Here we go again…it’s the Friday Blog!

Published on: November 17th, 2017

Just when you thought the toy trade had returned to a semblance of normality after the seismic Toys R Us developments, here we go again. Last weekend, the Wall Street Journal broke the news that Hasbro had apparently approached Mattel to propose a takeover. It’s important to keep this article in perspective; companies approach rivals with similar offers all the time. We don’t hear about 99% of them, mainly because they are politely declined. Plus, as those of us who have been around the trade for a while are aware, we’ve been here before – several times.
However, it has to be said that something does feel slightly different this time, even if that is largely down to the inherent nervousness of American investors since the Toys R Us bankruptcy protection filing. Make no mistake, there are still a series of huge hurdles to overcome; anti-trust legislation, diametrically opposite corporate cultures (I suspect that integration would be far from straightforward) and the presence of potential counter-bidders to name but three.

Nevertheless, it has been interesting to watch the reaction of Wall Street; both Mattel and Hasbro’s shares shot up when the news came out (as did Lego’s – owner Kjeld Kristiansen’s made a cool $2.7 billion in one day according to Bloomberg), to the point where the cynic in me wondered whether Mattel had made sure the news got into the public domain to help reverse recent share price declines.

According to reports, Mattel has rebuffed the original approach, but the manner of the rebuttal – which talks about the bid “undervaluing the company” – wasn’t the most emphatic denial I have ever read. Long story short, like the Toys R Us situation, the potential outcome is extremely difficult to call, and there are likely to be further twists and turns before it is resolved one way or the other.

Talking of twists and turns brings me neatly to the latest NPD weekly figures; hold onto your hats folks, week 44 saw a fall of 18.45%, with all eight super-categories in decline, which suggests it’s a macro- economic trend, and not just the fact that certain individual ranges or categories aren’t performing. A drop of nearly £15m in the eighth week before Christmas is not what anyone would have wanted (although, in fairness, some retailers had predicted it to me at Dream Toys). The shock waves are probably still reverberating around parts of the trade, although – once more – perspective is perhaps required; with Black Friday events starting to ramp up, and the potentially huge month of December still to come, it’s where the market ultimately ends up that counts. Apparently, there were similar scenes in 2013, when a 7% decline across November and December was reversed by a huge surge in December. Let’s hope that history repeats itself over the next six weeks.

Ahead of Black Friday, Amazon has introduced a delivery charge of £3.99 on same-day deliveries under £40, which strikes me as an eminently sensible thing to do – it will surely act as a deterrent, which presumably is exactly what the move has been designed to achieve. I suspect Amazon is painfully aware that the delivery system is at breaking point, and this is one way of relieving pressure. If only they could fix their delivery centre problem too, I’m sure suppliers would be equally grateful.

Retailers’ Christmas ads continue to hit screens; someone made a very interesting point about the B&M ads, namely that the retailer will have saved a fortune (anything up to £500k I’m reliably informed) on its production budget, which will have been invested into the media budget instead. There has even been a suggestion that Christmas ad fatigue is setting in, with many people complaining that the latest John Lewis ad doesn’t stir the same sentiment as some of its predecessors. Having spent £7m on the campaign, I doubt that’s what John Lewis wanted to hear; it’s a huge investment to recoup, especially if the creative hasn’t quite hit the mark this time round.

Elsewhere, it was great to see the former Palitoy factory in Coalville receive a commemorative green plaque – although rumours that they’re also going to put one up at the site of the infamous original ‘Star Wars landfill’ site nearby are unconfirmed.

I’ll be heading into London on Sunday to see the Hamleys Christmas Parade for the first time – I’m told it’s a great event, so I’m looking forward to seeing the toy and licensing communities represented in all their glory. And if someone in a giant costume falls over, all the better.

If you would like to receive our daily newsflash email, click here; you can also follow us on Twitter and Facebook and request a print subscription here.