When it comes to selection, display, and abundance of choices, nothing can compete with the hands-on experience of shopping for adult novelties in a well-stocked retail shop. While online retailers have had success selling novelty products, you can't beat the brick-and-mortar opportunity to touch, feel, and size up an adult novelty product.
Having studied retail customer buying habits, I can tell you that the impulsive nature of a toy purchase means that a few bucks make little difference to the buyer if the product promises a potential for pleasure. Lowering a price at any stage in the distribution chain from manufacturer, to distributor, to retailer, to consumer, in most instances, never leads to more sales ... just less profit.
Take it from a veteran of 39 years in the adult industry: Once you lower prices at wholesale or retail, it becomes very difficult to ever raise them back up. Sounds simple, but especially in a down economy, holding the line on price is more important than ever.
Back in the early 1980s, when theatrical adult movies and 8mm films were in their final days (an inevitable result of the home video industry), there was a very short time of "bargains" for consumers in the market before the new technology completely took over. Home video was the wave of the future, and the adult industry was at the forefront of film-to-video content.
As more VCRs were sold, a trend attributed by many to the large amounts of adult fare available, theaters closed; as we all know, the rest is history. Producers began flooding the market with film-to-video transfers, and competition dictated that pricing held up for several years before starting a slow downward spiral.
Then, producers started shooting directly on video. This medium opened the door for less expensive productions (less crew, lighting, elaborate sets, and post-production costs). The market opened wide for producers who otherwise lacked the technical know-how and financing to pull off a 35mm film shoot. It seemed that anyone with a video camera, a bed, and a few bucks could throw together a production.
Pre-Internet, adult films were still "forbidden fruit" in many respects; there was no logical reason to slash prices other than cutthroat competition. A very different adult film industry emerged; in many ways, the advances made and enjoyed with the Internet are creating a similar shakeout in an industry already reeling from an economic downturn and loss of consumer spending confidence.
So, how does this history lesson relate to the adult toy and novelty business?
First of all, I don't believe there will ever be an adult toy instantly available online for free. The costs for materials, components, manufacturing, and packaging of novelties have gone up steadily over the years. There have been no great changes in manufacturing technology that would create any major disparity in pricing as, say, switching from 35mm film to video or VHS to DVD.
In fact, novelty manufacturers today are fighting continual cost increases, almost on a daily basis. The cost of raw materials, especially the hygienically superior types today's market demands (silicone, TPR, TPE), has been rising steadily. Labor costs continue to rise, whether we produce domestically or overseas. It has become a constant battle, but it is one we must undertake to keep retail prices at a level that allows the masses to enjoy our products.
But the biggest problem in the novelty business, one that keeps rearing its ugly head, is unnecessary discounting in the wholesale market. This causes slim margins for distributors; so slim that many feel the pinch on a daily basis.
Full-service distributors, who invest very heavily to maintain an inventory for retail orders, are heavily dipping into their profit margins to give stores discounts and other considerations to get business away from a competitor. To make matters worse, these extra discounts don't usually make it to the consumer. Not a good situation, as manufacturers have been working on a set profit-percentage basis that allows no room for additional discounting at the head-end of the manufacturing process.
Simple translation: If this does not stop, distributors will, just to turn a buck, put themselves out of business.
So, what's the answer?
The toy and novelty business is growing and will continue to grow as more retail venues grasp the sales potential and demand for our products. Yes, we are feeling the effects of a down economy -- but if we have learned anything over the years, it's that when it comes to sex, consumers will somehow find the money.
While consumers are watching their pennies until the economy starts turning around (and it will), we, as an industry, must make some hard choices now to save our future. Cutting back costs and overhead, while often a tough call, will trump lowering prices in the long run. Once the discounting starts, it's an inevitable spiral downhill. And if the established distribution network does not survive, retail stores will surely struggle to maintain a diverse inventory of products that they are accustomed to stocking, and consumers have come to expect.
Now is the time to take stock of the situation and get busy making changes that will pay off in the long run.
Distributors: Ask the manufacturers for any and all sales aids, training aids, display pieces, and promotional items they have available. Use any and all sales aids to help retailers build effective displays. If a manufacturer has a sales representative in your area, ask them to work with your sales personnel, as well as your key accounts. Get your people on the phone and/or on the street to work hands-on with retailers. Simply sitting around and being an "order-taker" won't do during tough times.
Retailers: Now is the time to get creative and be aggressive to make sure there are no stones left unturned to get a sale. Work extra hard with all sales associates and be sure they understand the importance of the up-sell and accessory sales. Batteries, toy cleaner, and a good lubricant should accompany every toy sale. You would be surprised what a new "look" can do simply by moving existing inventory around inside the store in a new display. Regular customers may notice something that was previously "lost" in a forest of products, and that can happen only if the extra effort is put into creative and regular display changes. Creating new "looks" can be achieved with very little effort, and will pay big dividends.
Most importantly, fresh new products must be added to store inventories on a regular basis in a "New Product" area. Customers do have their favorites, but with an ever-changing lineup of new and exciting items, and with all the great new features, materials, and functions, you will keep them coming back for more on a regular basis.
The bottom line: Hang in there, don't panic, make some cost-cutting moves, go the extra mile, keep it fresh, and don't give in to the temptation to lower prices. In the long run, this strategy will position your adult novelty business for longevity and stability in any economic climate.
Al Bloom is the director of marketing for California Exotic Novelties.
