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The Naughty Corner

In most retail, a mixture of ‘clicks and bricks’ is required to gain the full customer experience. Courtney Devereux investigates how the rise of online shopping has affected physical adult stores, asking: is the safety of discretion preferable over a ‘hands-on’ experience?

By Courtney Devereux | May 29, 2018 | News

New Zealand has the highest percentage of vibrator ownership worldwide, according to a 2017 UK study by Statistic Brain Analytics. A little under 40 percent of Kiwis reported owning one, but New Zealand’s high streets aren’t exactly swarming with adult goods stores. So where are we buying our toys?

Although New Zealanders are notoriously laid back, it turns out prefer to do our dirty work online. New Zealand ranks sixth as the country with the highest number of Google searches for sex toys.

The adult toy category has long been part of New Zealand’s retail scene, but less visibly than those in uncontroversial categories. Perhaps not for much longer, however: according to Forbes, the global sex toy industry stands as a $15.2 billion segment, with expectations it will reach $20 billion by 2020.

Toy Story

Evolving technology means the adult toy category has been able to keep up with consumer demands for safer, durable, more customisable items. But even though retailers’ ranges may be increasing tenfold and the technology surrounding them is constantly improving, the interesting change is in how consumers are buying these toys.

Nicola Relph, owner of Adult Toy Megastore, an ecommerce site operating from Wellington, says the rise of online shopping has helped fuel the category’s growth.

“The option of discretion no doubt has really enticed the consumer. It has definitely grown the market. People back in the day might have been a little unsure of if they wanted to go into a store just in case they saw someone they knew. Now people can just browse the web privately when they want to, and, how they want to.”

Relph says adult toy sales have seen hard growth in the last decade alone, as well as a more relaxed feel surrounding the category as stores penetrate more commercial areas.

“Now we’re seeing adult stores in malls and popular areas. It’s not really whether it’s an online thing or a bricks and mortar thing, the adult industry is becoming a more accepted discussion point and people are understanding the value of great sex in their lives. And therefore, are seeking out the amenities to enhance that.”

Consumers’ attitudes towards sex and all that surround it have loosened, meaning it’s now more socially acceptable to own and purchase sex toys. Yet consumer confidence comes down to the individual. While some shoppers can strut into an adult toy store, make a purchase and walk out sans plastic bag, it isn’t the same for everyone.

“That discretion that online shopping provides has largely benefited our industry,” reiterates Relph. “I believe it is such an influential buying factor for some people. It just suits it so well, people can shop online, they can get all the information online and then send it to their home, or even their workspace.”

Filling the gaps

The ‘try before you buy’ model is important for most of the retail industry, yet for obvious reasons that largely bypasses the adult toy sector. But now an improvement in manufacturing technology means items are more or less ensured to be safe and of top design.

“Leading manufacturers around the world are now producing the most beautiful toys,” says Relph. “I suppose from a manufacturer perspective, and if you are producing any consumable good, if you don't keep raising the bar, you get left behind. I think regardless of what consumer products the manufactures in are, I think they’re always striving to create a beautiful product.”

Continuously trying to keep up with changing consumer demands is no new thing, but for the adult toy category, a good product often means repeat business and with that, more competition.

“You've got big manufacturers in Europe and in America that are competing for a slice of the consumer brands, or the consumer's pocket,” says Relph. “So, they're really looking for how they can ensure that their brand is top of mind for the consumer.”

The competitive landscape for adult toy stores differs from traditional retail in that normal advertising channels have more restrictions surrounding the promotion of their stores or products. Licensees must abide by strict conditions that commonly require premises to be at least 200 metres from schools and churches, and are restricted to age 18 onwards.

Yet apart from that, its biggest competition is shared with traditional retailers – international counterparts.

“What we've seen is that markets now have no boundaries,” Relph says. “So, you're not only competing with people in your local market. Nowadays, you’re competing on a global scale regardless of whether your business is, in fact, global or not. So, it has got more competitive because the boundaries of those markets have disappeared.”

This increase in competition has failed to slow down the Adult Toy Megastore, which, according to Relph, sends out about 20,000 items a month from its warehouse filled with over 10,000 different SKUs.

“We’re still seeing a strong growth curve at the moment. I think it’s an ever-increasing spectrum of things that people are buying. Consumers are also shopping differently, they won't have one standard item for life – they’ll have a fleet - It's a process that people go through now, just like they might buy shoes.”

Relph highlights the importance of good customer service, no matter the industry you’re in, and no matter if you’re pureplay or bricks and mortar, “I think regardless of what industry you’re in you have to step up and play the best game you can play because that is what the consumers are demanding.,” she says.

“Regardless of what industry you’re in, it’s about providing the customer with what they want and being really passionate about how you do that. Whatever customers are purchasing I think they expect the same thing, they expect the shopping experience to be top notch. And that’s what I think as a business you have to strive to do.”

Swinging both ways

On the other end, arguably New Zealand’s most well-known adult toy retailer, Peaches & Cream, has continued to expand its bricks and mortar stores as well as its online presence.

The retailer has 13 physical stores from Auckland to Dunedin, and has been Kiwi owned and operated since its opening days in 1992. The store's online presence was created in 1999. The online site started from humble beginnings with a simple catalog and DVD offerings, which were largely aimed at male consumers.

With very few retail stores offering an online adult experience in the early noughts, prices were higher than today. Interestingly enough, 10 years ago, Peaches & Cream also accepted Bartercard.

The transformation from a men-only site to a mixed-audience site finally occurred in 2012, and now according to the company’s general manager, Sandra Waters, that move towards inclusivity has help drive business.

“We have tried to make both online and physical more women and couple friendly. We’ve definitely found that over the years there has been a real change in our industry, people are more relaxed about coming into our stores.”

Waters agrees with Relph that the updated feeling of adult toy stores and evolving social mores helped consumers feel more comfortable going in and shopping.

 “There has been a real change in our industry,” says Waters. “People are more relaxed about coming into our stores and online has definitely helped that change. Our online arm is doing exceptionally well, we just class our online sector as one of our stores. But it is more profitable than our physical locations because it does not have the same overheads as our stores.”

 Despite online growing more than brick and mortar for the adult toy sector, Waters says brick and mortar stores are still important for the industry to grow.

“We really still do need physical stores as a lot of customers still love to have that personal service available, they like to talk to staff about the products, which they don’t really get to do online.”

Peaches & Cream as a retailer uses both online and physical sales to monitor trends and stay up to date with consumer demands.

“We sell a real cross-section of products here, and everything moves well for us. Also, what we stock is trend focused, but in saying that we still get customers coming in for the toys that have been around for years. They’ll look online and then come into the store to buy what they’ve seen.”

Does size matter?

The retail landscape is changing and leaving no category behind in the process. While some places may move at a faster rate to keep up, others will inevitably find their own pace – like Eketahuna, which welcomed its first sex toy store late last year.

The store opened in 2017 in a town of 440-odd people. Since its opening, director of Tabu Adult Boutique, Ian Turner, says sales have been strong as consumers will travel from different regions to visit the store.

“Focusing in on the size of the town's population isn't too relevant. We have a lot of interest in our store from across the Wairarapa and Manawatu regions. Around half of our customers make a specific journey just to visit our store.”

In smaller areas, such as the Wairarapa, a lot of retail is dependent on word of mouth. And apparently the same goes for adult toy retail.

“The key differences between operating in a small town and big city are, on the positive side, we have a great visit to customer conversion rate, as most people coming in are here because they specifically came to buy, or are at least interested in finding out more,” Turner says. “Also, we quickly became a household name in the area and we have that unquantifiable 'notoriety' factor.”

“On the downside, we have far less foot traffic passing the door than city stores, so our pop-in pedestrian traffic is almost zero.”

Unlike most industries, Turner says, stores like his own have to be “constantly aware we are operating in an 'adults only' environment.” Restrictions placed upon businesses like Tabu affect many aspects of its operation, from window displays to promotions and advertisements. “

Turner says that even for adult retailers in smaller towns, success comes from to not-so-uncommon practice of listening to your customers.

“The key to our customer retention and growth is to continue offering an inviting, exciting shopping experience, with mature and knowledgeable staff on hand to assist. But sales have been strong… Now our in-store sales outweigh our online activity. However, with the correct promotion, we forecast that our online sales will surpass in-store sales in mid to late 2018.”

No matter the retail scene, it seems the core lesson for growth is listening to consumer demands and continuing to expand on those as the requirements of the industry change. The rise of online shopping has fuelled the adult industry by offering discretional shopping and delivery.

As technology advancements surrounding online shopping and manufacturing capabilities grow, it is expected the adult industry will continue to grow with it.

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