A belated Happy New Year to you all. I hope that Christmas gave you all you wanted, both on a personal and professional basis.
Talking to a number of retailers over the past week, it seems that the widely-predicted last-minute festive rush thankfully materialised; one senior toy retail figure described the two days before Christmas and the two days after as “phenomenal.” In fairness, they probably needed to be. Anecdotally, there is a prevailing belief in some quarters that both October and November were relatively soft, which does appear to be somewhat at odds with the official data – especially the October numbers. The upshot appears to be that, with the exception of Hatchimals, there was no shortage of stock, which in turn led to some retailers going even heavier on promotional activity than they had initially planned – and, make no mistake, the plans were pretty heavy to start with. To put it in context, someone described it as the most disruptive Christmas we’ve had in many years, with strange trading patterns over the last twelve weeks adding further complication to the mix. NPD’s Toy Fair presentation should be particularly interesting this year.
All of which leads us to where we are now – the start of what could turn out to be one of the most intriguing Toy Fair Seasons in a long time. I arrived in a balmy Hong Kong yesterday, with temperatures akin to a nice early summer day in the UK, albeit many of the locals are still sporting coats and scarves. It’s early days to make any sweeping statements, but some things don’t change; there is inevitably talk of Chinese factories raising prices – as one supplier succinctly put it, “You can’t defeat factory labour or raw material increases, or force exchange rates.” One supplier admitted he is avoiding meetings with his Chinese factories until after Chinese New Year, to allow time for the dust to settle. But let’s be honest, few Far East suppliers will want to make an exception for one country, no matter what short-term challenges we may be facing.
As for the exchange rates, there are those who believe that the US economy – and thus the dollar – is poised to strengthen even further under the new President. My guess is that those who are truly confident in that prediction will be forward-buying currency with any spare cash they have lying around. Margin is undoubtedly going to be one of the most widely-used words of the coming weeks; with price increases pretty much across the board, making sure the sums add up will be more important than ever. I’ll throw two other words out there to join the ‘M’ word – Channel Management. It cropped up repeatedly in my conversations with the aforementioned retail heavyweights, with the suggestion that true Channel Management will be pivotal in ensuring this year will be a success for the UK toy industry as a whole. Of course, what constitutes true Channel Management is the six million dollar question and a point we will no doubt return to as the year progresses.
I have heard of one retailer telling a supplier that they wouldn’t be taking on any new suppliers in a particular category, but they seem to be the exception rather than the rule; more so than ever, everything appears to be up for grabs this year. Some lines, brands and ranges that it made financial sense to stock in the past may no longer satisfy the retailers’ margin requirements, so arguably there is scope to open doors which were previously shut. No-one is kidding themselves that there aren’t challenges ahead, but I get the sense that there will be plenty who can turn the current climate to their advantage with a little ingenuity and creative thinking. The toy trade is nothing if not resourceful…