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Panini Sales VP Mike Anderson Addresses New Distribution Policy, ‘MAPP’ Pricing

March 21, 2011

LAS VEGAS — Aside from Panini America’s trademark Black Boxes, arguably the single most anticipated aspect of the 2011 Industry Summit came Monday afternoon with the long-awaited public unveiling of the company’s new distribution plan and pricing policy.

Mike Anderson, Panini America Vice President of Sales, sat down with The Knight’s Lance to provide an exclusive first look at some of the pertinent details, just minutes before addressing the more than 130 retailers in attendance.

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.

16 Comments leave one →
  1. Sean Dickerson permalink
    March 21, 2011 3:08 pm

    What prevents these dealers from selling online, or taking preorders and selling them online the week before internet dealers? Or what prevents these dealers from selling to the internet stores?

  2. joe rodriguez permalink
    March 21, 2011 3:52 pm

    Hi…Good Luck Mike Anderson ! All of my Friends have stores out here in New York City, They sell in the store and On-Line on Ebay and other sources, giving the Store owners a 7 day window..i dont think makes any difference at all…Most Store owners are Internet sellers…I dont get where youre going with this ?

  3. KZed permalink
    March 21, 2011 4:11 pm

    It sounds like this policy assumes that a dealer sells in EITHER a brick-and-mortar OR on-line. What about retailers who do both?? Are you saying that a large retailer who has a presence in both arenas can only sell in thier stores for a week, THEN can offer on-line??

  4. Tony Frisa permalink
    March 21, 2011 6:32 pm

    Mike, nice gesture but most enthusiasts will be willing to wait the 7 days to purchase online if there is a considerable savings. Sure some enthusiasts will want to be “first in line” for new product, but wouldn’t this play in hobby shop’s favor and unfairly allow them to charge higher prices for those exclusive 7 days?

    I personally appreciate the design and quality of your product over all others in the market. As a collector however if I were asked what Panini could do to improve itself it would be to offer fewer redemptions and have a quicker turn around on those cards redeemed. Nothing is more frustrating for me than finding you pulled a great card that turns out to be a redemption. Except of course having to wait in excess of 4 months to get it.

  5. March 21, 2011 7:48 pm

    I am curious to hear more about what the minimum advertised price policies (MAPP) will mean for the price of cards.

  6. Chris Barr permalink
    March 21, 2011 8:06 pm

    I have a question about those of us in areas that have limited options. For example, hockey isn’t a big seller here in San Antonio, so shops are reluctant to order much product. If our shops won’t order it, are you forcing your buyers to wait a week to buy your product on-line due to the lack of shops carrying your product when we’ve been able to buy it immediately in the past?

    I can’t see you forcing a shop to carry a certain sport that doesn’t sell well in their location, so what options to we have now?

  7. Brandon Gable permalink
    March 21, 2011 8:48 pm

    As a consumer, I go out of my way to support my local hobby shops. They provide far better service and a much friendlier environment for all my hobby needs and I don’t mind their higher-than-internet pricing. That said, the bottom line is that MAPP is going to raise my prices everywhere. Even if Panini doesn’t raise their prices a single penny, the fact is they’re eliminating or severely truncating competitive pricing. Without internet pricing competition, we’re going to see the price of popular products rise much higher, much faster. And we’ll see the price of less popular products stay unreasonably high. The biggest reason retailers are able to move less popular products is because the price has come down, few people would be willing to bust bad products at their original price. 2010 Topps Chrome Hobby (to cite a competitor’s bad product) would be clogging up warehouses till doomsday if retailers HAD to sell it at $85/box. MAPP might surprise me, but right now I think it’ll be VERY unpopular with consumers down the line.

  8. Don Johnson permalink
    March 22, 2011 12:49 am

    This makes me sad. It is difficult for me to get to a card store due to medical issues sometimes. Even worse, when I do get to a shop, they usually don’t have the product I am looking for (finding Hockey is tough here and Football sells out quickly), so I like the ability to order online and rip open product on the day it comes out, just like people who can make it to a shop (and if I open cards and re-sell them online, the people who post their cards to sell first make a premium). Plus the local sales tax here is really high. And not everyone loves kids running around when you are spending hard earned money (like when a 10 year old sneezed on a NT box), so going to a shop isn’t always fun for me.

  9. John Kenney permalink
    March 22, 2011 6:01 am

    it’ll be interesting to see how this will affect the hobby …..

    in our experiences the “Mom and Pop” shop is just about done, our closest LCS is borderline “criminal” when it comes to pricing, charging double of our favorite destination which is well over an hour away ….. the one we prefer does internet sales and promotion allowing them to move more product, and in return charge less for hobby boxes while still maintaining their profit margins.

    allowing LCS’s to compete in a fairer environment is a good thing, the problem I see is that pricing will go up substantially limiting the amount of product we will be able to purchase.
    since we live in Canada our experiences may vastly differ from those in the States ….. the hobby here is already on “the edge” and hopefully this will not hinder it further.

    my proposal is to get the manufacturers more involved with LCS’s via promotions and special events ….. have a “Panini Day” at a selected LCS, have “Panini Pro Staff” visit a store for a day or two, telling folks about how cards are built, promote new products and maybe give out swag to folks (especially kids) that visit during that time ….. this is something I’ve wanted to discuss with you for some time now ….. if you really want to get folks back to their LCS, I feel you’re gonna to have to promote them vs. give them “better pricing” and structure.

    I feel that this will give collectors a “reason” to visit their LCS, maybe introduce more kids into the hobby (which is where the hobby hurts the most) and give dealers a great advertising venue that they can promote in a thousand different ways 🙂

    imagine a shop being able to have multiple “Panini Days” promoting all sports at different times of the year, maybe (depending on their market) they could even have signings from professional sports players on the same day ….. can you imagine the look on a kids face as he pulls a card of player “x” and he’s in the same shop signing autographs ….. could there be a better experience or memory to get a kid started in the hobby 🙂

    I would like to talk to you in greater extent on this, I honestly feel that this could be a great way to get the hobby back into the hands where it needs to grow ….. it’s true “grass roots” ….. kids 🙂

    • March 22, 2011 8:23 am

      Good stuff, John. There will be more details coming on this announcement but we apperciate your ideas on helping with shop promotions. We often work with hobby shops to help them with their events and we will continue to do that.

      • John Kenney permalink
        March 22, 2011 3:20 pm

        thanks Tracy ….. I have a ton of thoughts I’ve been putting together and if you want I can forward them to you ….. I really think that this could add a whole new dimension to the hobby in 2011 🙂

  10. Scott permalink
    March 22, 2011 6:05 am

    I admire your intentions here, but from this brief description of the plan of action, I think this is simply the wrong way to go about it. I hope we get more details about this, as I’m currently pretty discouraged, despite the fact that I purchase nearly all of my boxes from the LCS. I suppose this is yet another sign that I should abandon buying boxes, and stick with purchasing singles from one of the largest retailers on the internet instead.

  11. March 22, 2011 10:38 am

    I understand the concept, and love the nostalgia you guys are looking for. But what you’re attempting to do is make the economy go backward. Why are some card shops failing while some are doing great? It is possible that some of these card shops that are close to going out of business are doing so because of other factors? Poor management? Not keeping up with current trends? Not competing well? There are a lot of retailers out there who are managing to stay in business despite Amazon. Propping up a failing business with inflated prices isn’t exactly going to save the hobby.

    While I do understand where you are coming from here, I’m afraid that this is all designed to be good for SELLERS of cards, and those of us who collect will end up the losers. Cards are already expensive, and online retailers have given us an outlet, if you will, from that. If your intent is to help store margins by lowering YOUR distribution costs, then I applaud this move. However, somehow I don’t think that’s what you intend. By jacking up the minimum cost of a box for internet retailers (without adding more value), you are in essence adding a “local card store tax” to every single box. And when you artificially raise the price of something, you sell less of it. I can’t emphasize that point enough. When you artificially raise the price of something, you sell less of it. THAT’S how the economy works, and you can’t buck that with nostalgia.

    Take me for instance. I can get a couple boxes a month of Crown Royale at Blowout for $150, free shipping, no tax. And that’s about all my budget can handle in a month (probably too much actually). My local card store would have charged me $200 + $14 tax. Is the “nostalgia” or “sense of community” I get at the local card store worth an extra $64 a month? I’m sorry, but it just isn’t. I would only be able to afford 1 box of cards a month at $107 if I lost my internet options, which would effectively cut your sales from me in half. The store might have made a sale of one box they otherwise wouldn’t have, but Panini just lost a sale, and will end up with less income overall. The same might occur if you forced the MAPP up to $85 or $90 online. I will buy 1 box a month instead of 2. All you will succeed in doing is lowering your distribution.

    I might also add that MAPP might not work well for you. I’ve noticed right now, products tend to find their “market value.” If your MAPP is above perceived market value, your product is going to sit on the shelf. And what sets market value? EBAY. Sorry, but nothing you do, no strategy you come up with, is going to change the fact eBay is what sets market value now. So unless you have some plans to increase the value of your cards, this policy seems to be working directly against the way the economy works. Some customers might swim along, but those of us who have a budget (and I assume that’s a lot of us), are simply going to be able to afford to buy less cards. Unless of course after a window of time (say 2 months), you will negate the MAPP on a product and allow internet retailers to sell them the way they already do, and those of us with patience can wait that long. Otherwise, this plan seems to fly in the face of economic principles. I DO want what’s best for the industry, but at the same time, I only have so much money.

    • March 22, 2011 11:53 am

      Great, well-stated points, Paul. We’ll be posting video later today that should shed additional light on the new programs and addresses some of your points. Thanks, as always, for the feedback.

  12. March 22, 2011 2:13 pm

    I was at the presentation and had a chance to talk to some on the Panini Staff. I have collected since 1957 and have owned a storefront since 1991. While products today are better than ever, the whole hobby experience has been suffering. Resale values of products and singles have deteriorated, many collectors have left, and fewer new collectors enter the hobby. Panini has a plan in place that will adjust as necessary, but will hold a steady course towards improving the fun factor and the overall health of the hobby. Give it a chance to work.

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