Has American Girl made a wise move into Toys ‘R’ Us?
Photo: American Girl

Has American Girl made a wise move into Toys ‘R’ Us?

After years of being available only online, in catalogs and in its handful of “experiential” shops, American Girl, owned by Mattel, will start selling in select Toys “R” Us stores beginning in late October.

American Girl shop-in-shops — measuring up to 700 square feet — will open in 97 select Toys “R” Us locations across the country. More mini-shops will open in 2017.

At physical retail, American Girl has been only available at the brand’s 20 proprietary flagships in major cities. Many of the locations include eateries where girls can hold tea parties as well as salons where stylists do the dolls’ hair and pierce their ears.

The mini-shops at Toys “R” Us will feature an exclusive selection of American Girl’s Truly Me dolls and accessories. The contemporary 18-inch dolls come in a wide range of skin, hair and eye color that often match the children who play with them. The mini-shops will also carry the brand’s new WellieWishers line, which are smaller, about half the price of its classic dolls, and aimed at slightly younger girls (five-to-seven year olds).

The mini-shops will not carry the BeForever line of dolls based on historical periods in American history that the brand is best known for.

American Girl President Katy Dickson said in a statement that the move comes after years of urging from girls and their parents to increase access to the brand. She said, “Partnering with a top retailer like Toys “R” Us allows us to meet our customers where and when they want to shop and to take our timeless life lessons to even more girls.”

The move is also meant to reverse a decline in American Girl’s sales, which fell eight percent last year and 19 percent in the first quarter. The performance of the Truly Me line has been particularly disappointing.

American Girl’s positioning faces risks in shifting from exclusive to mass selling. Speaking to the Wall Street Journal, Jeffries analyst Trevor Young said he believes the “expanded distribution would more than offset potential margin pressures.”

BrainTrust

"Perhaps they've already strayed too far from the exclusivity and luxury experience that made them so successful"

Bob Phibbs

President/CEO, The Retail Doctor


"Obviously, the recent sales declines are prompting American Girl to seek other distribution options."

Richard J. George, Ph.D.

Professor of Food Marketing, Haub School of Business, Saint Joseph's University


"American Girl has a good experience, but what if, increasingly, it is the wrong one?"

Nikki Baird

VP of Strategy, Aptos


Discussion Questions

Discussion questions: Do you see American Girl’s move into Toys “R” Us as long overdue or too big of a risk to its premium positioning? Are there any guidelines to gauge if a brand is over or under distributed?

Poll

20 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Chris Petersen, PhD.
Member
7 years ago

As a father and grandfather who has bankrolled a number of American Girl purchases, I can unequivocally state that it’s all about the experience.

A very unique aspect of American Girl is that it’s not just a doll. Each doll has a unique story. That story that engages the girls and their parents in a dialog and process of selecting the “right doll.” That process is completely different from purchasing a doll off the shelf at a mass merchant.

The American Girl flagship stores CREATE an experience that can’t be replicated in mass retail. But there are only 20 of them, so Mattel is naturally looking for the magic of “distribution” to bolster sagging sales, Toys “R” Us is the logical choice.

However, the real question is, what will be the American Girl experience in a “shop-in-shop” that will never have the staffing of a flagship store? There seems to be a high risk of denigrating the brand if the American Girl dolls are merchandised in traditional ways and sold as commodities off the shelf.

Dick Seesel
Trusted Member
7 years ago

Yes, Toys “R” Us is the biggest big-box toy chain by far (not counting the huge sales at Walmart and Target) so it’s a tempting decision for American Girl. But I think it cheapens a premium brand, and there may have been other ways to drive broader distribution (and more sales). For example, wouldn’t a traditional department store like Macy’s be a suitable home for American Girl shop concepts?

Bob Phibbs
Trusted Member
7 years ago

First it was Sears taking their few recognizable brands into other retailers. Yesterday we heard of J.Crew putting their merchandise in Nordstrom.. And now American Girl putting theirs in Toys “R” Us. I get it for stockholder needs.

But the blurring of lines does not help you compete, if anything it shows just how bad you are. That 19 percent drop in American Girl merchandise isn’t gonna be replaced by putting dolls that don’t sell into more locations. Perhaps they’ve already strayed too far from the exclusivity and luxury experience that made them so successful. Coming out with half price editions doesn’t seem a novel or bold move.

Dave Wendland
Active Member
Reply to  Bob Phibbs
7 years ago

Well said, Bob. Increasing distribution through new channels does not always raise value. And, in this case, I suspect American Girl dolls will require new levels of discounting to move fast enough to warrant space in a box store like Toys “R” Us, thus reducing the brand’s appeal. Time will certainly either prove or disprove my prediction.

Camille P. Schuster, PhD.
Member
7 years ago

While more people will be able to see and touch the dolls, the experience of creating/purchasing the doll will be different. This approach also sets up the potential for creating two tiers of customers. Execution will determine whether this happens and whether it has a negative impact on the brand.

Richard J. George, Ph.D.
Active Member
7 years ago

Obviously, the recent sales declines is prompting American Girl to seek other distribution options. However, it does run the risk of becoming a toy discounter brand versus its premium positioning generated by its experiential flagship stores. I am always reminded that you can make it with class or make it for the mass, but you can’t do both.

A potential analogy is the Izod Lacoste brand which enjoyed success as a premium brand sold in separate “Izod Lacoste” shops at upscale department stores. In an effort to increase sales the company expanded distribution beyond the noted exclusive channels. As a result, Izod Lacoste lost its target market, sales plummeted and the upscale position or void was filled by Ralph Lauren’s Polo. This is a classic example of how changing one aspect of the marketing mix affects the brand’s image and positioning. American Girl would be well served by reflecting on the Izod Lacoste lesson.

Anne Howe
Anne Howe
Member
7 years ago

I would have guessed that American Girl could have gained more sales and kept the experience intact by using a VR platform on a website. The charm of American Girl dolls is in the premium experience, which will be very unlikely to translate into Toys “R” Us. Pressure from girls and parents to expand access is not really an insight. I see this as a shareholders move too!

Lee Peterson
Member
7 years ago

This falls under the “You know an iconic brand is dead when … ” category. It’d be like selling Ralph Lauren to Walmart. American Girl should have a seance with Nancy Reagan: Just Say No.

It’s kind of amazing to me that the new American Girl execs don’t get the fact that the difficulty in terms of access actually increases brand cachet and therefore allows for higher margins and continued quality. What they should’ve said is, “Because we’re under pressure to make more profit dollars, we’re going to sell out and put our timeless brand in a dying retailer. This will give management in the future the chance to be compared to an overpriced Barbie collection as our quality goes down with sales.”

They probably won’t say that though, huh? Too bad, as you know honesty really works with Millennials.

Steve Montgomery
Steve Montgomery
Member
7 years ago

When a customer enters one of the American Girl stores they enter a different world. A world where they are immersed in the American Girl experience. Like many, I know people who when traveling to Chicago make a special trip to the Michigan Avenue store to buy one.

When you enter a Toys “R” Us store you enter a large toy store engaged in the mass display and selling of a wide variety of toys. While it is a good store to buy toys, it is nowhere near the same type of experience. True the customer will still walk out the door with an American Girl doll, but the memories of the process will be no different than buying a bike or some other toy. From Mattel’s point of view they will sell more dolls but in the process will have denigrated the brand.

Nikki Baird
Active Member
7 years ago

As a parent who now has two carefully wrapped and preserved American Girl dolls sitting in her garage waiting for the next generation, I am of two minds about this question. One, I agree — it’s all about the experience. There is an American Girl store at my local mall, and not only is the store itself an experience but several of the restaurants around the store also offer doll-related experiences, like special dining options for families out for a trip to the store and doll-sized seating at special tables in the restaurants.

But I’ve also seen a lot of knock-offs of American Girl dolls, ones that are exactly the same size but just “not exactly” the same quality or level of detail. If you care about the stories and the brand and the detail (and don’t care about the money), then no matter where American Girl is sold, the knock-offs will pale by comparison — most especially by a direct comparison.

So if Toys “R” Us is going to sell American Girl-sized dolls no matter what, and American Girl retains at least some control over the experience, then they might as well be in the game.

I think ultimately, though, American Girl needs to create a better online experience — a gaming experience or virtual world experience. They have one, but it’s kind of lame. For my daughter, at least, it pales in comparison to, say, Minecraft. Which is why all of our American Girl dolls are now in the garage. American Girl has a good experience, but what if, increasingly, it is the wrong one? Then distribution through Toys “R” Us is neither a benefit nor detraction to the brand. It’s just a delay of the inevitable.

Ryan Mathews
Trusted Member
7 years ago

I see it as a risk. Limited availability is a critical component of the American Girl aura. Take that away and part of the brand allure goes away with it. At best you create two classes of customers: real, authentic customers who travel to American Girl stores and faux, aspirational customers who can only access a limited downmarket assortment at Toys “R” Us. Premium brands flourish in part because they are deliberately under-distributed. It’s a lesson somebody at American Girl ought to pay attention to.

Lyle Bunn (Ph.D. Hon)
Lyle Bunn (Ph.D. Hon)
7 years ago

You go Girl — full speed ahead! When a brand defines itself as a “movement,” transition to include a wider base of people is essential. The cachet may erode slightly, but this cost, against the benefit of more people aligning with and amplifying the brand, is a risk to be managed. There is plenty of brand equity to draw upon, and this should be leveraged as a seed that can produce thousands more seeds. When your product is “inspiration,” go as fast and big as brand equity allows.

Larry Negrich
7 years ago

Shop-in-Shops has been successful for many retailers and allowed them to gain exposure to additional shoppers and benefit from the heavier foot traffic of the host. American Girl should position these shops as a step towards the full American Girl destination experience, not as a replacement.

Patricia Vekich Waldron
Active Member
7 years ago

So American Girl will be the next Michael Kors? So much for experience and exclusivity for the brand.

Naomi K. Shapiro
Naomi K. Shapiro
7 years ago

So I understand that this can go either way: Stay exclusive and maintain the “experience,” which sounds extra-special. Mass sell, which is another way to move product, but without the aura. I don’t fault American Girl for this move, but these are two very different approaches which will have two different long-term results — and the company should be prepared for this outcome. (Maybe American Girl can benefit from an “after the fact” experience, i.e. make the purchase at Toys “R” Us and then direct the doll recipients to the internet for ore information and background — and maybe a whetted appetite to return to buy more.

Mark Price
Member
7 years ago

If you are going into mass retail, American Girl is doing it in the right way. Do not offer the core brand, but keep it for your higher end retail channels. Offer lower priced sub brands and accessories at the mass retail level. In this way, you can keep the brand still prestigious and have access to the volume available through a mass retailer like Toys.

Ken Morris
Trusted Member
7 years ago

I think this is a smart move for American Girl. With declining sales and limited distribution, it is difficult to make a big impact without a bold move. The timing for this move is also perfect, as it will cause more excitement for the dolls right before the holiday season.

While limited distribution can make a brand “exclusive” because it is hard to get, it also limits sales opportunities. American Girl can still maintain a premium brand image by keeping its price point high and refraining from discounting. Most of the dolls are more than $100, which definitely falls in the premium category for toys/dolls.

The other benefit of opening the mini-shops in Toys “R” Us is that it doesn’t require American Girl to make a significant capital expenditure like they would to open a new standalone store.

I predict that we will see more girls with American Girl dolls in late December!

arnold maggi
arnold maggi
7 years ago

American Girl will certainly get a sales jump at Toys “R” Us, but is it worth it in the long run? I have been at both Toys “R” Us and FAO Schwarz in executive capacities and while at FAO tried to get the company to set up a Boutique for American Girl Dolls in our 5th Ave Store; this was back in 1974 and they would not do it. They thought they would lose the brand appeal and get lost in the store.

Now they want to set up in Toys “R” Us??? They will kill the “Brand.” Toys “R” Us is a discount store and not the place for $100 dolls. I know that sales were down, but this is not the place this “Brand” belongs. eventually, it will wind up being discounted.

Goodbye “American Girl.”

Jillian Fisher
Jillian Fisher
Reply to  arnold maggi
7 years ago

You must be mistaken on the year. American Girl wasn’t around in 1974. They started in 1986. And the company has changed hands several times since the founder sold Pleasant Company (the original name) to Mattel in 1998. Sadly, that is also when the brand began declining in the eyes of longtime fans. Sometimes slowly, sometimes drastically, and occasional rebounds gave hope that AG would return to the “good old days.” But right now it seems to be utterly confused.

Jillian Fisher
Jillian Fisher
7 years ago

I have been a devoted fan of American Girl since I was six years old, back in 1991 when my grandmother sent me a housewarming gift of a book, Meet Kirsten. Kirsten was a Swedish girl who immigrates to America in the 1850s. Her family joins more family in Minnesota, but not before experiencing real hardships along the journey.

That book contained a card in the back showing the American Girls Collection dolls and books, and inviting me to send for a catalogue. Naturally, I did. And from the moment that first catalogue arrived, my life changed. Seriously, the brand was that magical. And this was back around the time they only offered historical dolls and had only just expanded to four characters with the fairly recent addition of Felicity, their Colonial girl.

That catalogue (they were always spelled that way) was gorgeous and enchanting. From the cover it set the tone of a rare, precious, magical experience – time travel. Each cover featured a girl and a doll reading a book. That was me, a girl who loved dolls and loved reading. Further, every girl was dressed to match her historical doll and they read the book pertaining to the doll and often the outfit. I had a love of history and learning from birth, practically, and I could just tell, sense, that I had finally discovered “kindred spirits”. Here was a collection of beautiful dolls, historical fiction, and authentic miniatures of historical clothes, accessories and furniture. I could essentially immerse myself in history, and even better, do it through the eyes of a girl my age.

A few years ago, I came across an interview with Pleasant T. Rowland, the founder of Pleasant Company which was the original name of American Girl, regarding her creation and visions for the company. The key point that stood out to me was this: “It was clear to me that American Girl was a thinking girl’s product line.” (Ironically, the end of that sentiment goes “…one that would not sell at Toys R Us.”) That description, “a thinking girl’s product line” was key. I was a girl who was smart and enjoyed learning. So this was a perfect fit for me, and given my continued following of the brand I think it shows just how powerful that idea and marketing were. What set this brand apart for me, as a girl, was never the high price. It was the focus and celebration of girlhood and learning and history. The catalogue opened up a whole new world for me. A safe, inviting, comfortable world where I was truly understood and appreciated. I wouldn’t be teased or talked down to, but instead treated with respect and intelligence.

My family was not affluent. We had the necessities, and were often treated to cheap extras or outings. American Girl dolls were expensive, though at a lower price than today. I was denied a doll for years. Still, I stuck by the company through whatever means I could find. I read and reread every book. I eagerly anticipated each new catalogue, and spent hours upon hours between the covers. It didn’t matter that they were largely the same inside. I soaked up every detail, delighted in every word. I daydreamed about having the matching historical clothes, and envisioned myself back in time, using the precious accessories. I adored Felicity’s bright red hair, her courage and her four poster bed with curtains. As a girl, I had the symptoms of generalized anxiety disorder but not yet the diagnosis, and that bed seemed idea to me as a way of shutting out nightmares and hiding from kidnappers and murderers who I often feared would break into my home at night. I know, that’s not normal sounding, but I knew I wasn’t normal. I was in the gifted class and I was more sensitive than my peers. Either way, I stuck out. I had friends, but the American Girl Collection offered me a much truer sense of safety, acceptance and support somehow. They became my rock throughout my youth. My family split across two states for several years, beginning when I was 10, and eventually my parents divorced. My brother and father had harsh anger, which often scared me and my source of comfort was my Samantha doll (who I finally received as my only birthday gift from my parents on my 9th birthday) and an American Girl book or catalogue.

When we moved, American Girl became my way of making friends. I would talk about them, share my catalogues and encourage others to read the books. My one heartbreak was the loss of my early collection of catalogues when my mom threw them away when she went back to our old house to get a few things out before it was sold. It is now one of her regrets, as she sees me spending $15- $20 and sometimes more to acquire those early catalogues now. They are true treasures, and I firmly believe their look and feel were just as important to the success and impact of American Girl in the beginning. I also feel the move away from that attention to detail in marketing is one of the reasons the company has declined in the eyes of its customers. Along with that change, the company began to focus less on the historicals and that entire experience (they matching clothes were discontinued, and eventually they quit producing the historical cook books, craft books, stationery, trading cards, and other pastimes that really helped one immerse in the world of American Girl at an affordable level even if they couldn’t buy the dolls and their things.) began to diminish and then disappear.

Originally, Pleasant T. Rowland envisioned the American Girl Place (retail store) just as it was when it opened – a special, all inclusive experience for girls and adults to make memories. Her vision included the cafe and a live theater show, as well as charming window displays and other thrills. The live theater show was a musical featuring the historical characters, telling their stories and inviting girls to “imagine life in another time”, as well as to “look to the past, learn for the future”. I got to see that musical when my mom, aunt, grandma and I made a special golden birthday trip to Chicago in 2008 (my 23rd birthday) just to fulfill my dream of visiting the store and seeing the show. It was the final year of the live theater, sadly. Though we were all adults, that store impressed even my aunt and grandmother (the same one who had sent me Meet Kirsten so many years before) who were relatively unfamiliar with AG and not doll collectors of any kind. My grandmother had even been telling me I was too old for dolls. After that trip, and especially after that musical, things changed. They “got” it. That musical exquisitely summarized the stories, lessons and appeal of the characters that it was like Scrooge being visited by those three ghosts. Even in me, and I was already in awe of them! Beyond the cafe (which was so elegant and special feeling) there were life sized displays of scenes from each girl’s time period, often real life versions of the same accessories available for the dolls. And the displays were enchanting. It was like a wonderful museum, with the great bonus that every item was for sale in the gift shop! And at the time, we were even lucky enough to catch a special event taking place in the store, as it was Felicity’s birthday weekend and costumed characters told us a bit about life in 1774 and we made a craft, a makeshift version (construction paper and yarn) of a common toy from the period. I believe a game of graces was even demonstrated.

Another experience AG once advertised was a menu of special events at select historical places around the country. In Minnesota, there was an opportunity to explore Kirsten’s time period during a special ongoing event at Gammelgarden, which showcases pioneer buildings and way of life. Felicity, of course, had a special ongoing event at Colonial Williamsburg. These events didn’t involve meeting the character, as girls were encouraged to see themselves as that character, I believe. Samantha, ever the lucky one, had events at two different places.

Most of these aspects of the brand are long gone now, and I feel they are another part of the reason why American Girl is declining. The stores offer little in the way of special experience now, compared to the original concept. And in that interview I mentioned, Ms. Rowland seems to have only envisioned one American Girl Place: “This would be the American Girl mecca, an extremely special environment with a store, a theater, a museum, and a restaurant.”

By moving too far from the original concept, I think American Girl has lost it’s way. Customers have been complaining for years about the declining quality, value, attention to detail and historical focus. We have seen historicals archived, and the moderns and Girl of the Year expanded. The modern line has gone from having a strong, complementary focus to the historical line to a much more “Barbie” appeal. The original concept for the modern line (originally called American Girls of Today) was that like the characters in The American Girls Collection (the name for the historical line originally) girls today have an important role in society and will have their own part in history. Each doll came with a set of blank books and writer’s guides, for the girl to write her own story about a girl growing up in the present time (generally expected to be the girl, herself, but not always the case). I was in 6th grade when this line really grabbed me. Part of it was the wonderful clothes line they had for girls, that was separate from the dolls actually but still seemed to inspire the same ideal in me. I remember reading the introductory words in the catalogue and feeling tingles of excitement: “She’s just like you! You’re a part of history, too!” And how I important I felt, and inspired. Not just to create my own character and write stories about her, but to truly think about how I wanted to be as a person and what I wanted to do to leave my mark on history. It was always so much more than buying a doll, dressing her in cute clothes and styling her hair. They were my friends, my confidantes, my rock in difficult times. A tough day in school, being embarrassed by a puberty mishap or betrayed by my supposed best friend or losing a battle of stage fright during the spelling bee (again!); whatever it was that the world threw at me as I grew up, I found comfort, and renewed my spirit by just seeing my Samantha doll or flipping through one of the catalogues. I was past the expected age of doll play, but I still held firm to my love of American Girl. They weren’t just dolls. They weren’t just toys. And I never really played with them in the same way I had my Barbie dolls.

From the very start, Samantha had been my special friend. The world of The American Girls Collection had been my special world. I didn’t have to have all of the accessories or furniture, just having one doll had been enough. Just having a safe place to dream and learn and grow had been enough. That’s what American Girl was to me for so long, and why I have continued to be a fan. I don’t see that same level in the current brand, not even close, but there is still some of it there. And I still very much want it to continue, and to grow. I want American Girl to be that sort of friend and world to the girls of today. But I see the mission changing over the years. I sense they are desiring something different now then the original concept. They aren’t the same company, and they aren’t focused quite on the same things. I think they have some of that still, of course, but ultimately they are more mainstream. They have been making steps in that direction for years. They have been doing more and more sales (something never done in the old days), and even discounting dolls. Being a fan these days is tough, to be honest. Stuff comes and goes so quickly, it is tough to keep up. There is a constant pressure to buy now, or miss out. That might help move some product, but it also leads to burnout and frustration. I’ve gone from monthly purchases down to small yearly ones (if that), largely because I feel burned out by the archiving of characters and the introduction of new ones and then in a year or two losing them or losing yet another favorite I was collecting for. How are young girls supposed to enjoy this experience if they don’t have the time to collect for their favorite doll? There is so much emphasis on new, new, new; not on actually playing and sticking with the brand for years as you collect for your dolls.

Prices have gone up every year in the past few years, after only slow increases before that. Yet quality isn’t as great as it should be, though recent products have been showing more promise. But outfits used to have incredible detail, down to working pockets and buttons, accessories that looked just like the original and were made of wood, ceramic, glass and porcelain. Things were not pink or bright or “girly” just for the sake of it, but were a broad range of authentic colors including deep green weber grills for a birthday cookout, black pieces of an outfit to contrast the bright jewel tones, etc.

I apologize for this extra long response. I just wanted to explain my background and experiences with the line, as someone who has been through the entire range of customer experience. I don’t know if I really made the point I wanted to make, which is that while disappointed by this new venture for AG I can’t say I am all that surprised. It seems to be following with their trend of listening to the part of their customer base that wants lower prices, and easier accesibility. In general, those same customers aren’t particularly interested in anything but the toy aspect of AG and see the company as overpriced, larger Barbie dolls. I am not one of those fans, but I don’t seem to me the type of customer AG really wants. I have been feeling that way for several years, but yet find it difficult to completely let go. I see me experience and feelings echoed in many others, too, but I suppose there are likely many more who are thrilled by the changes.