By all accounts, those people who have been in Hong Kong this week have found it a rather different experience to the one they have previously become accustomed to. When I’ve asked people how they’re finding it out there, the word “quiet” frequently crops up, an anecdotal observation backed up by pictures of empty lines at passport control and stories of record levels of under-occupancy at hotels (one report I saw suggested as little as 4% occupancy across the territory). I gather that some buyers have even been staying in Shenzen rather than Hong Kong this time round, although whether that means a rather onerous daily commute to TST or meetings being held in Chinese factories rather than Hong Kong showrooms, I am not entirely sure. Neither would be ideal.
Of course, the main reason Hong Kong is quiet is not that droves of toy buyers have deserted it – far from it. Apart from reports of fewer grocers and a handful of missing international buyers, I don’t get the sense that the toy community has been put off from visiting Hong Kong en masse, especially not the Brits. And if there were a few drop-offs this time round, I suspect that will just make the January trip even more hectic than usual. However, many tourists – particularly Chinese ones – do appear to have taken the decision to give it a miss. I was never planning to visit Hong Kong in October for a multitude of reasons, but I will certainly be heading out in January: it would take a drastic deterioration in the situation for me to reconsider. As long as you employ a bit of common sense, the ongoing protests don’t strike me as a huge problem – mind you, as someone with a journalist’s natural curiosity, a wardrobe that resembles peak-era Johnny Cash and a hotel located in Wanchai, what could possibly go wrong?
A few reports have filtered back from Hong Kong that this week’s currency fluctuations – the pound has been knocking on the door of $1.30 – have led to some interesting discussions. Never slow to miss an opportunity, some UK buyers have apparently already been asking for better prices, while UK suppliers are nervous that factories will start to ask for increases if the pound continues to strengthen. Personally, I think it is a bit premature to be basing negotiations on what has happened to sterling over the past few days – maybe it’s best to wait until we see what happens with the Johnson ‘deal’ first. Although, as someone pointed out, it’s ridiculous how much money has been lost in sales and margins this year by the whole sorry mess.
Perhaps unsurprising given the retail climate, this week has seen the big UK toy retailers ramping up their promotional activity several notches; half price sales at Smyths, Sainsbury’s, Tesco and Morrisons, coupled with an Argos Crazy Codes campaign which will last for the next 10 weeks, all point to the fact that an aggressive price war could be looming. With NPD confirming that the UK toy market has declined by 9% YTD to September and is down 11% in the month of September, plus Brexit still hanging over us like the sword of Damocles, I doubt this comes as a huge surprise to anyone. Buckle up people.
Mind you, not all retailers are being poleaxed by Brexit shenanigans; value retailer Home Bargains posted stellar results this week, exceeding £2.5b sales for the first time. Not only have sales doubled since 2013, but Home Bargains has also announced that it will be looking to double its estate to 1000 stores in the coming years. What’s more, the Financial Times retail correspondent Jonathan Eley suggested that the fortune of the founding Morris family is now greater than that of Mike Ashley and Philip Green combined. Huge, if true…
Leaving Brexit aside for a minute, another topic that is never far from the media’s gaze these days is sustainability. What I suspect may have been an innocuous comment from Lego’s vice president of sustainability about being open to the idea of offering customers a rental service was quickly seized upon by the media and rapidly turned into an initiative that would be happening very soon, which I suspect is highly unlikely. When I posted the story on my LinkedIn page, a few people viewed it as a positive move, following broader retail trends, while the more pragmatic posters envisaged nothing but problems: even the Lego man, when talking about the high piece count of many sets, admitted: “What are the chances of giving them to an eight year-old child and getting them all back again?” Someone else questioned whether every set would be cleaned after each hire, while the administration of such a scheme would surely be a burden of epic proportions (it’s not a single dress that is likely to be worn once or twice and easily cleaned). And I wonder how toy retailers would react to the loss of turnover and profit from one of their largest accounts. As an industry, we obviously have to be aware of our responsibilities and polite when responding to questions of sustainability, but I think we also have to be practical; the person who described this as “ridiculous, anti-retail virtue-signalling nonsense” may not win any awards for tact and diplomacy, but – in truth – is he really that far wide of the mark?
However, as I’ve been talking about Hong Kong this week, I’m just going to throw one suggestion out there which could arguably help our industry’s reputation in the environmentally-friendly stakes; people having to take flights to Hong Kong for a single appointment. The beauty of the January and October trips is that suppliers can see a multitude of buyers in one go; yet in recent years, I have heard of people having to fly to Hong Kong at other times just to see one individual account, with the fear of missing a substantial order if they didn’t agree to the meeting. Quite how such a practice sits with retailers championing their green credentials escapes me. One wonders how these retailers’ sustainability officers – not to mention the public – would react if they found out. As we all have to find ways to address our carbon footprint and sustainability, maybe this would be a good place to start?
Finally, if ever a reminder was needed that the toy community has the most particular and discerning of consumers to convince, this week’s episode of The Apprentice illustrated it perfectly. It took the focus groups of 6-8 year old kids approximately 30 seconds to demolish the ‘brilliant’ ideas of the would-be entrepreneurs, whose toys stood up to scrutiny about as well as a chocolate fireguard. Hopefully they will be far more receptive to what the proper toy industry has to offer them this Christmas.