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Toy Fair Season begins…it’s the Hong Kong Blog!

Published on: January 5th, 2018

A belated Happy New Year to you all – I hope you had a wonderful Christmas, your batteries are fully recharged and you’re ready for what lies ahead in the coming weeks.

For while some industries are gently easing their way back into a working rhythm after the festive break, there is no messing around for the toy community – Toy Fair season is already in full swing. I arrived in Hong Kong yesterday, so it feels a little bit of a cheat to refer to this as a Hong Kong Blog (the full unexpurgated report from the trip will come next Friday). Nevertheless, in amongst all the usual opening conversational gambits (When did you get here? Where are you staying? Have you slept properly yet?), there is already plenty to ponder.

Traditionally, conversations in Hong Kong in January revolve around Christmas trading, how cleanly retailers finished up in terms of stock, how the year is shaping up and what the pricing trends are. I’m getting a range of answers to these questions, but the general consensus thus far appears to be that the four or five days leading up to Christmas were strong for many retailers (particularly independents), but I’m not sure that would have been quite enough to make up for the comparatively sluggish sales of the preceding six weeks. In terms of pricing trends, raw materials and packaging continue to increase in price (did you expect anything else?), but retailers at least have a modest currency swing in their favour to counter-balance that at the moment.

The post-Christmas sales don’t appear to have produced the level of deep discounting sometimes associated with this period, so my guess would be that margin preservation remains a priority for most retailers.

As for how 2018 is shaping up, that very much depends on who you talk to (and how honest they are prepared to be). The January Hong Kong trip is traditionally a period of boundless optimism, with retailers having a fresh slate and suppliers having a wealth of new product to enthuse about. Inevitably, after a turbulent 2017, this year’s mood is tinged with a greater degree of caution than is sometimes the case – for the UK toy community at least (conversely, I am led to believe that many international markets are feeling pretty buoyant).

Inevitably, the uncertainty around Toys R Us remains the number one talking point. The UK buying team is here in force and – by all accounts – in fine form, so it will be interesting to see how quickly their ranging plans for the year take shape. With the store estate reducing, trade terms will no doubt need to be renegotiated, but as the final number of store closures is unlikely to be known for a while, it won’t be a straightforward conversation for either side. It’s the same over in the USA – apparently around one third of TRU stores are sufficiently close to a Wal-Mart, Target or another TRU outlet that they have been deemed to be potentially at risk.

Equally, it isn’t just the UK where the overall retail landscape is undergoing significant change – a top US analyst has sent ripples through the US market by suggesting that Amazon could purchase Target this year. With the ongoing uncertainty surrounding TRU and Amazon growing its share of the US toy business to 20% last year, you can see why this move would be a game-changer for the American toy market, and thus for the global toy community. In the past, such a suggestion would have been thought far-fetched, but after the past year, it is certainly not beyond the realm of possibility.

Back in the UK, the impressive January issue of Toy World is about to land on desks any day – I am genuinely envious that you will all see it before I do. The digital format has its benefits, but nothing beats the look and feel of that bumper Toy Fair edition in all its printed glory. So, put aside a few hours and enjoy exploring what lies in-store for visitors to Toy Fair, as well as Nuremberg, Spring Fair and New York. As I’ll be attending all five toy shows this year, I will be very much pacing myself this week.

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