All to play for in the second half…it’s the Friday Blog!

Published on: 27th May 2022

We’re rapidly approaching the second half of 2022– the business end of the year, the ‘make or break’ period for many toy retailers and suppliers. After the past two years, we had all hoped for a return to more normal trading conditions and sales patterns this time round. Instead, it looks like we’re in for another rollercoaster ride, buffeted by a host of factors entirely outside of our control.

However, rather than dwelling on the impact that the prevailing fiscal challenges will have on the disposable income of families and thus on toy purchases, let’s stay a little closer to home and look at what to keep an eye out for within the confines of the toy market over the next six months.

As ever, there are plenty of intriguing retail developments to look out for here in the UK; in the bricks and mortar arena, how will The Entertainer’s partnership with Marks & Spencer for the Early Learning Centre range pan out? I gather that early figures are encouraging, so let’s see how that partnership develops. I also hear that Hamleys is talking up its new Westfield store, which I gather could open in time for October half-term week. I’m certainly hearing that significant investment is going into the new branch – maybe Hamleys has decided that, strategically, it makes more sense to invest its available budget there, rather than upgrading the Regents Street store, which would arguably require a far larger pot of money?

Then, of course, there is the imminent arrival in the UK of the new Toys R Us online operation. If rumours are accurate, the owners have set ambitious targets, so there will be great anticipation within the toy community to see if it can achieve those bold goals.

And after a largely disappointing year in ’21, can Argos bounce back this year? I am sure the majority of suppliers are looking for a reaction, although I gather there have been some interesting pricing decisions in recent months – once a retailer known for driving down UK toy prices, it seems that Argos has been retailing some lines significantly above ‘market rates’, with one supplier prompted to wonder if it was a deliberate strategy to make its own Chad Valley lines look attractive from a pricing perspective. That may just be a one-off example, or it may herald a major change of direction for Argos moving forward.

It’s not just here in the UK where retail is being severely challenged by economic conditions: I gather that in France, PicWic Toys has been placed in some sort of legal redress, as the owner looks for new investors for the 45-strong chain of stores which turns over around 200m Euros. Over in the US, there have even been reports that Amazon and Walmart’s bottom lines are being pummeled by an excess of both warehouse capacity and staff. Amazon, famed for using predictive analytics, has been spectacularly unsuccessful in terms of anticipating staffing and warehousing needs: having embarked on a hiring spree and snapping up as much warehouse space as it could get hold of last year, the company now has a surfeit of warehouse space (adding $10b costs in the first half of ’22 alone) and far more workers than it needs, which cost the company a further $2b. That delicate balance between under and over capacity – and the same for stock supply – will likely be a big factor in retail performance and profitability over the coming months.

The second half of the year will also be an interesting period for toy events, which are on their way back in key territories. The UK has already seen several successful shows this year – London Toy Fair, Toymaster and Distoy – while Licensing Expo took place in Vegas this week, suggesting that the US is joining us in enthusiastically welcoming back trade fairs. But how will the autumn toy events shape up? Will the toy community be able to travel en masse to Hong Kong this side of the New Year? Realistically, you would have to be an optimist to be confident of that happening.

Over in the US, the TIA is hoping for a good send-off for the Dallas Show in September, while in the same timeframe, the LA event continues to gather traction. I have had a few companies from the international market slightly confused about the dates of the LA previews, which do appear to be a bit more fluid than traditional toy show dates. A formal Toy Fair has to commit to a venue, often 12-18 months or more ahead of time, so the dates are cast in stone. When an event takes place at a handful of major company HQs, the timeline can be more flexible, and should they choose to do so, companies can even react by moving dates a few months before it all kicks off. However, that makes it trickier for anyone trying to arrange a toy fair at a fixed venue, whether nearby or in another city on the other side of the country, to dovetail with LA. For what it’s worth, a very well-positioned source tells me that this year’s LA show will take place from 22nd August – 5th September, which I believe is slightly earlier than in previous years. What happens in ‘23 is anyone’s guess…

I can also confirm that Distoy ’23 has been booked in for 30th May – 2nd June, thereby reverting to its traditional schedule, which will thankfully avoid a clash with the Toymaster show (16th-18th May) and Licensing Expo (23rd-25th May). Three shows in three consecutive weeks is very ‘January part two’, but infinitely preferable to overlapping shows in the same week.

The other area to keep an eye on in Q4 is the rapidly evolving media landscape: I attended Generation Media’s KidsCon 22 yesterday and was suitably overwhelmed by just how fast change is happening and how far-reaching the consequences could be. Suffice to say that if you are a supplier hoping to chuck a few quid behind a TV campaign or a buyer asking how many TVRs are going behind a particular product, it just isn’t going to cut it anymore. We’re in ‘tipping point’ territory, and the support of media experts is going to be invaluable as the world of media planning is turned on its head.

Finally, congratulations are in order for Sanjay Luthra on his well-deserved promotion to executive VP and MD for EMEA at Mattel; Helen Genia for her appointment as Global Hardlines director for Moonbug’s London office and Toys R Us Asia’s Jo Hall on receiving a lifetime achievement award from the retailer. There is plenty of grim news about, so it’s nice to share some good news when it happens.

Hopefully there is plenty more good news to come when the whistle blows for the start of the second half…