Toy Story: A Conversation with Kevin McGrath, CEO, Original Toy Co., Milford

All across the land, independent toy stores are experiencing something of a revival as parents (and their children) seek a more personal shopping experience during a time when so much shopping has been reduced to the click of a button. Just ask Kevin McGrath, founder and president of the Original Toy Co., who has been in the business of toys for 30 years. New Haven Biz sat down with McGrath to talk about the makings of a good toy, the future of the mom-and-pop retailers and the power of technology-free play.

How did you find yourself in the toy biz?

I originally came into the toy business 40 years ago. I was president of a company called Galt America, based in England, which had been around since the 1800s — one of the oldest toy companies in the world. I ran their North America operations in Canada and the U.S. From Galt, I had the opportunity to create my own company about 30 years ago. We founded the Original Toy Company on August 1, 1989 and it’s always been based in Milford.

Tell us about the company.

We are a manufacturer creating our own product and our own brand. But we are also a distributor, distributing Bontempi, an Italian musical instrument manufacturer and we are the exclusive distributor for Orchard Toys, the leading manufacturer of educational puzzles and games for children aged between 18 months and 12 years. That makes up about 40 percent of our business. The other 60 percent is our own designed and branded product, created in our 15,000-square-foot warehouse in Milford. 

Where do you sell your products?

We sell exclusively to specialty store companies throughout North America and we export to Belgium, Australia and New Zealand. We sell exclusively to mom-and-pop specialty toy stores across the United States, educational supply companies, specialty toy catalogues and on the Amazon platform to FBA [Fulfilled by Amazon] sellers. We have about 80 independent sales representatives that call on those accounts nationwide.

Where can we buy your toys locally? 

Jesse’s Toys in Orange, Evan’s Toys in Hamden and Jordie’s Toys in Guilford. 

How many mom-and-pop-type stores do you work with across the country?

A little over 2,000. That market has shrunk to some degree over the last six years as many stores were not able to survive due to internet sales. 

For those independents that have survived, what has contributed to their ability to stay in business?

By far, they are providing a service to the consumer. Someone’s in that store telling you how to play that game, which toys to check out, what the benefits of that toy are. These are people who stand behind the product they sell and can provide one-on-one service. You’re not going to get that in a mass-market store. 

What challenges do you worry about most?

For retailers, the Internet has been challenging simply because of different pricing structures. [Brick-and-mortar retailers] might be selling a product for $13.99 that you can buy online for $9.99. It’s about convincing people why they should buy locally, and they’re going to get better services. They’re going to be able to see and feel and touch the product, where online you don’t get that. And then there is the real estate end of the business. If they are in a standalone building or in a mall wherever it may be, what they are faced with in terms of operating costs, insurance, and medical expenses can be a challenge. 

[Consumers] are going to be able to see and feel and touch the product, where online you don’t get that.

What has changed since you started?

You don’t have a multitude of mass-market chains. If you went back 20 years ago you had Toys R’ Us, Babies R’ Us and a number of franchise operations scattered around the country. Now you have the big-box stores like Target and Walmart, but they have recognized that there is a need for specialty products, and they are beginning to sell specialty toys in their stores. From a retailer standpoint, it’s very important to keep their merchandise fresh and keep turning it over. Businesses like hardware stores and general stores have gone by the wayside, and those were stores that would have toy sections. The market has certainly narrowed, but the Internet has opened up options for us as well. 

What has stayed the same?

The down-to-earth wooden blocks are always going to be there. Technology cannot replace a traditional toy, nor should it. It’s important that those building blocks are still used by the generation of children growing up today. There’s always going to be that technical product, but the foundation for good specialty toys has not changed. Where you get them may have, but there is a market for that type of market in stores or online. The product baseline remains unchanged. 

What does your annual production look like?

We sell about 250 different types of toys with our [annual] sales ranging from $2.8 million to $3.8 million. Products are made to our specifications and our designs out of Milford and produced in China. In the last 10 to 12 years we have come out with an average of 10 new products that we design. 

The toy business is back ended. The strongest is in the end of third quarter and all of fourth quarter. Twenty five percent of our business is in the impulse category. This is product that you might see at the closeout section of a store near the cash register. They can be in a general store, a hardware store, a gift shop. We try to offer a universal impulse type product because that is day-to-day business so it’s not just dependent on that fourth quarter. 

What’s your favorite toy you’ve created?

The ‘What ‘Zit’ We developed it by accident about nine years ago. It’s a manipulative. It’s sold in a display that’s right on the counter. People pick it up and ask, ‘What is it?’ Well, it’s a What’s It? You can put it into all different shapes. When I developed it, we found out very quickly it was incredibly popular. So we took that concept of the elastic and bright colors and developed a car, a fish, a puzzle, a worm, buildings and other variations. It was one of those things that we designed that put us into a different universe. We’ve done millions and millions of pieces. Everyone from three years old to 99 years old.

What’s the secret to building a great toy?

You have to think about, are you looking to meet a need and fill a requirement? On our side of the business, it’s going to be an item that’s manipulative and involves the child interacting with the product. We want the toy to stimulate the mind, body, feelings — and also be educational. We are not in the business of creating a product that has a 10-minute life[span]. We are in it for the long haul, withstanding years of play.