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A matter of principle…it’s the Friday Blog!

Published on: October 5th, 2018

Just when you thought the Toys R Us saga was coming to its natural conclusion, this week’s developments have thrown a massive curveball to the global toy community. If you have somehow missed the latest twists, you can read how events have unfolded here. It now appears that this was the plan all along – to resurrect Toys R Us as a retail operation once the dust had settled (and the anger had subsided). It would certainly explain the delaying tactics over the sale of the IP, and the constant stalling over the sale of the Asian operation.

So, what will become of Geoffrey’s Toy Box – will it rise like the proverbial phoenix from the ashes? Comments so far reveal opinion is polarised: some suppliers seem keen to support the new operation, while others appear conflicted. Can you blame them? Basically, the financial partners responsible for the collapse of Toys R Us – the same people who destroyed the jobs of 33,000 people and pressured suppliers to continue to send in stock knowing they would never get paid for it, a practice described by one supplier as “ethical fraud” – are now asking toy companies to forgive and forget. One person used the word “distasteful” on my social media feed, and I don’t think he will be the last.

I have no doubt that many in the toy community will welcome Geoffrey’s return with open arms, especially those companies which have struggled to replace TRU’s business. But to say there are trust and integrity issues would be an understatement: put simply, if they were willing to screw so many companies over once, who’s to say they wouldn’t do it again?

MGA’s Isaac Larian has been typically forthright, stating bluntly that TRU is “dead to me.” He summed up what many will be feeling right now: “MGA for one will never give them credit or do business, because they’re not reliable people. I won’t sell toys to them even if they pay cash in advance. For me it’s a matter of principle.” Ok, his current runaway success allows him that luxury, but I admire anyone who is willing to put their principles ahead of other financial considerations.

As it happens, I don’t think the UK will be one of the initial territories earmarked to be revived – there are plenty of established retailers who have moved swiftly to fill the gap here. So, I guess we can sit back, see how things develop in the US / international market and take it from there. Let’s just say I would love to have been a fly on the wall in the Geoffrey’s Toy Box room in Dallas this week; I bet there were a few lively conversations.

The Entertainer’s latest set of results certainly illustrate that UK retailers have been quick to take advantage of TRU’s demise: a 38% jump in profits, allied to a total sales increase across all channels of 7.4% (driven by 28% growth online sales) represents an impressive performance in any climate, yet alone the current one. Well done to The Entertainer – another example of a company that puts principles at the heart of everything it does.

I was on the verge of saying a rare ‘well done’ to Amazon earlier this week, when it announced that it would be increasing its minimum wage for UK and US workers. I had assumed that this was evidence that it was perhaps sensitive to criticism and bad press after all – or maybe that it was simply trying to head off the proposed digital sales tax by doing the principled thing. However, it turns out that Amazon’s altruism wasn’t quite all it appeared, after it was revealed that half the rise will be paid for by cancelling employee share and incentive schemes. So, it appears to be a case of one step forward, one step back – so they don’t get a ‘Hollywood handshake’ after all.

The October issue of Toy World landed on desks last weekend – you can read the digital edition here and the accompanying Mattel Supplement here. With BLE coming up next week, there is naturally a strong licensing theme running through this month’s edition. It will be interesting to take the temperature of the licensing community over the coming days – from a few conversations I have seen on social media this week, it appears that some of the comments in my leader column have struck a chord with a few people. Always happy to start a debate – personally, I don’t see the point of having a platform and never having anything remotely interesting or thought-provoking to say.

I attended the annual Hong Kong Trade Development Council dinner in London last week, and there are unquestionably some interesting things happening in the region. There was much talk of the Belt and Road Initiative (so much talk in fact that our table turned it into a drinking game – a drink for every time it was mentioned. Frankly, I am surprised I made it home…), but behind the headline, there were two things which I found particularly interesting; the first is that there will soon be a direct train link from China to Europe / UK which will transport goods in half the time it takes to ship goods by sea. An intriguing – and certainly more cost-effective – alternative to air freight when stock is needed urgently? Secondly, there are plans to build a massive technology park in the Guangdong area – essentially, it appears that the plan is to turn the region into the Chinese equivalent of Silicon Valley. One wonders what would this mean for toy manufacturing – tech factories would surely pay workers more than most toy factories could afford, and you get the sense that toy factories could be pushed further into China as a result. Definitely a situation worth keeping an eye on.

There’s just time to tell you that Jean-Christophe Pean has moved on from his role at Alpha Animation in the US, to congratulate on Zuru’s Nick Mowbray on being named as New Zealand Entrepreneur of the Year and to applaud Worlds Apart as it heads for a record year (more on that story here).

Finally, gullible media outlet award of the week goes to the New York Post, after it quoted a post from LinkedIn claiming that Richard Barry was the person in the Geoffrey the Giraffe costume in Dallas. Clearly a joke (and a rather amusing one at that), the NY Post fell for it hook, line and sinker and printed it as fact. Unless, of course, that was all part of the deal that saw him pick up a multi-million-dollar bonus just before TRU went into liquidation. I’m sure we’d all put on a giraffe costume for that level of compensation. I’ll be looking very closely at the costume characters at BLE next week to see if there are any licensing executives lurking behind the mask…

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