Traditionally, the phrase ‘Tis the Season’ is followed by the words ‘to be jolly.’ This year, on the first day of Christmas, my true love -and I use those words with the heaviest of irony – has decreed that we will get an election instead of a partridge in a pear tree. Oh joy! This is not the place to debate whether this is a sensible move and what it will (or won’t) do to resolve the ongoing Brexit fiasco. But it is worth exploring the impact it could potentially have on festive trading; five weeks of relentless campaigning dominating the media landscape is certainly going to give the festive run-in a very different feel this time round. Calling a general election slap bang in the middle of peak trading season certainly doesn’t fall under the ‘goodwill to all men’ category, and it adds an additional layer of uncertainty into an already tentative market.
The last time the UK held a December election was 1910, long before Christmas became the commercial behemoth it is now. So we are literally in uncharted waters; we have no idea what impact it will have on the consumer mind-set and their willingness to throw caution to the wind. In previous tough years, the toy trade has always fallen back on the adage that “Consumers have kept things tight all year, but they’ll relax the purse strings at Christmas.” We can only hope that this philosophy holds in the face of what is to come. I wonder if it will be harder for companies to secure media coverage and for messages to cut through, although perhaps the media will be looking for some light relief in what could turn out to be a fairly brutal election campaign. I also suspect that the warm and fuzzy, feel-good, tug-at-the-heartstrings Christmas ads will resonate more than ever this year – the population at large will certainly be in need of some festive cheer.
Arguably, the last thing we need right now is further obstacles being put in the way of consumer spending. UK toy suppliers and consumers are already grappling with the demise of Argos’ legendary ‘3 for 2’ sale. The promotional mechanic has always had its critics, especially amongst other toy retailers, but few would deny that it was capable of moving the dial significantly when it came to sales volumes. While it is no great surprise to see any retailer ensuring its promotional activity is financially viable in the current climate, the impact on sales volumes is keenly felt by suppliers. Perhaps some readjustment in expectations will be required going forward.
That doesn’t mean that retailers are not doing everything they can to drive sales – far from it. Smyth’s Christmas TV ad makes its debut today – we gave the toy market an exclusive sneak-peek at the new creative yesterday afternoon, but if you missed it, you can view it here. Meanwhile, our most-read story of the week focused on the Tesco top ten toys list: say what you like about the cynicism behind these lists (is it a coincidence that most of the products on Tesco’s list were all heavily discounted…), they do seem to work on a level.
Mothercare could do with something working at the moment: it was revealed this week that the retailer has brought in so-called ‘restructuring experts’ KPMG to advise it on its next steps. Did no-one there see what happened to Thomas Cook recently, after it spent a king’s ransom on not one but two of the big four accountancy firms to help it out of the mire (spoiler alert: the countless millions it spent on them only pushed it further into the mire). A toy person got in touch to share his own experience with a former company: “When we got KPMG on board it cost more than £30k a week. I pointed out to the board that we now needed to make all the money to cover our overheads (same as before), plus this £30k a week – and do all the extra work to deal with KPMG’s requests.” My own view has always been that the eye-watering sums involved are generally disproportionate to what a restructuring firm can realistically achieve, especially at the late stage when they are usually introduced into the mix, long after the rot has set in. Ultimately, according to media reports, Mark Newton-Jones wants Mothercare’s UK stores to become franchises, to mirror its profitable international business – effectively turning the retailer into a branding and product supplier. I wonder if there will be any takers…
But it’s certainly not all bad news on the results front: Mattel’s Q3 results surprised analysts, but not perhaps those in the toy market who have been following the steady progress the company has quietly been making. A highly creditable overall performance, with high spots including Barbie, Hot Wheels, BTS and Toy Story, has given a timely boost to the share price, ahead of the crucial Q4 period. After the global results were released, I spoke to Mattel’s EMEA managing director Sanjay Luthra to get the lowdown on the company’s performance in Europe, which you can read here.
The November issue of Toy World landed on desks this week. You can read the digital version of the issue here. The word ‘bumper’ gets thrown around with impunity by publishers – often hilariously inaccurately – but I believe this is the largest November issue we have ever produced. I don’t have time to check, because we are already well into work on all of our editions for Toy Fair Season. In the midst of such a challenging trading environment, we have to be delighted with the way 2019 has panned out for us (especially as we are the only toy magazine not in decline/freefall this year). The truth is that our readership and levels of engagement have never been higher. Things are moving faster than ever out there, and people are looking for news, information, analysis, opinion….all the things we excel at. So whatever the coming weeks throw at us, we will continue to try to make sense of it all, and hopefully another good year beckons for Toy World in 2020.
But let’s not get ahead of ourselves: we still have seven and a bit of the year’s most important trading weeks ahead of us – not to mention five weeks of wall-to-wall political shenanigans. Let’s hope that we will all be feeling ‘jolly’ by the time we close the doors for Christmas.