From Panini's The Knight's Lance Blog comes new from the 2011 Industy Summit regarding Panini America’s new distribution plan and pricing policy.
Mike Anderson, Panini America vice president of sales has provided a first look at some of the pertinent details in this question-and-answer format.
Panini America has called 2011 “the year of the hobby shop.” What exactly does that mean to you?
We have always believed the brick-and-mortar store to be the lifeblood of our industry, but the hobby stores have been under siege by Internet sellers that have no overhead and can undercut the hobby store prices. We are implementing some distribution changes that will give hobby stores the advantage and start to direct traffic to and through storefronts.
“The year of the hobby shop” is not a simple campaign slogan but a very real commitment by Panini America.
What factors led Panini America to make such major changes to the way it distributes its hobby products?
Current distribution models offer no incentive for people to open new stores or expand their existing business and we have to reverse the trend. Without some intervention by Panini and a change in our distribution model, we could only expect more stores to close and begin offering products online.
Manufacturers have been hesitant to address the Internet issues because of the significant revenue generated by the internet sellers, but it is now critical we take a stand. We finally feel we are in a position to make a difference. Panini America is a leader worldwide and as a true leader in the category, Panini America is willing to risk losing short-term internet sales to preserve and protect our true retail partners – the hobby store.
What are the key long-term objectives of the new plan?
To give hobby stores the opportunity to thrive again. To rebuild the community that used to surround the store. A place where people could come by the store, open packs with their friends, brag about their treasures and have an enjoyable experience.
We hope the store owners will make better profit margins that will enable them, with Panini America’s support, to reinvest in their business and, simply put, grow again.
What are the key differences between how Panini America will distribute going forward and how the company has been doing it?
There are several key differences, starting with our minimum advertised price policies (MAPP). We want to protect the stores that have overhead costs by making sure no other competitor (primarily Internet sellers) offer the same Panini America products at a “cost plus” price point that prohibits or prevents. We are also providing a seven-day window for the store to sell product without interference from Internet sellers. If a consumer wants the latest Panini America product, they will have to find their nearest hobby store, at least for a week.
As a 30-year industry veteran, what aspect of the new plan most excites you?
It is fair! We have watched a lot of changes take place but not always for the benefit of everyone in the industry. I think it is clear to anyone that has ever purchased a Panini America product that we are trying to deliver good values at fair prices. No games!
We now have the opportunity and enough support to make a difference in how these products flow through the marketplace.
Good products, fair prices and a solid distribution plan is a recipe for success. We recognize if our consumers, retailers and distributors win, we will win.
What do the new policies mean to traditional brick-and-mortar storefronts?
It means they finally have a friend in the industry. They finally have someone who understands their situation and is willing to take a stand. It means they have a reason to be optimistic again.
What feedback have you received thus far from those most affected by the changes?
I have heard from countless stores that were “on the brink” of closing their stores. Our commitment has made the difference in their decision to renew leases, commit advertising dollars and involve their family in the business. We are so excited to see this renewed enthusiasm. It is a reward in itself.
Perhaps more than any other group, online retailers are the most impacted by these new procedures. What does the new program mean for them?
We have talked with many online retailers and every one of them has been supportive. Everyone recognizes the need for change and if we strive to be fair to everyone and everyone can start to profit again, everyone will win. Even the Internet sellers have been caught up in price wars and they welcome the relief. A “high tide raises all boats” and a fair distribution plan will definitely raise the tide.
I believe we have been supported by everyone in the entire food chain because we want to insure a place for everyone. We are not trying to eliminate anyone. We’re trying to level the field. MAPP will allow internet sellers to be profitable again because they will no longer compete solely on price. We hope everyone will compete on the service they provide rather than who can sell the cheapest.
What does this new plan say about Panini America’s commitment to the long-term viability of the hobby shop and, as a result, the hobby at large?
This is a major commitment to the hobby store and to the industry and I am grateful the senior management (Mr. Sallustro, Group CEO in Italy, and Mark Warsop, CEO at Panini America) has encouraged these changes. Programs similar to ours have failed in the past because it takes some time for everyone to adjust to the new flow of product. We are already hearing of some large “buyers” frequenting hobby stores and getting re-acquainted. We hope everyone will help make this a smooth transition.
We need everyone to support our products now more than ever.
What will the industry be saying about this program one year from now?
I hope they will be saying they are proud to be in this industry. I hope they will recognize our intentions were honorable and Panini America made a difference. I hope they will be suggesting to friends and relatives that they should take another look at our hobby. It’s safe to come back in the water again.
Finally, in the 24 months since Panini has entered the U.S. market, what one thing has stood out to you the most?
Wow, great question. It’s hard to point out just one thing because the energy and everything that we’ve been doing has been moving so fast when you look at where we are today. I’d say I’ve been impressed with the adoption in the mainstream to our U.S. sports sticker collections. But as an insider, the one thing that stands out the most is how we went from one exclusive NBA license to securing one of two licenses with the NFL and NHL, and how fast our production teams have had to ramp up to produce another 40 collections — and that’s just on the sports side. That’s a huge undertaking when you talk about the products we are building.