Why strong vendor partnerships are essential in a challenging retail climate

Josh Bonello, sales director of BMS Brands, right, with MD David Smith.
Josh Bonello, sales director of BMS Brands, right, with MD David Smith. (Source: BMS Brands)

At last month’s Toy Fair in Melbourne, Josh Bonello, sales director of toy manufacturer and distributor BMS Brands, recalls every retailer he engaged with saying they wanted to forget 2023, a terrible year for most. 

“But everyone is more optimistic about this year,” Bonello tells Inside Retail.

“Most vendors and most retailers are looking to this year with resolve and with a sense of quiet optimism. The overall response we saw from the Toy Fair was that yes, 2023 was a year we’d rather forget, but this year there is a lot more to look forward to. Most retailers have worked through the challenges they had with the supply chain and with their inventory levels and overstocks, so they are creating more space on the shelf.”

Sydney-headquartered BMS Brands is an emerging Australian toy company that is taking on mass-market toy retailing domestically and abroad. Founded as a niche book wholesaler, the company expanded into toys six years ago and that category is now its main focus. Last month it beat major multinational brands to win the Kids Choice category at the annual Toy Awards, organised by the Australian Toy Association in partnership with Just Kidding magazine, for an electric-powered water gun under its fast-growing locally developed Kazaang brand.

Bonello says that with inflation coming down and the Reserve Bank able to keep interest rates on hold, there is optimism in the air. However, “every retailer is still adjusting to the new climate”.

Overcoming such challenges requires partnering between vendors and retailers – through open and honest conversations, he says. Both parties need to work together to identify improvements that can be made in product development, supply chain and price, and of course, sell-through. 

“From a retailer’s perspective, the biggest challenge has been managing inventory. That has been the number one challenge for most retailers, small and large. The last four months we’ve noticed that – especially the bigger retailers – they’ve had a problem or a challenge with sell-through and their stores have been full to the brim with stock, simply because there was a slowdown in the retail trade that came off the back of all these interest rate rises. And Christmas sales while good, weren’t great” 

“We understand there have been a lot of challenges in the market. And a lot of those challenges in particular have been totally out of the control of the retailers themselves. The message that we’re trying to get across as a vendor in this massively competitive space, is that we’re always here to help. That speaks volumes in the current climate. As I have always said to my customers, it is a journey and we are far from our destination, so let’s tackle the hard stuff together.”

BMS Brands is more agile than its industry counterparts – largely because it is a smaller company, adaptable and ready to make changes quickly.

The TikTok effect

In terms of trends specific to the toy market, Bonello says there has been a “massive surge” in products popularised on TikTok. 

“TikTok can essentially make or break a product or a concept. That has become quite prevalent during the past year.” 

He cites an example of a concept called Nanocraft – a double-sided inflatable tape – which you can decorate, write on, or fill with confetti. 

Last year, there were more than 1 billion views of different people creating things with Nanotape shared on TikTok. “We saw there was a huge interest so when we launched our own range of nano crafts, there was huge interest from retailers.” 

Amazon, too, has enormous influence, given that it is the largest retailer in the world. “If a product does well there, the one challenge that a retailer might have with certain products or concepts that sell well on Amazon is that there is an endless variety available online.”

Some sellers gain a competitive advantage because they’re running on very low overheads and all they’re doing is listing their product on Amazon. “It can be a massive driving force for products that trend, so the challenge we have in the toy industry is if you are not working on a particular product or concept that is trending on Amazon, you can essentially lose out, especially if you don’t have the right team and people around you that are analytical in their approach to understanding what is trending. And if you are not generating demand for what you create through marketing, you are wasting your time ”

The importance of brands

While brand and licencing partnerships are important in the toy market, according to Bonello, BMS Brands has achieved the seemingly impossible with its Meccano-inspired range of kit-set toys under the Construct It label which now spans 140 SKUs. “Construct It was a learning curve for us because we were coming up with concepts we thought were great, but we were so naive about what was trending.” 

After “six years of development and trial and error” Construct It has grown to be one of the company’s most successful brands, with products conceived and designed in Australia and manufactured in China. But despite that success, the company is now looking at opportunities to partner with licensed brands – a recognised auto marque for a Construct It car, for example. 

“Licencing can be a massive growth driver for a business if they take on the right assets or licences,” he explains. “Sure, you can do it without – we did it with Construct It – but branding and licencing are the cornerstones of any good toy asset. Some of the most successful toy companies in Australia own some sort of asset, or have a licenced one, that has essentially driven the growth, success and survival of their business.” 

Stem – Science, Technology, Engineering, and Mathematics – is an increasing focus for BMS Brands as it looks to create toys that educate as much as entertain with key players in the retail space now collaborating with Bonello on concepts and private label brands. The company targets children from six months to 12 years. 

Under the Craft For Kids brand, Bonello and his team have developed a range of toys that can be painted or decorated, such as nesting dolls, of which 60,000 have been sold. 

How a water gun blew away rivals

BMS Brands’ most recently developed product range, Kazaang, has had the highest impact yet. “We developed it in a relatively short time. Essentially, because Kazaang is specific to outdoor toys, we wanted a summer 2023 launch. The brand message is encouraging kids to get outside and have fun.”

The rechargeable electric-powered water gun “CrossXFire” is selling in high volumes and attracting export interest, despite a price tag of around $50.

“Everything at the moment seems to be driven by price, but our water guns aren’t an impulse buy and certainly discretionary spending but they are doing incredibly well at the current price point.”

Bonello proudly recalls the moment the product won the Kids Choice category in this year’s Toy Awards. 

“We were up against some pretty heavy hitters in the space like Mattel, Lego and Hasbro so we were elated when we were announced at the gala dinner. I thought there must have been a mistake – a couple of young guns, David Smith (MD) and myself, and we won the award. You can imagine the celebration afterwards”

In addition to the Kids’ Choice Award, Bonello was honoured with the prestigious Rising Star Award. “That was the icing on the cake, to be recognised as an up-and-comer in the toy industry has been a privilege and I am really looking forward to what this will mean in terms of leading the industry”.  

That accolade has already had a positive impact on BMS Brands, triggering the interest of large retailers looking around for something new and different – and providing the company with a doorway to share its other products.