When I commented on the vagaries of retail pricing in the toy market in the Blog a few weeks ago, little did I suspect quite how much feedback I would receive on the subject, nor how passionately people feel about it. For a journalist, such a contentious subject really is the gift that keeps on giving. Some of the comments are probably best left off the record, but one perspective consistently crops up; namely, how a retailer can deliberately reduce prices below a sensible level, then tell a supplier they aren’t making enough profit from their lines and request that they contribute to funding the profit shortfall. A bit cheeky, wouldn’t you say? I heard of one example this week where a retailer dropped the price of a line dramatically, sold out, then steadfastly refused to re-order unless the supplier agreed to reduce the cost – while, at the same time, said retailer’s replenishment team was emailing to warn that stocks were dangerously low. I promise I am not making this stuff up (as, sadly, numerous suppliers can attest to).
On the question of ‘sensible pricing’, although online retailers remain the most frequently cited miscreants, Tesco is doing a good job of running them close this year – another week, another major promotion; this time it’s 33% off all toys until Monday. Even before this latest offer was announced, independent retailers had been phoning in to point out that Tesco has been selling certain items at literally pennies more than the trade price. To say that our callers were not impressed would be putting it mildly. Having personally interviewed Tesco a year ago, for the most in-depth retail interview any toy magazine has conducted with a major buying team for years, I have been slightly surprised to see just how aggressive they have been with their pricing strategy this year. I would even go so far as to suggest that their current approach goes against some of the objectives they outlined in the piece.
The feeling within the toy community is that this is essentially a supermarket v supermarket war; although ostensibly the primary focus of the price cuts is Argos, most people perceive that the ultimate target is Sainsbury’s. The unfortunate by-product of this ‘battle of the grocers’ is all the other toy retailers who have been caught in the crossfire. I have the utmost respect for the toy buying team at Tesco, who are not only knowledgeable but also a nice bunch of people. But I have a suspicion that the strength of feeling in the toy market about the way they have operated in the past few months would come as a shock to them.
On a different note, I wanted to mention two people who are highly regarded across the toy and licensing market who are moving on from their respective roles: Barry Groves, who is leaving Posh Paws, and Richard Hollis, whose time at DreamWorks – now of course NBC Universal – comes to an end today. Both have been a pleasure to work with over the years and I’m sure everyone will join me in wishing them both all the best with whatever comes next.
Speaking of NBC Universal, I was delighted to be invited to attend their licensee presentation day earlier this week. As is so often the case with licensing presentations, I am no doubt bound by all manner of NDAs, so I shall have to be careful what I say; but I was certainly impressed with the strength of the newly-combined Universal/DreamWorks portfolio, and licensees and retailers will undoubtedly have been encouraged to hear details of the major organisational changes which will deliver a far greater level of support going forward. I don’t think it’s unfair to suggest that the merger has created an organisation capable of challenging the very largest of licensing companies, and I’m not just saying that because they put our recent interview with Hannah Mungo up on the big screen for five minutes (if you missed it, you can read it – and indeed the entire December issue of Toy World – here).
I’ll round off this week’s column with the brand-new trailer for Despicable Me 3 – I laughed (a lot). Definitely one to watch out for next summer, and with a strong line-up of licensees and retail partners already on board, it will undoubtedly be a major event in the retail calendar.