Last week’s Argos ‘3 for 2’ promotion proved controversial on several levels. Consumer website Money Saving Expert has reported Argos to the advertising watchdog over concerns that the retailer rigged the offer by hiking prices in the days before the sale started (another “systems issue” according to the retailer). Then there was the issue of lack of stock of key lines, which I touched on in last week’s Blog. That comment led to an interesting exchange with a group of independent retailers, who seem to have uncovered another intriguing angle; for example, if someone wanted to buy two Large LOL Surprise! dolls from a branch of Argos, it was fine. But if you tried to buy three, it was mysteriously unavailable. So, did Argos set the stock limit to two per customer – or even two per store? And, if so, is that a good thing? At least it will stop people buying up bulk stock of scarce lines to sell on eBay for extortionate profit.
I also gather that one retailer was told by their rep that it would be best to buy their stock from Argos rather than trying to order through the company – once VAT was added to the trade price, it was the same cost anyway, and the suggestion was that Argos was more likely to have stock available to sell them than the company itself. It does make you wonder what percentage of these ‘3 for 2’ sales are to consumers, and what percentage are to other retailers or resellers? Which all seems a little bizarre…
I was heartened by the news that the EU is to bill Amazon in lieu of back taxes owed because of a dodgy tax deal agreed with Luxembourg in 2003 – that is, until I saw that the amount, a paltry $295m. I’m sorry, but based on their turnover, that is nothing short of pathetic…and they’ll probably contest the ruling anyway.
Toys R Us continues to dominate most toy conversations. I am still reading a lot of nonsense about the situation; it is amazing just how many retail ‘experts’ have suddenly sprung up, all with amazing insight into why TRU finds itself in this situation and what it should do to turn things around. If I read one more ‘expert’ talking about how “a bit of retail theatre” could have saved them…please! I am sure that TRU knows only too well that some of its stores could do with being spruced up, just as its website needs to be improved. But if you make a tidy profit, and every single penny of that profit – and a lot more money besides – is taken away from you to pay off interest on a humungous debt, which you were loaded with by a group of vulture capitalists twelve years ago, just how are you supposed to pay for these improvements…with magic beans? In the end, it all comes down to the interest payments on the debt, which have spiralled out of control (as interest on debt often does) – yes, Amazon has had an impact and yes, TRU needs to fix some issues, but it can only do that if the significant trading profit it makes isn’t robbed to feed a voracious and inexorably-growing debt burden. By the way, a small note to journalists: saying you’re “being supportive” and in the next paragraph calling the stores “a soulless experience with no cheer” isn’t really being consistent. And as for the toy magazine which presumably thought it was being funny by using the giant headline “Toys R Bust,” words fail me – to so spectacularly misjudge the mood of the entire global toy community really is a special talent. I am no stranger to the pitfalls of attempting to create amusing copy, but some subjects just aren’t suitable for sixth-form humour.
Back in the real world, I’m hearing that not all UK toy companies have complete autonomy when it comes to managing the Toys R Us trading relationship; in some instances, I understand that the decision on whether to ship stock to TRU in Europe is ultimately being driven by the international parent company, based on what is in its best interest back in the States. There is no doubt that American companies are hugely invested in the situation; without the sort of specialist competition which Smyths and The Entertainer provides here in the UK, a US toy market without TRU would be a very different proposition indeed. One US supplier told me this week that he estimates that product development would be cut by as much as 30% across the board, as other major retailers such as Wal Mart and Target carry a massively smaller SKU count. And that is just one reason why the American companies will continue to ship, and do all they can to help TRU make it to second base (Americans, I hope I’m using that metaphor correctly, I’m not a real baseball fan). The cost of shipping TRU may have increased between 2-5% in the short-term, but people are thinking about the long-term consequences.
Finally, this week’s Channel 4 Barbie documentary gave us some entertaining moments, but alongside Barbie herself, the other star of the show had to be presenter Mary Portas’ son. His reaction to his mother’s attempts to encourage him to play with gender neutral toys was absolutely priceless; he may now be on Let Toys be Toys’ hit-list, but the next time the industry is attacked for perceived gender-bias, we should wheel him out as our industry spokesperson – he really wasn’t having any of it!