Overexpansion – Too Many New Products
This past year or so has been release after release for Amerian Girl – far more so than in previous years. Just off the top of our head, here’s what AG has recently added to its collection:
1. Two new Truly Me dolls (#65 & #66)
2. New outfits & accessories for Truly Me, Bitty Baby, & ALL of the historical doll line (that’s a lot at once!)
3. The new 15″ Wellie Wisher line (5 new dolls)
4. New Historical Character, Nanea
5. Tenney Grant & Logan Everett (contemporary line)
6. The usual Doll of the Year, Gabriela
7. Suzie “Z” Yang and the Z. Crew (contemporary line)
8. Rerelease Historical Doll Felicity
9. The Mega Construx Line with mini-Wellie Wishers
While as a consumer you may be excited at all of the new products, introducing a whole lot of new products at once opens a business to instability. Each of these new products – particularly the new lines like Wellie Wishers and the Contemporary Line – involves millions of dollars in research and development, design, and production. As such, they each carry some financial risk for the company to launch. The more products launching at once, the more financial risk accumulates. In addition, the new products may compete with themselves or earlier products instead of adding to the company’s overall growth.
Take for example a five year old. Previously, you might have bought her an American Girl Doll Samantha as her first real doll for $115. Now, though, there are Wellie Wishers, which are only $60 so you get that instead – losing the company $55. American Girl may be hoping that you buy Samantha in a year or two so that they can capture two sales and instead gain an additional $60 in sales. But, it may turn out that the five year old loves her Wellie Wisher and doesn’t want Samantha, or that you will have bought her a new doll anyways in a year so they still have lost that $55.
Now take a nine year old with two AG dolls already. AG has released six new dolls since the last time she got a doll. You obviously aren’t going to buy her all six new dolls. She gets to choose one doll. Those six new dolls are all competing for that one new sale, plus all of the original dolls that haven’t been retired. That makes 10 historical dolls (soon to be 11 with Nanea), one doll of the year, 40 Truly Me dolls, and 3 contemporary dolls to choose from. The nine year old decides on MaryEllen. All of those millions sunk into the new products, and they get no new sales.
All of these new products and lines are an investment which may not pay off. The market may not be able to support such a huge expansion in their product line so quickly. Consider American Girl’s expansion since Mattel bought it: the average number of dolls released per year was 2.08 over the last 12 years. There are now 6 normal AG dolls released in 2017, plus all of the other developments.
Of course, AG will get some sales. Collectors – like the people who read this blog – will probably buy all the new dolls and their collections before they are retired. But sales to collectors cannot support the entire business.
We’ve also been closely following American Girl’s trend of changing the dolls to make them cheaper. There was quite a bit of controversy when AG announced that they would be selling all but a few of their Historical dolls with sewn-in underwear. After lots of comments, American Girl released a statement that part of the reason for this was to save costs. No surprise there. In May the company reversed its decision and decided to stick with removable underwear.
Changes to the interior of the doll, while not widely publicized, are likely for the same reason. This includes zip ties instead of neck strings and the elimination of metal fasteners. We’ve also noticed that customers are receiving less and less when receiving new a doll – Truly Me no longer comes with charms or an activity guide, Logan comes without a book, Meet Outfits are containing fewer pieces, and non-historical line hair is becoming thinner.
Overcommercialization of a “Luxury” Line
American Girl has also opened up its distribution line to get more products in more stores locally. It is testing selling AG dolls and accessories at Toys R Us and Kohl’s. While ideally this gets their products in front of more consumers, and therefore generates more sales, there is also a downside. Part of what makes American Girl so desirable is the perception of quality and exclusivity; they sell a “luxury” doll product. Every girl wanted one, but not every girl got one. If you did get one, you treasured her and saved her to pass her down to your sister, daughter, or niece. A trip to the American Girl doll store was an immersive experience and highlight of the year. You couldn’t just walk into Toys ‘R Us and pick one out like you can with a $35 Journey Girls doll. American Girl Dolls aren’t special anymore, they are just another doll.
American Girl Dolls have their own section of the Toys ‘R Us and Kohl’s stores, so they aren’t lined up side-by-side with other play dolls. However, it is very easy to price compare two dolls when they are 10 feet apart. It is hard to justify spending $115 on a luxury doll when a similar looking doll is right in the same store for $40 or less. Same goes for the clothing and accessories.
They’ve Tried It Before
American Girl has introduced similar product lines before without great success. Compare the Wellie Wishers to Hopsocotch Hill, Dolls of Many Lands, and Angelina Ballerina. All of these resemble Wellie Wishers and have been retired or sold off due to poor sales and lack of interest.
Furthermore, American Girl retired the Bitty Twins in 2016 to make room for the Wellie Wishers – which might have been a mistake. The Bitty Twin line was first released in 2003 and redesigned in 2006 to look like toddlers, and sold well enough to last fourteen years. With the difference in age range (Bitty Twins for age 3+ and Wellie for 5+) AG seems to be undercutting itself. Personally, we would have replaced Bitty Baby with Bitty Twins, since there isn’t much to differentiate a Bitty Baby from any other cheaper baby doll.
Then we have American Girl Doll Caroline from the Historical Line. Caroline was released in 2012 and retired in 2015 – only a three year run. The original 3 dolls were out for 20+ years, and then re-released. Josefina, Kaya, Addy, and Kit have yet to be retired, and have been out for at least 15 years. Even Julie and Rebecca have been around for a respectable 8+ years and still going strong. Rumor has it that Caroline was a failure in part because she had such an expensive collection, she didn’t have a great storyline, and there were copyright issues in Canada.
Caroline shows us that not every Historical Doll launched will do well. Low demand will result in low profits and quick retirements to stem the bleeding.
It is possible that all of the new American Girl releases will do well and the company’s profits will grow considerably. However, the financial risk associated with having so many new releases makes us nervous. Their track record is not great outside their Bitty Baby and normal AG doll lines. They are also facing issues with cut corners leading to declining quality.
We are hoping that everything will work out, but we wouldn’t be surprised if we see signs of financial instability in the next few years. Since American Girl is privately owned, they don’t have public stock for us to track. Therefore, signs of instability will be more subtle. This might be manifested in the fast retirements of these new dolls / lines, a high rate of retirement of more established dolls, fewer AG stores opening, no raises for store employees, changes in company leadership, and further alterations in doll composition.
American Girl has already pulled back some of their changes. They have reversed their decision on including sewn-in underwear in their dolls. They have also decided to go back to their original boxes, instead of continuing to print the very nice but very heavily inked and detailed boxes used by Tenney and Logan. They have also retired some of the Just Like Me dolls.