At Mattel, Playtime Is Never Over

Faced with an evolving retail environment, toy maker Mattel’s general manager and country head, Sanjay Luthra, has been forced to think like an emerging-markets expert

Growing up in New Delhi, India, Sanjay Luthra didn’t play with Mattel’s products. And while he’s risen from a middle-class upbringing in New Delhi to become the Canadian country manager to the world’s most well-known toy manufacturer, Mattel Inc., Luthra never intended to go into the toy business.

“My father always used to say that getting me the best education in the world is the best gift he could give me,” Luthra says. “And that’s what he did.” After obtaining an MBA from the University of Punjab in India, Luthra joined Bausch & Lomb, where he grew to national sales head and, later, during the flush of the dot-com boom, founder of a tech start-up. Then Mattel came calling, and the timing was right.

THE ROAD AHEAD
To keep Mattel’s Canadian operations in front of the competition, Luthra keeps five keys in mind

1. Be a disruptive thinker

2. Reward failure

3. Strengthen the organization’s position as a leader

4. Reap the benefits for years to come

5. Get support—from company, team, and family

“When I was interviewing, I had a six-month-old son, so I was able to appreciate what the organization did,” Luthra says. He saw the company as wonderful place to hone his skills and appreciated the opportunity. “I was an absolute raw manager who was polished over the years,” Luthra says of Mattel’s training efforts. “They truly believed in me and aligned my career path with the organization’s needs.”

Luthra began his Mattel career in India, where the goal was to make a struggling, emerging-market subsidiary profitable. Although the task was challenging, Luthra was so successful that after seven years he was asked to take on an even bigger project: Eastern Europe. “We had three subsidiaries, in Poland, the Czech Republic, and Hungary, and I was considered the emerging-markets guy,” Luthra says. There, he not only made those three markets grow profitably, but he was also instrumental in the launch of a new Russian subsidiary.

After 10 years, Mattel began discussing Luthra’s next move with him. The natural choice would be another emerging market. “I was branded as an emerging-markets guy, so ‘What emerging market do you want next?’ seemed like the logical question,” Luthra recalls. But instead, another change was in order.

Mattel recognized Luthra’s ability to see things from a different perspective, so he ended up in Canada, a developed market that couldn’t have been more different from his past experiences. In India, the toy industry was growing by around 20 percent to 25 percent a year, and in Eastern Europe, by 27 percent to 28 percent. In Canada, however, it has been either stable or growing at a pace of 1 percent to 2 percent a year. The drastically different landscape required a drastically different focus.

“In the emerging markets, the focus was on ramping up operations—working out supply-chain solutions, differentiating your packaged offerings, and fine-tuning your distribution channels,” Luthra says. “In Canada, the focus is on gaining share in a mature market. It’s highly concentrated from a customer-point-of-view, with close to 65 percent of our business coming from our top two customers. And there’s a cultural diversity that means talking to the consumer in the correct manner requires constant change and customization.”

Regardless of where he has operated, the key to success for Luthra has been Mattel’s support—and he’s received it from the highest levels of the company, no matter the challenge. In India, the challenge was a customer base seeking offerings across a wide range of price points. In Eastern Europe, it was the market going through the roof. “We were always managing through the bandwidth,” Luthra says. “We’d prepare for a volume of 100 one year and be doing a volume of 120 the next.”

THROUGH THE YEARS
with Sanjay Luthra

March 1996
Begins work at Bausch & Lomb

December 2000
Joins Business Standard

September 2003
Starts at Mattel Toys India Pvt. Ltd.

December 2008
Becomes Mattel’s regional director of Eastern Europe

January 2012
Moves to Mattel Canada as general manager and country head

Meanwhile, in Canada, the challenge is the changing retail landscape. “Before I joined the subsidiary three and a half years ago, there hadn’t been a retail landscape change for 14 years prior to that, since Walmart entered the market; the last three and a half years, we’ve seen Zellers exiting, Target coming, now Target exiting, and also Amazon coming,” he says. “It’s continuous, and in that environment you need an organization that can support you in those ideas and lets you ask, ‘What is right for consumers?’ and act upon it. Mattel has been wonderful in doing so.”

Despite the changes in the retail landscape, total market sales in Canada over the past three and a half years have not declined—an accomplishment Luthra notes is partially the result of the intuitive Canadian consumer and partly an acceptance of disruptive thinking. The beauty of the Canadian market, says Luthra, is the Canadian shopper. “We have industry data showing that when one retailer exits the market, families immediately know exactly where to shop,” he says. “Canadian shoppers adjust very quickly to a new retail format.”

According to Luthra, when working in emerging markets, one can get used to challenging the status quo because a lot is unknown. And while a mature market like Canada has an established way of doing things, the approach should be the same. Change is always on the horizon. For example, online sales now present a tremendous opportunity for Mattel, and Luthra says the entire team is empowered to think innovatively about how to approach the growth of the business. “The landscape is changing, the customer is changing—so how can you think like an emerging-market person in a mature market?” Luthra says. “You need a disruptive mind-set.”

Doing so is particularly important right now because the landscape is in the process of change, and the companies that establish themselves as leaders now will reap the benefits for years to come. “We’re the number one player in Canada right now, but once the retail landscape establishes itself in its new form, it will remain there for 10–12 years unless a new big retailer enters,” Luthra says. “In these times of reformation, how you adjust—establishing yourself as strong leader and gaining market share—is important. So we’re asking ourselves what our clear differentiator is now versus four years ago, seeking a new advantage over our other industry players.”

There will be bumps along the road, but that’s all part of the plan, Luthra says. “In a way, we’re rewarding failure in our organization,” he explains, “because that’s the only way of cutting through the clutter and establishing yourself as a leader.”