Pleasant Rowland introduced American Girl dolls in 1986 as a historically-themed alternative to Barbie and the Cabbage Patch Kids. Since 1998 her firm has been owned by the maker of both rival dolls, #1 toy manufacturer Mattel. American Girl produces the American Girls Collection of 18-inch, high-dollar dolls, including Addy (an escaped slave) and Rebecca Rubin (a young Jewish immigrant). The company also publishes American Girl magazine and American Girl books (nearly 140 million copies sold) and sells room décor, clothing, and accessories, including items that match their dolls. American Girl's products are sold through catalogs, its website, at about 20 stores. American Girl is expanding into Mexico.
Geographic Reach
American Girl products are sold primarily in the US. Flagship American Girl Place stores are located in Chicago, Los Angeles, and New York City, while smaller American Girl stores are in California, Colorado, Dallas, Florida, Georgia, Houston, Kansas, Massachusetts, Miami, Minnesota, Missouri, Ohio, Texas, Washington, and Virginia.
Sales and Marketing
Boasting some 63 million visitors to date, American Girl stores have become destinations for mostly females of all ages. Besides its portfolio of flagship and smaller namesake stores, American Girl peddles its products directly to consumers through its catalog and online store. The company's children's publications are sold to certain US and Canadian retailers.
Financial Performance
A business segment of Mattel, American Girl Brands reported 2013 sales of $659 million, a 10% increase vs. 2012's $596 million. The increase was driven primarily by sales of Saige, the 2013 Girl of the Year doll, and expansion of retail locations. Net income increased 13% over the same period, to $138 million, driven by higher net sales, partially offset by lower gross margins and higher expenses, primarily related to retail expansion.
Strategy
The company is expanding its stores network. In 2014, American Girl made plans to open stores in Orlando, Florida; Charlotte, North Carolina; and Scottsdale, Arizona; with an eye on extending its reach into the Nashville, Tennessee, market in 2015. In late 2014 the company announced its expansion into Mexico in partnership with El Palacio de Hierro, a Mexican retailer.
Strategically, American Girl Brands places its stores in cities and shopping destinations in affluent areas. For instance, in 2013 the company opened a 15,000-sq.-ft. shop in Palo Alto, California. The stores sell more than just dolls (more than 21 million since its inception). They sell the American Girl experience. They are tourist attractions for families with females. In addition to dolls, doll furniture, and apparel for dolls and their owners, some stores also house a "bistro" for casual dining and a doll hair salon.
Through a partnership with Indigo Books & Music, American Girl added a pair of in-store boutiques in Canada in 2013.
The company keeps the brand fresh by retiring historical characters (such as Kirsten and Samantha) and introducing new historical dolls, as well as girl of the year dolls (Saige in 2013). The dolls are often launched with friend dolls (to spur additional sales), books and accessories, and a movie featuring the character available on DVD. While the company's historic dolls are targeted at ages 8 and up, it has extended its reach to new niches with its 15-inch Bitty Baby dolls for girls as young as 3 years old.
The company has expanded into movies for both the big screen and made-for-television events through partnerships with New Line Cinema, HBO Films, and Warner Brothers. The HBO deal also calls for other programming, such as a series and specials. American Girl is also taking its brand to the small screen through a deal with THQ, an interactive entertainment software developer, to publish video games based on Julie Allbright. As part of the agreement, the games are developed for Windows PC and Nintendo DS.