits. And of course, right from the get-go the meeting was diverted onto the subject of should it be New York or not New York, and should it be showroom or not showroom? I thought it was appropriate for us to let that conversation happen again. Subsequent to that meeting, I think what we’ve heard from the exhibitors that were there is that perhaps there is some clarity emerging as a result of that event. We have had wonderful reports back from the exhibitors about the amount of buyers that were there and the quality of the buyers that were there. We’re even hearing some rumors that some people that had stayed in showroom spaces during that event might be rethinking that. What we’re hearing is that the people at the Javits probably had a better event. So if, in fact, what emerged is clarity by virtue of all of the exhibitors being under one roof at the Javits, that, I think, would be a wonderful outcome—not because it’s a wonderful outcome for TIA. I think that often gets tossed into the mix: “TIA likes this because it’s good for TIA.” Hopefully people at the meeting heard me say I believe what’s good for TIA is what’s good for the toy industry—what’s good for those exhibitors. It would be foolish of us to think that we could put something over on the industry and provide an economic event to them that doesn’t work.

Playthings: Who showed up at the fall show?

CK: We had [207] exhibiting companies at the Javits, plus [27] listed exhibitors in permanent showrooms. We did not list exhibitors that had taken hotel spaces. So 90 percent of the exhibitors were under the roof at Javits.

[Editor’s note: There were 1,230 buyers, representing 631 retail outlets, at the show, including 327 international buyers from 182 different retailers, according to TIA.]

Playthings: The interesting thing about Javits was that it was set up for an October show with private meeting space, as most companies wanted. But there was also a significant number of companies presenting in an open, traditional trade show style. Does that raise any issues about the identity of the October show versus the identity of February Toy Fair? Are you at all concerned about October morphing into a traditional trade show event and, if so, how it would differentiate from February?

CK: My impression is that some of those booths that were open booths, their product was already in the can and they were looking for opportunities to meet buyers that perhaps they hadn’t [met] before. Again, I’m still learning about the strategies of all the different companies in the industry. And I think for every company there’s a different strategy. My sense is that they all are still feeling their way, trying to make that determination of what is, in fact, the best thing for their company.

Marian Bossard: It wasn’t about the openness; it was an appointment-only show. And even some of those people in the open booths came in with some appointments. We expected these vendors to create environments that were appropriate to their existing relationships. And even if it was minimal with the drapes pulled down, they did have appointments. And that was the most important distinction between October and February. No one came in totally unprepared [without appointments]. And if they did, it was against our instructions and they won’t be back.

CK: The shows will evolve to what they want to be. We can’t dictate it. It will be how the exhibitors find the best way to make use of those events.

MB: I don’t think it’s the physical structure that’s running this event. I think it’s the mass and long-lead buyers getting appointments with the vendors they want to see. That’s why it’s so small. Goodness, [207] is the right size, I think, but it’s not a major trade show. And if it starts to grow double that, I’d be questioning who was there. We have kind of an anti-sell to this. We’re not looking to sell exhibit space to anyone that does not have a reason to be there.

Playthings: What is the commitment to the Javits venue, at this point?

CK: For February [Toy Fair], it’s through 2010. And, we have space at the Javits for October [mass market show] for ’07, ’08 and ’09. So, we’re now at the point where will probably have to go back to Javits and ask them about availability of space for October and February for out-years.

Playthings: You are now several months into your position with the TIA. What is your sense of the industry’s discussion about showroom versus trade show venues for October? What are you getting from this so far?

CK: A continued lack of clarity, as you pointed out [ 10/25/06]. While I think there is a huge emotional attachment to the showroom format, the facts seem to point to it being just that—more an emotional attachment than an economic attachment. Despite the repeated opportunities that have been presented to the industry to have a focused showroom building, the industry has not taken up on it.

Playthings: Why do you think that is?

CK: Well, it may well be that the industry is deciding that the economics don’t work for that format anymore. As I understand it, the showroom buildings when they were sold to be converted to condominiums, were only about 60 percent occupied. So people were already beginning to migrate away from the showroom format. The Cushman & Wakefield people were there at [the town hall] meeting, talking about the 7 W. 34th St. option. In fact, they came up here to meet with me after, and I asked them: “Did anybody come up to you and hand you their business card and say, ‘I’d like to get a lease on the space that’s available there?’” and they said, “No.” What other conclusion can we come to but that people have just decided that the showroom option is not the way they want to go? And the argument that was made at the meeting that, if only TIA had made a commitment to Javits for 5 years or 7 years, instead of the next 4 years, then that would have given us the courage to take a lease—I’m not sure that I believe that that extra 1 to 3 years of extra commitment to Javits would have given them that courage.

Playthings: At this point, TIA has essentially taken a position that it will not lead the charge to a new showroom building but if the industry decides on one, it will follow. Is that a good place for a trade association to be?

CK: I think so. Absolutely. A trade association is not an organization that is capable of offering a market center to the industry. We don’t have the assets—we don’t have the financial wherewithal to do that. We can be supportive, as we tried to be on the Eleventh Ave. building, when the very hard work was done by Steven Greenfield, the [New York Toy] Tenants Association and others to put that package together. We were supportive. I showed up at the organizational meetings and we said we’d move our offices there. But still it did not materialize. So all we can do as a trade association is offer a trade event at a Javits-type convention center.

Playthings: Yet, when the TIA made its statement about Eleventh Ave. it was notable for what it didn’t say. It didn’t say it was endorsing the building. Why?

CK: I think in the same way that individual companies were having a hard time deciding whether or not that was the best place for them to put a showroom, or even whether or not they wanted to have a showroom, I think the TIA board felt the same way. They weren’t sure if this was, in fact, the best thing. So for the TIA board to come out and say, “We think this is what the industry should do,” I think they thought it was not the prudent thing to do.

Playthings: Which harkens back to the decision not to be in the real estate business and recalls the Church St. building. Was this something of a ‘once burned, twice shy’ kind of decision?

CK:I don’t think it was that as much as it was members of the board truly being not sure it was the right thing to do for the industry.…But we were cooperative. We used our Web site as a communications vehicle and we pushed out an email to folks saying this is what’s going on. I showed up at the organizational meeting and we did offer to put our offices over there if it became the toy center building. So we were trying to be cooperative but without telling companies in the industry that we thought that’s what they should do, because it wasn’t clear.

It has become clear to me over the last 6 months that the toy business is a very tough business. Margins are thin and you have got to work hard to succeed in this business year after year. And you can’t afford many big mistakes. And so, for companies to make a commitment to that space at, say, $40 a foot, when they’ve been paying maybe half that here—maybe three-fourths of that here—my guess would be that they decided that, without this being a much surer bet, that it was not the right thing for them to do.

Playthings: So where do we go from here? Where do you see the process going?

CK: From TIA’s stand point all we can do is continue to offer the best, most convenient, most efficient, most economical trade event we can at the Javits and hope that will attract more and more of the companies to come into the Javits so we can offer the buyers a one-stop shop.

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