Making Memories with the American Girl Company
The American Girl company is in the business of magic, memories, and new best friends.
The American Girl company is in the business of magic, memories, and new best friends. Their core products are mini-series, six books each, about nine-year-old girls at different periods of time (Colonial America, the Civil War era, the Victorian era, and more). They also sell dolls and accessories to go along with the books. What they really sell, however, is larger than any single product.
To me and millions of others who read American Girl growing up, they were selling stories of young girls that I could see myself in. American Girl’s true value is in being able to create a deep sense of relatability by balancing the foreign (the stories’ unfamiliar historical contexts) with the familiar (the characters have the authentic dreams and concerns of nine-year-old girls).
The process begins with the meticulous creation of the characters. Developing a new character takes 1-3 years because of the extensive research teams do. Teams bring together “historians, museum curators, and linguists” (1) and take research trips to ensure their stories are accurate. For Kaya, a Native American girl, they worked closely with the Nez Perce tribe to ensure that “everything from the positioning of her braids to the patterns on her ‘pow-wow outfit’ were historically accurate” (1).
However, being familiar and authentic to young girls is just as important as being accurate. To ensure they remain in touch with their customer, American Girl conducts extensive customer research at all their touchpoints (in stores, online focus groups) and also leverages the experiences of their employees, 80% of whom are women.
By investing in extensive historical research while also gathering constant customer feedback, American Girl is able to develop stories with deeper resonance and impact.
A unique store experience
American Girl controls its product distribution tightly, only selling online and through American Girl stores. By designing its own stores, American Girl can create a one-of-kind customer experience. According to Wade Opland, the brand’s SVP of global retail, “Everything is 38 inches high. That is the average height of a nine-year-old girl. This is for her.” (1)
The stores sell books and dolls, of course, but they are specifically designed to create “girl-doll moments” (1). Flagship stores feature a hair salon for dolls, a doll hospital, and a café where your doll gets a chair at the table right alongside you. The immersive store experience mirrors the immersive experience of reading the books, writ large. They generate not only revenue (“Everyone leaves with at least one deep red shopping bag. Everyone.” (1)) but delight (“A girl came in and asked me, ‘Who created this? Was it god?'” (1)).
American Girl has also leveraged its expertise in creating high-quality dolls to expand into a new line of dolls, called Truly Me. With Truly Me, girls can design a doll that looks like them. Not only can they customize the hair, skin, and eye color, but “you can buy your doll orthodontic headgear; there are allergy bracelets and EpiPens, wheelchairs and service dogs.” (1)
In this case, American Girl is able to leverage existing capabilities in doll manufacturing to expand its offerings to young girls and further its core mission – to help girls see themselves in the toys they play with.
Challenges going forward
Despite its well-aligned business and operating models, this past November, American Girl saw a dip in sales for the first time since 2010. Critics also asserted last year that its focus had shifted away from historical stories and toward “blander” and less controversial characters (2).
As American Girl caters to customers’ desire to customize, they may also risk moving too far away from their roots in historical fiction. They began in the business of immersion – bringing readers into a different world and introducing them to a new context through a familiar lens. As they shift to customizable dolls and online games, they are entering the business of reflection, where the focus is on self-expression and self-presentation. “Instead of you becoming your doll, your doll becomes you.” (2)
American Girl must recognize this potential shift in their business model, make a deliberate choice about the extent to which it wants to play in each space, and ensure its operating model continues to align with its strategic initiatives.
Student comments on Making Memories with the American Girl Company
I had an American Girl Doll and Bitty Baby when I was little so this brings back great memories. I actually didn’t own many of the books though so I’m curious where their main source of revenue comes from – is it the books, the dolls, the accessories, or the in-store experience? One of the things I find interesting about American Girl is that they’ve created this ongoing experience for girls. Even if you only own one doll there are still tons of add-ons and accessories you can continue to purchase and receive as gifts. As you noted, I’m also curious how the digital space is affecting American Girl. Are children still as excited about their physical products as I was when I was little or are these becoming less popular?
Great post Pooja! I was certainly nostalgic reading it; I remember spending hours as a seven-year-old, attempting to convince my father to purchase me the $80 Samantha doll to no avail given the steep price tag. I did however convince him to purchase me the books which I pitched as an “investment in my education.”
I too am disappointed in American Girl doll’s shift from the historical doll strategy to the customized doll strategy. Before its acquisition by MatteI, the stories that accompanied the historical dolls were used to educate young girls of issues of poverty, racism, and inequality (e.g., the Samantha story related to her battle against child labor in the 1920s). While the customizable dolls do serve a social mission in allowing girls to choose dolls that reflect themselves (as opposed to propagating a classic notion of beauty), the dolls’ narratives are no longer driven by historical lessons. Although American Girl says the phasing out of the historical doll line is a matter of inventory management (claim they need the warehouse space for new dolls), I suspect the decision was driven by a desire to shy away from controversy and informed by marketing’s agenda as opposed to supply chain’s needs.
Does the introduction of a customizable product line erode the communities that evolve around a particular doll (I see community as the key point of diffentiation between American Girl and other doll manufacturers)? As the business model pivots in focus to a celebration of individuality and self-reflection, I fear that the organic communities that developed around each iconic, historical doll are in jeopardy). Perhaps the introduction of the online portal mitigates this risk. How does store design change with the introduction of a more complicated, customizable product portfolio? (I remember the stores used to have a “corner” for each doll where accessories and stories particular to her were sold)? I suspect inventory management and order fulfillment policies had to be elevated with the introduction of increasingly differentiated products. Would be curious to learn about this transition in supply chain and how the Mattel acquisition affected SC as I imagine the production synergies were substantial).
Interesting post, especially to see how a traditional legacy business model is still able to compete against the prevailing e-commerce business through focusing on customer experience! I think this is the barrier that’s less easier to overcome for the time being. and I like it that they are able to accompany the user through extended period – extend the user’s life experience. A few risks I have:
1) it seems the unit price for the doll is high on average $100 and I wonder how big of a customer base they can attract per year. While it makes sense for them to price this the highest and use this to subsidize other lower price segments such as apparels. I can imagine the margin for the doll must be high if it’s made in China
2) competitor landscape: who do you see as their main competitors, esp in their cashcow sector i.e barbie?
3) what’s view on the increasing heroine trend that’s forming and driven by the media industry (hunger game/divergence etc), do you think that will play against their customer preference?