Transformers retail prices in 2012 unchanged despite exchange rate

[griffin]

I'll ask about fixed pricing, to see if it is a factor. I know that the annual Toyfair would limit it to 12 months maximum, but the retailer order forms usually only go as far as September (last time I saw one)... and even if their price was set for the remainder of the 12 month cycle, the next Toyfair gives them new prices. (if they choose to adjust prices on product lines that are ongoing)

[Seraphim Prime]

Imagine if the dollar dropped to $0.60 US I bet we would all be grateful for the fixed pricing terms then. Swings & roundabouts I am afraid & retailers need to have fixed pricing wherever possible to report to their stakeholders with clarity on their performance expectations.

Just my $0.02 of course but there is a lot more than just what we perceive as corporate greed.

A point I've been trying to make, yet said so much more eloquently.

I remember looking at Armada TFs at BBTS back when the AUD was about 54c to the dollar. Definately pushed you towards the local market.

[Prowl]

I'll ask about fixed pricing, to see if it is a factor. I know that the annual Toyfair would limit it to 12 months maximum, but the retailer order forms usually only go as far as September (last time I saw one)... and even if their price was set for the remainder of the 12 month cycle, the next Toyfair gives them new prices. (if they choose to adjust prices on product lines that are ongoing)

I would be interested in if the buyers have fixed terms for 12 month periods or shoot for a longer term deal such as over 3 years. I can assure you that when the dollar dipped so badly retailers in general crapped their pants & would have pushed for extended fixed pricing terms. This would be why we have the current situation & Hasbro would have gone in with a worst case scenario to ensure X% profitability.

As I previously said Hasbro are under no obligation (if this is the case) to pass on ANY price reductions if the contract stipulates fixed pricing & periods. Think of it like this guys. The stores gambled with their expectations & lost heavily the last 18 months for their gamble. If I was in their situation I would have done the exact same thing & anyone who didn't should have lost their job.

If the dollar nosedived back to $0.60 again we as consumers would be buffered from the majority of that impact through the retailers FPA's.

I understand that the major retailers are doing it incredibly tough in the marketplace right now & online sales are hurting them worse than you can imagine. I am working on a very large packaging contract with one major retailer currently as they are looking to attack the online sector head on.

I did advise them as a consumer that their pricing had better offer an incentive for me to not buy either in person at a physical store or online O/S. The point of this is that retailers are sitting up & taking notice of market trends.

The thing is that we need to remember is that smaller nice traders like RK or BBTS are akin to a small speedboat who can turn on a dime & adapt much faster to a lumbering titanic retailer who take time & more importantly have stakeholders they need to justify the expense of opening online portals for clients to utilise.

A point I've been trying to make, yet said so much more eloquently.

I remember looking at Armada TFs at BBTS back when the AUD was about 54c to the dollar. Definately pushed you towards the local market.

Exactly mate. I am no rocket scientist but due to my job I feel that I can add a reasonable explanation without resorting to hysteria & unfounded accusations (not saying that anyone is doing so here mind you). the simple fact is I believe that rather than a conspiracy between retailers & Hasbro this is just the way it has worked out due to contracts. I am not privy to their contract stipulations but I have worked on plenty of large contracts in my time to know how it works & reatailers especially must minimise risk & financial exposure.

[griffin]

Prices went up quickly when our dollar weakened and hit US$0.50... but prices never came back down, unlike everything else that gets imported.

The American owned toy companies were quick to raise prices to offset a weaker Aussie dollar, so I don't see how they can be locked into lengthy price periods, or justify resisting cheaper prices. After all, if they can easily go one way, there's no reason why they can't just as quickly go the other way.

At the end of the day, if Hasbro can reduce the size and paint apps of toys to offset inflation and keep size-classes priced the same over several years in America, then a 40% increase in the Aussie Dollar in the last 5 years demands answers if our prices don't get significantly cheaper. And my question to them is, why is it hard to believe that we shouldn't be seeing close to a 40% improvement in our prices, if Hasbro already had a price buffer when we were at US$0.50...

[Prowl]

Prices went up quickly when our dollar weakened and hit US$0.50... but prices never came back down, unlike everything else that gets imported.

The American owned toy companies were quick to raise prices to offset a weaker Aussie dollar, so I don't see how they can be locked into lengthy price periods, or justify resisting cheaper prices. After all, if they can easily go one way, there's no reason why they can't just as quickly go the other way.

At the end of the day, if Hasbro can reduce the size and paint apps of toys to offset inflation and keep size-classes priced the same over several years in America, then a 40% increase in the Aussie Dollar in the last 5 years demands answers if our prices don't get significantly cheaper. And my question to them is, why is it hard to believe that we shouldn't be seeing close to a 40% improvement in our prices, if Hasbro already had a price buffer when we were at US$0.50...

I don't disagree Griff. Far from it & the point you make is valid. Nothing would surprise me but the way I am reading it & I may be very wrong indeed but if a 3 year agreement was signed during the period when the AU$ was very low that would explain a lot.

If not then the buyers for the retailers need to take the hard stance of playing hardball with Hasbro on this. If Myer, DJ's, Big W, Kmart. Target & TRU all threatened to remove Hasbro product from their shelves unless they passed on genuine price reductions Hasbro would find itself in a very dangerous position.

As you said answers are required & it is interesting that the retail prices are all pretty similar even if though the retailers would all have different contract dates & lengths.

I also suspect that there is a bunch of resale price maintenence transpiring between Hasbro & their distributors.

[Trent]

This price disparity is not just in toys. It is on most things we import. Take cars, a good example is a WRX. Here they are ~$41K drive away. The EXACT same model in the US is $25K drive away. And remember that these cars are manufactured in Japan, so shipping distances are relatively equal.

Remember that the USA is is a SUBSTANTIALLY bigger market than Australia, with historically low prices for a lot of goods sold there. Thus have a lot more purchasing power and goods are priced lower to keep them selling.

And while you see ACA and Gerry Harvey crapping on about how badly retailers are doing because everyone is buying online from overseas, its not nearly as big an issue as they would have you believe. Most people would still be buying their kids transformers toys from kmart/bigW without it even occuring to them to look online/overseas for a cheaper price.

my 2 cents

[griffin]

I may be very wrong indeed but if a 3 year agreement was signed during the period when the AU$ was very low that would explain a lot.
....if though the retailers would all have different contract dates & lengths.

I also suspect that there is a bunch of resale price maintenence transpiring between Hasbro & their distributors.

Other retail departments may well have prices locked in for lengthy periods that you have mentioned (I wouldn't know, so yield to those who have experience in that), but since the Toy industry has the ANNUAL toy fair, and sign up retailers to pre-orders every year, their prices would only be fixed for a maximum of 12 months.

And Hasbro distribute direct to the major retailers, so there's no middleman to add any extra expense. The wholesale prices I've seen at Toy Fair (which are more than double the wholesale prices in America) is what is in question anyway... something that shouldn't be happening unless our exchange rate was close to half the US$. (which is hasn't been since July 2002)

The added factor here is that when you have a foreign owned company (like those car companies mentioned in the post above), a commission goes to the head office in that other country... problem with Toys though (and some other industries) is that they have been getting greedy with the massive exchange-rate shift, by doubling the US$ value of our toys, just to make extra money for their American Companies, essentially for nothing (because the foreign countries/branches are doing all the work to sell those products).
Based on the price differences, it appears that a Deluxe sized figure sold in America makes Hasbro America about $2-3 per toy (the yellow bar in my graph)...
BUT, a Deluxe sized figure sold in Australia is making Hasbro America about $7-8 commission - and that's if you give the local branch a healthy profit of about $4 per figure (from the yellow bar). Hasbro America are making a lot more per toy in Commission when sold here than they do from figures they sell in America (at our expense), and make more per unit than the local branch do despite them doing the work selling the stuff here.
Sure, give the Head Office a commission to cover their R&D costs, but not at such a huge margin that ends up making it cheaper to import the product.


I guess with so many figures, factors and variables, it makes it easy for Businesses to price however they want, and confuse the consumers enough to not have to be competitive.
My gripe just comes from watching prices and exchange rates since I started this community 16 years ago... we hit a low of US$0.50 on the exchange rate in 2002 and toy prices went up a lot in a hurry. We've now been at or above parity for the last 12 months - the value of those products have now halved in that time and someone is making all that extra money, because it isn't being reflected by the prices in the stores.

[Seraphim Prime]

Adding in UltraMarginal's point from the News threads, as it holds value for this discussion.

I never put much stock in these sorts of listings as they are often fuelled by popularity or promotional advertising in some way.

Regarding Hasbro's pricing structure though. I have noticed in the podcasts I listen to that deluxe pricing in the US has gone up with prices approaching $15 now in some cases. while at the same time, if you shop carefully here you can deluxes for as little as $23 which while it's not equivalent it's much better than 5 years ago when a deluxe was $8 to $10 in the US and $28 - $30 here.
Keeping in mind the horendous import duties here and the scale differences in the two markets, it's not as bad as it could be. I think we have seen a change in the retail prices here, especially with the Deluxe toys. Whether that's a reflection of a change in Hasbro's wholesale prices or something else is anyone's guess.

Either way, I'd recommend against putting too much stock in a report by a company who's business is to create lists to be included in media to make it sell better so the advertising in the media is worth more.

US prices have been increasing much more, relative to the increases we have recieved over hear. Looking long term, we have had a (roughly) 15% increase in TF prices in the last 10 years, whereas US pricing has increased by (again roughly) 30%. So we are seeing some savings passed on to us.

I really only began collecting with RID, and more intensively with Armada/Energon, but do not feel that (speaking in the long term) that the extra $4-5 that we are being asked to spend per figure is too much.


Speaking outside of direct price V exchange rate comparisons, there is also an economic argument for the higher prices we see.

The Australian market is smaller than the US market. Therefore we receive less toys. Economics of scale indicates that there are certain overheads that need to be paid no matter the size of the order. Therefore smaller batches recieve higher costs per item than larger batches would. In the case of shipping, each shipment to Australia would have similar costs to shipments to the US, however this needs to be spread over fewer figures - effectively an extra 50c or dollar per figure.

Economics of scale also then affect the wholesale price, in that a project will require a minimum turnover to be viable. The US buys many more TF figures, so it's viable to sell them at a much lower price. The AU market does not buy as many figures, so it's not viable to sell the figures to the Australian market at the same price as they are sold to the US market.

I'm not necessarily supporting the practise but, like Prowl, I'm simply trying to show that there is a lot more at play than what we perceive as corporate greed.

[Deonasis]

This is a great thread guys and it should be stickied.

[5FDP]

After all the attention with the US Toyfair, and the Titans being of no interest to older fans, I can wait until BotCon now to buy these things for half the price of here.

It's disgusting how much extra we have to pay for things just because of our location. It was in the news this morning that we actually pay 40% more for Vegemite in Oz than what the Brits do (among other things)