Common business problem number 8: market changes
I spent most of my career in the consumer products industry, namely in clothing, toys and seed products.
One of the benefits of selling consumer products is that it can be a relatively low barrier to entry. That means it doesn’t require much capital to get started. You can print a hundred t-shirts and start selling them under your new, super cool apparel label without a huge investment.
However, there is a big con that people often don’t pay attention to which is the necessity to take into consideration trends, styles and consumer desires. And that has led to failure after failure of some of the most iconic brands.
Trends: Cabbage Patch Kids
The Cabbage Patch Kids was a line of cloth dolls with plastic heads with soft fabric bodies, first produced in 1982 by Coleco Industries. It was said that they “grew” in a cabbage patch and no two were the same. And you didn’t buy them, you adopted them. Cute.
At the peak of their popularity, between 1983 and 1986, the dolls were highly sought-after toys for Christmas. Cabbage Patch riots occurred as parents literally fought to obtain the dolls for children.
In 1984, Cabbage Patch dolls and accessories produced a staggering $2 billion in global revenues. The fad predictably ended and Coleco’s sales plummeted from over $800 million in 1986 to nothing in 1988 when the company went out of business.
To their credit, Coleco tried to introduce new toys, but nothing caught on like the Cabbage Patch dolls and their overhead was far too high as they hired people and leased space to fill the demand for their dolls. When the fad died off, they couldn’t react quickly enough to cut overhead.
If the toy industry is the king of trends and fads, then the fashion industry it the queen of shifting styles.