Beware the slides of March…it’s the Friday Blog!

Published on: 29th January 2021

As yet, we don’t have a fixed date when Lockdown 3.0 will end and stores will be able to re-open – but we do know that it won’t be before 8th March. What happens after that is dependent on a range of factors, including the virus transmission rate, number of cases and progress of the vaccination programme – essentially, the information which features in those riveting government briefings that have become part of all our lives. Basically, we need to keep an eye on those slides and hope they bring us good news in the coming weeks – or will it be a case of ‘beware the slides of March’…?

I can understand why retailers – especially specialist toy stores – are frustrated. So many livelihoods are at stake. It’s clear that the virus isn’t going to magically disappear any time soon (even Marvin can’t make that happen), so we are going to have to learn to co-exist with it for a while. That necessitates a government plan to allow businesses to safely manage the risks and continue to operate responsibly. Hopefully we’ll see that plan being put into practice sooner rather than later.

In the meantime, I continue to admire the flexibility and resilience of the toy community, and its willingness to keep looking and moving forward. I have attended several zoom previews this week – clearly we are all missing seeing people and products in the flesh, but digital presentations and meetings are now very much part of the business landscape. It’s lovely to see how each company has tried to inject a little fun and personality into proceedings. Virtual previews are getting better and more effective all the time and I suspect they will become a permanent fixture. I don’t believe they will replace physical events (no matter how excited accountants are at the prospect of saving mountains of cash), but they can certainly run alongside them, extending the number of people who can be involved and offering maximum flexibility to all parties.

There are other reasons to be cheerful, not least the fact that positive sales numbers from last year keep rolling in. Here in the UK, it has been reported that Hornby’s Q3 sales showed a healthy lift, while Character Group saw sales increase by 25% over the festive period. Overall, I thought the UK toy market did incredibly well to post an increase of 5% last year, but the US numbers were truly astonishing – a jaw-dropping +16%. Wow – just wow. Of course, the devil is in the detail (not everyone benefitted to the same degree – in the main, the big players seem to have weathered the storm best of all, both on the retail and supply side), but let’s not take anything away from an ‘awesome’ collective performance of the US market.

NPD also unveiled its global awards this week, recognising the companies and brands which shone through in this most unusual of years – congratulations to all the winners. It’s all the more important to celebrate success in these challenging times – sometimes, looking at the news (or ‘doomscrolling’ as it has become known in certain quarters), you could be forgiven for thinking that it is all bad. But it isn’t, and it’s nice to be working in a market that is one of the business success stories right now and is also bringing happiness to a lot of kids and adults.

Of course, it’s not all plain sailing: it emerged this week that one country is already benefitting from a Brexit dividend. Sadly, that country is The Netherlands, rather than the UK. It turns out that numerous UK companies are exploring moving their logistics operation to Holland to avoid port delays, extra freight costs and new VAT and customs tariffs. So, it turns out that Brexit did result in more jobs and business opportunities…for Dutch people. Like googling the word ‘google’, the government messaging must be confusing Brexiteers no end: “We have given you freedom from the tyranny of the EU. But if you want to continue running your business efficiently, it’s probably best to open up a subsidiary in the EU.” Irony has officially retired, but unfortunately it is restricted as to how much of its retirement time it can spend on the Costa Del Sol each year..

You may also need to retain a sense of humour whilst ‘negotiating’ with Amazon over new terms. I saw an example of a terms review form this week, and all I can say is “rather you than me.” If I were to sum up the process, it goes roughly like this: “Tick this box if you want to be screwed (in fact, to make your life easier, we’ve ticked it for you). Alternatively, tick this box to be royally screwed. Oh, and by the way, you need to reduce most of your prices by 10%. And pay us to hold stock. Or pay us even more to send it back to you. Have a nice day.” Predictably, there doesn’t seem to be a box marked “Freight costs are through the roof, the RNB is strengthening against the US dollar and raw material & labour costs are going up in China, so I need to charge a little bit more to reflect my increased cost structure.” I read an article this week in which one US vendor estimated that for every $100 worth of products he sold on Amazon last year, his company kept on average $48.25. Yet people still moan about The Entertainer’s “unreasonable margin requirements” (some suppliers’ views, not mine). The clever thing which Amazon does is to hide many of the costs in extra charges and ‘optional’ advertising or marketing opportunities. Who says artificial intelligence isn’t improving all the time…?

Finally, I wanted to pay tribute to two industry legends who passed away this week: Philip Harrison, who ran the Mondo UK operation for the past 30 years, and licensing guru Kelvyn Gardner. Both gentlemen were well-known and hugely respected in their respective fields, renowned for their sartorial elegance and passion and commitment to their chosen fields. They also remind us that while product will always be king, it is the people that ultimately make the toy and licensing worlds what they are. Both gentlemen will be greatly missed, and we will be raising a glass in their memory…albeit in our own homes, rather than in an Irish bar in Nuremberg this week.