Innocent until proven guilty …it’s the Friday Blog!

I’m going to get the bad news out of the way first: despite last ditch attempts on Monday to avoid industrial action, the Unite union has apparently rejected the latest pay offer from the port of Felixstowe and strike action is scheduled to go ahead from the 21st- 29th August. The likelihood is that there will be significant disruption to services calling at Felixstowe during this time. Just what we all need right now…what we would all give to the turn the clock back to more normal times when all we had to moan about was a grocer knocking the latest hot movie line out at 25% off on the day the film launched.

Hopefully there won’t be too much of a knock-on effect on Christmas stock arriving – our most read story of the week covered the John Lewis festive Top 10 (people do love a list). As has been the case for several years, JLP was first out of the blocks, releasing its predictions while UK consumers are still sweltering in practically tropical temperatures and battling drought conditions. Personally, I am not sure that Christmas could be further from anyone’s mind at the moment, but I guess someone has to be first. There were no great surprises or curveballs on the list, but then you wouldn’t necessarily expect that from a traditionally safe retailer.

In other retail news, Lego unveiled its revamped Leicester Square branch this week, now the largest Lego store in the world. Toy World’s assistant editor Sam was there for a sneak peek the night before it opened and was suitably blown away – as was her 12-year-old son. One of the truly great things about Lego is its wide generational appeal – and if it can keep teenagers (and grown adults) interested in toys, that can only be a good thing. Frankly, we need all the customers we can get right now.

I am sure toy specialist retailers across the world will echo that sentiment – and the last thing anyone needs is additional obstructions put in the way of trading. So, I was disappointed to hear this week that eBay is employing what can only be described as rather heavy-handed, draconian measures against retailers which it *believes* are selling counterfeit products. An established, completely legitimate retailer (you know, the ones who have to demonstrate they have all the relevant safety markings and certificates) told me that he has been accused by eBay of selling counterfeit products, and when he protested his innocence, was told he had been found guilty and there was no right of appeal. He even offered to send them a letter from the MD of the company whose products were the subject of the accusation, confirming that the products were genuine; eBay’s response was effectively “Oh we don’t doubt that you might be buying some legitimate products from them, but that doesn’t mean these ones are genuine.”

Now I know that platforms have come under attack in the past for being far too relaxed about letting infringing product be sold online and too slow to act when a product was found to be dangerous – but this seems to be going to the other extreme. Clamping down on the cowboys is very much needed, but surely it would be more effective if it was done in the right way – going after bona fide retailers, accusing them of selling illegal product and offering them no redress or right to appeal seems rather unfair. Whatever happened to the principle of ‘innocent until proven guilty’…?

Meanwhile, over in the Far East, there has been some slight relaxation in the quarantine regulations for Hong Kong. Sadly, judging by numerous comments on my LinkedIn post explaining the new rules, it doesn’t seem that the changes go far enough for the global toy community. On the plus side, quarantine has been reduced from seven to three days. However, further ‘medical surveillance’ is required over the next four days, including a daily PCR test (which I suspect won’t be cheap). During those four days, visitors are not allowed to enter bars or restaurants, curtailing the opportunity for networking and socializing, where many valuable relationships are forged. Overall, it still feels like they’re not exactly rolling out the red carpet and welcoming international visitors back with open arms.

Virtually every comment on the story came from people who said that they would only return when restrictions are lifted completely, not eased slightly. On that basis, a return to Hong Kong in January 2023 is looking debatable. Some have even questioned whether the days of the toy community heading to Hong Kong in September and January will ever return. Perhaps the most honest / brutal assessment came from toy stalwart Kim Carter, who said: “This has changed forever. The really important buyers have their offices there, which take care of the business they need to do with the factories with whom they are established. The others have managed for two years now working with local suppliers. In the short term, FOB purchases will be restricted because of the global economy. In terms of international business, Nuremberg will be king in the new year and come next September LA & New York will have taken over. Remember much of the creativity is still either North American, Western Europe or Australia driven. Time for everyone to move on.”

Is he right? On a personal level, I hope not. I have very much enjoyed visiting Hong Kong over the past 15-20 years, and I have always found the trip to be productive and worthwhile. However, times change, and as we have seen in recent years, if something disappears for a prolonged period of time, it is much harder to bring it back (that has certainly been the case in the trade magazine market, for example…). Of course, it’s not impossible – London Toy Fair missed one year, Nuremberg has missed two years, and they have both came back strongly. However, if the January Hong Kong trip doesn’t happen next year, by ’24 it will be four years since the last one – and that is a sizeable gap. I would love to believe that the Hong Kong government appreciates what needs to be done – let’s see what happens over the next few months.

I couldn’t have put it better myself…it’s the Friday Blog!

A few interesting nuggets about the impending Toys R Us UK launch have emerged this week. According to what we in the media like to call ‘multiple sources’, the original intention was apparently to launch the website in June. However, according to an official statement issued by Louis Mittoni to the Australian Stock Exchange, “we experienced disruptions to equipment availability in the UK that have delayed operations.” In an email he sent to me earlier this week, Louis indicated that delays caused by customs were to blame, which is certainly plausible (I’ll return to that point later).

In the same official statement to the ASE, it was reported that Toys R Us ANZ had secured a loan facility of A$15m to support the company’s entry into the UK market. The loan was described as supporting “working capital and capital expenditure requirements, including the acquisition of inventory.” Perhaps this was actually the driving factor behind the delay? You need hard cash to buy stock in this climate – I would imagine many suppliers are nervous about offering extended credit facilities to new accounts, even ones with iconic names.

Either way, the launch date is now scheduled for the end of August / early September, which may ultimately prove to be better timing than the start of summer– arriving just as things start to hot up for Christmas. It sounds like the person who tipped me off about a second Amazon Prime Day in October was right (I’ve now heard it from numerous sources), so I think we are going to see a lively and competitive festive trading period this year, both on and offline.

Let’s hope there aren’t too many curveballs before then – such as the story about 92% of workers at Felixstowe voting for strike action in a dispute over pay. Nobody needs any further supply chain disruption right now; I think I can speak for every toy retailer and supplier when I say, politely and with the greatest of respect, NOT NOW FELIXSTOWE!

It’s not just container ports where it is all kicking off – this week saw Roblox sue WowWee over an alleged infringement of its trademark ‘block’ figures by the toy company’s new doll range My Avastars. WowWee has strenuously denied the allegation and vowed to vigorously defend its position. We’ll keep you posted on further developments.

On to happier news, the August issue of Toy World landed on desks at the start of this week, and the digital issue has already been racking up views online. There’s plenty to get your teeth into in the 148 page edition, which is jam-packed with great content and a treasure trove of new toys which are currently hitting the market. You can also find out what happened when Paul Reader and David Middleton visited the Learning Express Toys show in Florida, as the relationship between the UK and US specialty retail chains continues to evolve. Someone sent me a fascinating email after reading that article to let me know that a similar attempt at fostering UK / US indie collaboration took place back in the 90s. I will keep the detail private – or at least hold it back until I release my memoir of my time in the toy trade just before I retire (the plan is to include all the ‘interesting’ material I couldn’t use over the years). Suffice to say the meeting didn’t quite go according to plan, but three decades later, there seems to be a much more open-minded attitude on both sides as to the benefits of exchanging information and knowledge.

I will be doing my own bit for transatlantic relations when I host a POP webinar later this month, where I will be joined by representatives from the London, Nuremberg and Hong Kong Toy Fairs to give US marketing and PR people a flavour of what to expect at the Q1 international toys shows, arguably even more relevant now that New York has chosen to move its show from February to September.

On so many levels, the world is getting smaller, and the ripple effect of what happens in one place is invariably felt across the globe. Nowhere is this more true than Brexit. I don’t think it is any great secret that I am not the biggest fan of Games Workshop (long story), but I am prepared to put any enmity to one side to quote a passage from the company’s results statement this week, just because it falls into the ‘I couldn’t have put it better myself’ category: “Low Point: Brexit has added £3.4m of additional supply chain costs, we have an outstanding £11m VAT receivable (a timing difference as we now pay VAT on entry to Europe and submit a reclaim) and we are trying to mitigate staff recruitment gaps, especially those with language skills in the UK based European trade team. We look forward to the Brexit benefits promised.” I hope they are a patient bunch, as I suspect it will be a while…

Finally, with the incredible achievement of the Lionesses last weekend (Men: “It’s coming home” repeated ad infinitum for over 50 years; women: “Ok, just leave it to us”) and the Premier League making a welcome return tonight, football is very much back with a bang, and this is your last chance to enter our Fantasy Football Toy World Masters League. We have just crossed the 100 player mark, so you will be joining lots of your industry friends and colleagues. The entry code is vnpxlv – just go to the website, where entering a team and joining our league is completely free. Everyone’s welcome, novice or pro alike. If nothing else, it might help to take your mind off the truly bizarre Conservative leadership contest and yesterday’s announcements about rising inflation and impending recession. Keep smiling – Christmas is coming.

 

 

Is it too early to talk about Christmas…it’s the Friday Blog!

The UK heatwave turned out to be mercifully brief, but some good came out of it – I understand that toy sales in the first two weeks of July saw a considerable bounce, propelled by sales of outdoor toys. That said, it’s probably best to see that as a very welcome blip rather than evidence of a turnaround in consumer confidence. I saw a statistic this week which suggested that High Street footfall was actually up by a whopping 40% in June, yet sales fell in monetary terms. Plenty of people are visiting retail, but they’re watching what they spend very carefully.

This problem isn’t confined to the UK – over in the US, Walmart has issued a warning that it is expecting its profits to drop by 13% this year, while Reuters reported that both Target and Walmart are reducing FOB orders in favour of domestic business. Reuters seemed surprised (and didn’t seem to fully understand the concept of FOB trading), but I wasn’t – this often happens when retail faces tricky times…putting more of the risk onto suppliers by converting FOB business to domestic seems a perfectly prudent strategy, giving the retailers far greater control over stock and the ability to turn the tap on and off. It poses questions for suppliers, who have to decide whether to be bold or cautious in terms of how much reserve stock they bring in, knowing they could either end up with a warehouse full of stock or unable to fulfill late orders.

And this year, we may well see Christmas sales going to the wire as they did before the pandemic. I say that partly because several major toy companies have either told me or been quoted as saying that they believe retail promotions will return to a more traditional (aggressive?) pattern this year. If consumers believe that, they may be more inclined to wait for deals. In addition, Christmas falls on a Sunday this year, giving consumers a full week and a final Saturday to complete their festive shopping. According to NPD, the last time that happened back in 2016, sales exploded in the final week, but that relies on retailers holding their nerve and having sufficient stock, and also suppliers being in a position to supply right through to the end of the festive season – and in the current climate, that is two very big ‘ifs’.

There is another potential development to factor into Q4 planning: there are strong rumours circulating that Amazon might be running a second Prime Day in October. If this turns out to be true, it will certainly have an impact on the promotional plans of other retailers, although it could also be seen as an opportunity for everyone to kick start festive sales at a relatively early stage. We’ll keep you posted on whether Amazon decides to go down that particular road, and what domino effect that might have on the timing of other retailer’s promotional calendars, as we hear more.

As well as optimising stock levels for Q4, suppliers also have the tricky task of working out how much to increase prices by. Speaking to NPD this week, we are starting to get more insight into the effect that increasing prices has on sales volumes. Perhaps unsurprisingly, initial signs suggest that the impact can be significant: for example, in the Action Figure category, there is evidence to suggest that when the price of a figure goes over £10, the volume can drop by as much as 50%. Of course, this isn’t black and white: there are a lot of nuances in different categories and at different price points, and even for different consumers. But even those Kidults whose purchases of expensive toys has helped to fuel the UK market in recent years may be wondering if they can really justify spending several hundred pounds on a shiny new toy right now. It really is going to be a fascinating second half of the year…

Meanwhile, over in Hong Kong, there has been talk of a relaxation of quarantine rules, despite everyone sensible pointing out that quarantine needs to disappear completely, rather than just be shortened by a day or two, before international travelers will return in force. One supplier based out in Hong Kong asked me if I thought Western visitors would be comfortable wearing a trackable wristband as a condition of entry, as has been mooted: I suggested that a few might be willing, but that the majority would be seriously uneasy, given the wider situation with China and Hong Kong.

It doesn’t help that Toy & Edu China announced this week it would be postponing its August event for two weeks – making a change at such short notice won’t exactly help to instill international visitors with the confidence to book flights and accommodation for Asian events. China and Hong Kong really do need to get a grip of the situation before it renders Asian destinations off limits for business travelers.

Also on the international front, Nuremberg has announced that it will be opening the Model Railway Hall (7A) to consumers over the weekend next year. A few people contacted me to ask whether I thought this might be extended to the rest of the show if the move is successful, but I really can’t see it. I am not a fan of mixing trade and consumer, although I appreciate the Railway section already blurs the lines. I just can’t see that approach would work for the rest of the event.

I was sad to hear that popular indie retailer Ken Andrew, the original owner of Hal Whittaker’s toy shop in Knutsford, passed away last week. I didn’t know Ken personally, but he was extremely well-loved and respected by many people in the UK toy community, especially those who have been around for a few decades. Our condolences to his family, who I am delighted to see continue to own and run the shop, preserving Ken’s wonderful legacy.

Finally, there is one week left to sign up to the Toy World Fantasy Football League – we have 73 players on board so far, so if you would like to join them, the entry code is vnpxlv – just go to the website, where entering a team and joining our league is completely free.

The heat is on…it’s the Friday Blog!

Warm enough for you? Thankfully we managed to dodge the wildfires in our neck of the woods, although I hear a few reps got uncomfortably close on motorway journeys earlier this week. I suspect the apocalyptic weather was both a blessing and curse for retailers: I had to go out to buy printer paper in the middle of the day on Tuesday (it’s press week for our August issue – another scorching issue coming your way very soon) and the Asda car park was practically deserted. I imagine a lot of people chose to do their shopping early in the morning or late at night to avoid melting.

Conversely, some toy retailers have told me that they have had a massive week on outdoor toys. Timing is everything with the good weather and toy sales, and with this burst of extreme temperatures coming just before the summer holidays, it couldn’t have been better. I hope people were well stocked with paddling pools, water blasters, water balloons and the like – because the demand was undoubtedly there this week.

Which is good, because – brace yourselves for a blast of honesty – it has been a tricky few weeks. To be precise, around six weeks, according to certain retailers and suppliers I spoke to this week. Perspective is needed: it’s not just toys, but UK retail in general is having a challenging time. Toy stores may even be faring a little better than many other destinations. But as the reality of inflation and rising prices hit home with consumers, the inevitable repercussion was a short-term reduction in footfall and sales, as people recalibrated their household finances.

According to some of my retail contacts, the declines are not necessarily across the board: there is a bit of a North/South divide, and an even bigger divide between the market towns and ‘local’ stores versus outlets in cities. But overall, the feeling is that we have just been through something of a sticky patch.

At least it’s a relatively steady time of the year for toy sales – there have been several sets of Q2 results released this week; Hasbro recorded a solid performance, while Mattel’s numbers were pretty special. Of course,the year isn’t won or lost in Q2. If the year is a four-course meal, Q2 is a pallet cleansing sorbet that tastes of very little. It’s the main course and the sumptuous desert we’re all looking forward to.

Despite the UK cost of living crisis being in danger of escalating out of control, the government seems powerless to intervene, or is choosing not to – free market, neo-liberal economics has its advantages in the good times, although it is arguably not the best defence against the prevailing economic headwinds. And the average member of the public can’t do what the previous Chancellor ‘Richi Rich’ Sunak, or current Chancellor Nadim Zawahi, allegedly did to make their finances stretch a bit further – registering your wife for non-dom status or manoeuvring shares into your father’s offshore trust isn’t exactly a viable option for Darren from Doncaster.

Politicians aren’t the only ones making the most of certain tax arrangements (you might even call them loopholes if you were so inclined…): Amazon UK Services, which includes the company’s network of warehouses, paid absolutely no corporation tax last year – despite hitting revenues of an eye-watering £193 a second. It seems the company took full advantage of Richi Rich’s super deduction, which offers firms 130% tax relief on qualifying plant and machinery, to wipe out its entire tax bill. Nice work if you can get it (I am not sure the acquisition of ToyNews and Licensing.biz counts, unfortunately). At least one prominent toy retailer I spoke to this week suggested that it would be wrong to blame Amazon for simply following the rules of the land – his view was that it was entirely the fault of the government for creating the policy in the first place. And by the letter of the law, he is 100% correct.

Having missed the BTHA Industry Day after catching Covid just days before, I was delighted to catch up with the BTHA team and many of the Council members at a special lunch this week to recognise the contribution of industry legends Andrew Laughton and Clive Jones to the Toy Trust. Both men stepped down from the Council over the past couple of years, but the pandemic precluded the BTHA from being able to mark their many years of valuable service to the Association. So, this week was a great opportunity to formally thank them in front of a specially invited audience of current and previous Council members, together with a host of industry friends and colleagues.

Clive Jones modestly said he had nothing prepared and then proceeded to give a fifteen minute speech thanking almost everyone in the room (he is going to make a great MP one day), while Andrew Laughton not only accepted a parting token of appreciation from the BTHA, but also a generous gift from his former colleagues at Zapf. I am sure ‘Little Andy’ – as he quickly became known – is going to take pride of place at Laughton Towers. Despite rumours to the contrary, ‘big’ Andrew has no plans to start a ventriloquist act with ‘Little Andy’ – although that would make excellent entertainment at this year’s Fence Club Christmas Party…

I will leave you with some photos from a memorable afternoon. The great thing is that I get to call this work: talking to so many knowledgeable industry figureheads about the current state of play out in the market is a priceless opportunity, and it helps us to do what we do best – reflect exactly what is happening in the world of toys…the good, the bad and (occasionally) the ugly.

 

In a league of its own…it’s the Friday Blog!

While no-one is pretending it’s easy at the moment, thankfully it seems that the toy market is continuing to buck the general retail trend. We don’t have the launch of the Argos catalogue in summer to galvanise the market these days, but there are plenty of new lines hitting shelves over the coming weeks to start injecting some excitement and ‘newness’ (a word I dislike intensely – someone please come up with an alternative as soon as possible so it never has to assault my ears or brain ever again) into proceedings.

Overall, retail is pretty grim in the UK right now: according to the British Retail Consortium, sales in physical stores and online have now dropped for three months in a row, while prices in the UK are currently rising at their fastest rate for 40 years. Total retail sales decreased by 1% in the five weeks between the end of May and the start of July, compared with an increase of 10.4% in June last year. And yet…. Mattel shares have actually been rising this week following an upgrade from Goldman Sachs, which was predicated on the belief that toy companies are better placed to withstand economic uncertainty than many other categories.

Hasbro is another business in good shape, as the 200+ attendees at this week’s Peppa Pig partner event learned. There is positive momentum in both the toy and licensed Peppa ranges, and there are already strong brand plans in place for next year, building towards 2024, which will be Peppa’s 20th anniversary. An incredible achievement and you can see why Hasbro intends to paint the trade pink that year. Congratulations to all the winners of the awards given out on the day, brilliantly dubbed ‘The Oinksters’ – there was a strong showing from the toy category, with both Character Options and Wow Stuff triumphant, along with retailers Tesco and Asda.

Toy retailers can also take heart from this week’s Amazon Prime Day, which apparently saw many sale prices looking remarkably like normal prices from last year, and overall, toy deals didn’t seem to be especially prevalent or outrageous. Collectively, the toy community probably heaved a sigh of relief – the last thing anyone needs right now is current or best-selling lines being killed for the rest of the trade in an unnecessary two-day bloodbath in the middle of summer. I liked the way someone described Amazon’s approach: “They want to be the lowest price…but they want the lowest price to be as high as possible.”

Elsewhere, Lego finally confirmed that it would be pulling out of Russia indefinitely. Although the company had stopped delivering products to Russia back in March, its shops remained open despite most other international retailers pulling out of the territory. However, Lego has now confirmed it will be ending its partnership with Inventive Retail Group which ran 81 Russian shops on Lego’s behalf. Even though it did not specifically cite Russia’s invasion of Ukraine for the move, it is unquestionably the right decision for a company as ethically and morally impeccable as Lego.

I was sad to hear that Eaglemoss has given notice of its intention to call in administrators – I remember meeting the team when it first entered the retail space a few years ago and was always impressed with the quality of the product the company produced. Unfortunately, a fall in revenue from £68m to just over £30m in the company’s latest accounts suggests there were significant issues, and there have been murmurs for a few months which hinted that all was not well.

Conversely, Character Options will be delighted to have been appointed by Playmates to distribute the new Teenage Mutant Ninja Turtles toy range in 2023: a Classic TMNT range will launch for Easter 2023, followed by a line based on Paramount Picture’s highly anticipated animated new feature film, set for release next summer.

Over in Hong Kong, Hong Kong’s new health chief has claimed that “conditional quarantine-free travel could be allowed by November” – although the word ‘conditional’ appears to be doing a lot of heavy lifting in that sentence. To be fair, readers of the Blog will know that I was told something similar several months ago, so there is clearly movement in the right direction in terms of loosening restrictions. But, as ever, the devil is in the detail – and there were some very mixed messages in the comments attributed to the new Secretary for Health. Within the space of a single article, the possibility of removing quarantine completely and moving to a five day quarantine were both mooted – and those are two very different scenarios for international visitors, especially when you consider the traditional timing of the Hong Kong Toy Fair and the opening of the showrooms in TST.

In addition, it was suggested that visitors could be subject to PCR testing (which is fine) and prohibited from attending “high-risk venues like bars.”  Ok, but what about restaurants – or even bar/restaurants? Or trade shows and showrooms? Would these be classified as “high risk venues”? What constitutes the risk – the number of people, the density, the ability to control interactions?

As I see it, a sizeable number of people from the global toy community would welcome the opportunity to return to Hong Kong – but in order to do that, they need reassurance that the goalposts won’t be moved after the trip has been booked, or – heaven forbid – while they are there. No-one wants to be forced into quarantine if something suddenly changes. The challenge is whether anyone in the Hong Kong government can offer travellers a cast-iron guarantee – and if that isn’t feasible, how many will be prepared to take the risk?

Finally, with the new football season a few short weeks away, if you would like to join our Toy World Masters League this year, the entry code is vnpxlv. We already have lots of last year’s contestants signed up, but if you play the game and want to join in and compete with fellow toy people, head to fantasy.premierleague.com or drop me an email john@toyworldmag.co.uk and I will send you an email invitation.

One step ahead of the competition …it’s the Friday Blog!

There has been a lot of activity in the toy retail channel this week, with interesting developments both on and off the record – some encouraging news, some not so positive. Let’s dive in and see what has been occurring…

First up, there was the huge news that Smyths Toys has acquired the French toy retail chain PicWic Toys. I first heard rumours at the end of last week that Smyths was in pole position, and despite several other credible bids, the court ultimately confirmed late on Tuesday afternoon that it had chosen Smyths to take over the running of the business. The move creates Europe’s largest specialist toy retail operation, and it made perfect sense for Smyths, who told Toy World that “we are confident that we can successfully introduce and grow our brand in France.” Given the success of the Smyths German operation, which saw the retailer take over the Toys R Us stores in that territory and turn them round successfully, you can understand that confidence.

Ahead of the acquisition, there had been some murmurs on LinkedIn that suppliers would be heavily out of pocket following the PicWic collapse, but a key part of the deal involves Smyths providing 9m Euros in compensation for creditors, as well as a sizeable contribution to the job protection plan and 50m Euro working capital being deposited, so you would hope that this mitigates the suppliers’ concerns.

Meanwhile, back in the UK, the CMA announced that it is investigating Amazon over some of its listing practices. It will be a long, drawn-out, complex investigation, so don’t expect a quick resolution – but this is a good opportunity to find out if the CMA has teeth. It’s anyone’s guess what the conclusion will be and what level of punishment will be deemed appropriate if Amazon is found guilty (which is a big ‘if’, to be fair). However, as several toy sellers have pointed out to me, they saw a tangible difference in their business when Amazon stopped selling non-essentials during the pandemic, so the platform clearly plays a pivotal role in determining market pricing, arguably even more so than Argos in its heyday. Too many times I hear of great products being killed as a viable line for other toy retailers by Amazon, and I wish we could find a solution that worked for the toy community as a whole. Amazon isn’t going away, and I appreciate that it can shift serious volumes, but it can also be a product killer and that really isn’t ideal.

Moving to the off the record news, I am hearing that certain key toy retailers have a buying ban in place. It’s difficult to offer comment, because there can be many reasons why a buying ban is introduced: maybe the retailers over-bought earlier in the year? Maybe there was a huge clearance parcel or two that hoovered up the available budget? Maybe demand is soft and coupled with carry-over from the end of last year, pressing the pause button makes sense in order to reset the balance ahead of the run-in to Christmas. Or maybe the accountants are winning the internal battle over the buyers – numerous people who have worked in retail over the years have told me that the internal conversations with their bean counters were often far more of a battle than conversations with suppliers.

I also heard of one major retailer which chartered its own ships from the Far East, which subsequently decided it didn’t need that level of capacity after all, resulting in some cheap deals being offered to suppliers to fill the space onboard the ships. It has certainly been tricky to get the balance right over the past year – it has often been a case of feast or famine when it comes to shipping availability and stock flows.

The latest Sainsbury’s / Argos results reinforced the perceived wisdom that non-food retail is having a challenging time, with Argos sales and Sainsbury’s general merchandise numbers both down double digits. Suppliers are still complaining that it is almost impossible to communicate with Argos buyers or get decisions – even on carry forward lines – so I hope the retailer can sort that out before the festive season kicks in. The last thing anyone needs is radio silence from one of the industry’s big guns ahead of Q4.

Despite the ongoing retail turbulence, there have been some uplifting stories this week; you have to take your swim cap off to the brave souls from the licensing community who swam the channel to raise funds for the Light Fund last week. Reading their first-hand accounts of the experience, it sounds absolutely horrendous, so well done to them for persevering and succeeding.

I also raised a smile at the ‘gentleminion’ trend which has been sweeping social media. Frankly, there have been some daft (and often dangerous) TikTok challenges over the years, but the thought of a bunch of teenage boys putting on formal attire to visit the cinema to watch the new Minions: Rise of Gru movie strikes me as one of the better things to come out of the medium. There have been a few claims of rowdy behaviour, but frankly if teenage boys want to put on a suit and tie to cheer the Minions on, that suggests all is well with the world. This is a franchise they’ve grown up with, and it obviously means a lot to them on an emotional level – and isn’t that what we want from entertainment brands, to resonate with the audience and evoke genuinely positive feelings? Minions may just catch a few people by surprise in the coming weeks, as it has been a bit over-shadowed by Jurassic World Dominion and Lightyear in some quarters thus far.

Just as some retailers may have thought Stranger Things wasn’t quite right for them – while other indies talk of selling over 1000 units over the course of a weekend. Never has it been more important to be open to the prospect of ‘different’ ranges, and to find a niche that other retailers may not be fully exploiting. This will always be the advantage that specialist toy retailers have over the bigger corporate retail operations– be nimble, quick and responsive and you always have a good chance of keeping one step ahead of the competition.

On a positive note…it’s the Friday Blog!

Well, it finally caught me – I landed back home on Monday after a lovely and long overdue holiday only to test positive for Covid. Sadly, my delusions of super-immunity have been shattered – it seems my body will no longer be required for medical science experiments. More importantly, it meant that I wasn’t able to attend this week’s BTHA Industry Day, which was a real shame – it is always a great day, and a wonderful opportunity to catch up with many people I haven’t seen since Toy Fair to gauge how everything is going out there. However the rest of Team Toy World report that the day was a huge success and they thoroughly enjoyed chatting with everyone.

Unsurprisingly, general economic indicators point towards a testing summer for retail in general. High street footfall fell 25% in May. Overall, footfall is estimated to be -48% lower than pre-pandemic levels, driven by declines in big city numbers as a result of hybrid working. Last week’s rail strikes didn’t help, as I am sure we’ll see reflected in the June data.

However, I am hearing that toy retail is holding up better than many other sectors: new Pokémon, Lego and Squishmallow releases and some ‘leftfield’ ranges such as Stranger Things capsules, coupled with lines from summer blockbusters such as Jurassic World Dominion, Minions and even Top Gun Maverick, are generating nice buzz and footfall at specialist toy stores and major retailers alike.

There will be challenges ahead, especially in the pricing area. This week has seen reports of Heinz and Tesco falling out over price increases, with some key brands temporarily absent from Tesco’s shelves while the two sides attempt to resolve their differences. It shows that while retailers are prepared to be a little more sympathetic to price increases than usual, there are still limits.

Mind you, the imminent government ad campaign, suggesting businesses should cut prices to help with living costs, strikes me as yet another example of the government fundamentally failing to understand the challenges which business are facing. They could reduce VAT on petrol, or even reduce fuel duty – both of which have seen huge tax windfalls as the price of petrol has soared. They could put pressure on the fuel industry to justify why pump prices have continued to rise despite oil prices falling for the past month. Yet instead of practical support measures that would support business and consumers, they prefer to tell businesses they should be absorbing their additional costs. Words fail me. I appreciate that many people in the government have never run a company (or even held a real job in some cases), but ministers like Nadhim Zahawi, who used to work for Fashion UK, must be mortally embarrassed to have to defend such ridiculous policies.

Over in the US, former Toys R Us directors in the US are facing trial over their conduct during bankruptcy proceedings in 2017, where they will stand accused of misleading suppliers over the retailer’s financial position. Anecdotally I was told by several suppliers at the time that they were encouraged to continue shipping to the struggling retailer, with assurances from unnamed senior people to the effect that “it will be ok, don’t worry.” It will be interesting to see how the Judge assesses those conversations – are individuals responsible for what they communicate to suppliers on behalf of their company, especially assuming they were under significant internal pressure to maintain that things were fine? Or should they have been more honest with their vendor partners, even in a ‘nod and a wink’ way?

There are some big names under the microscope – including David Brandon, Richard Berry and others – so it is unlikely that they will be able to claim they didn’t realise how bad the financial situation was. In truth, I don’t know which way the judge will go, but I do think this case will be very closely watched by retail executives in every sector – if Toys R Us directors receive heavy fines or even jail time for the way they conducted themselves, it will act as a very powerful deterrent for anyone finding themselves in a similar position in future.

And I do feel sorry for those businesses that have still operate successful Toys R Us operations across the globe – it can’t be good to watch the brand you have over your door or on your website dragged through the mud over the actions of some individuals five years ago. Within the toy community, we all know that these are all very separate businesses, but does the average global toy consumer?

Rounding up some of this week’s main news stories, congratulations to Tim Hall on receiving a Golden Teddy and huge condolences to industry friends and colleagues of Brightminds’ Alison Quill, who sadly passed away in April. I was also sad to see that Melton Toys has closed its doors after 12 years of trading, and that former Palitoy chief executive Bob Simpson passed away recently.

Finally, the July issue of Toy World has been landing on desks this week and available to read online now. It’s another fantastic issue, with some great features – you can read all about the Schleich global brand strategy and find out what US visitor Mike Derse from Learning Express Toys made of the Toymaster May show. Toymaster completed the Anglo-US exchange last weekend, when Paul Reader and Dave Middleton made the return trip to the Learning Express show in Florida – you can read all about their stateside experience in next month’s issue. I love the fact that we have two fantastic specialist independent organisations collaborating and exchanging ideas – in many respects the challenges faced by the specialist toy retailers are often the same across the globe, so co-operation can only be a good thing.

As well as these great articles, the July issue includes truly comprehensive features on the Construction, Tech Toys, Dress Up & Role Play and Stationery categories, plus all the latest news and views from around the trade as we enter the second half of the year. Indeed, Q3 starts today – let’s all do our best to make it a good one.

Planes, trains and automobiles…it’s the Friday Blog!

I am just coming to the end of my first ‘proper’ holiday in three years – by the time you read this, I will be about to head home. Have I missed anything? I assume the airports are all running smoothly now, so my trip back will be hassle-free. And surely the price of petrol must be on its way down? If not, I guess there is always rail travel as an alternative?

Ok, so getting from A to B might not always be straightforward right now, and prices are increasing across the board on an almost daily basis, but at least we have that high wage economy the PM promised us to soften the blow and offset all these rising costs…right? (Checks the latest news from the UK, reads that the high wage economy apparently only applies to bankers and MPs, logs off with an eye roll). Yep, turns out I was wrong in last week’s Blog – we haven’t gone back to the eighties, it’s actually the seventies.

This all takes me back six years, to when I was about to return home from another international trip – albeit for business rather than pleasure on that occasion. As we sat in the Vegas departure lounge after the 2016 licensing show, a historic vote was taking place back in the UK – the Brexit referendum. As we boarded the plane, ‘remain’ had just won the first constituency declared (albeit narrowly), and we settled down to sleep as we flew back overnight, with no idea of what was to greet us upon landing. The audible gasps as phones were switched on nine hours later told the tale – and here we are, six years later, still paying the price, especially with the ongoing weakness of sterling. When sterling collapsed as Leave emerged triumphant on that fateful morning, Brexiteers were quick to suggest that currency fluctuations are merely blips, and the fiscal law of reverse gravity (‘what goes down must eventually come back up’) would see everything balance out soon enough.

And yet…it hasn’t. Six years down the line, sterling remains in a parlous position, with little prospect of improvement on the horizon. The Bureau de Change at the airport would have given me less than 1 Euro or Dollar to the Pound, had I been disorganized enough to need cash at the airport. Far more concerning is sterling’s weakness on the economy and on business – it may not be the root cause of all the current economic and business turbulence afflicting the UK, but it sure as heck makes the problems far harder to fix.

But here we are, all in the same boat and at least lucky enough to work in an industry that is partially protected from the deepest economic impact. And finding ‘little wins’ is more important than ever’; so, if you were one of the companies who read last week’s Blog, logged straight on to Amazon Vendor Central and put through price increases which were approved instantly, good on you. Happy to be the bearer of good news, and if we can help our readers to trade more profitably and effectively by doing our job as journalists, we all win. A few people have grumbled that in certain instances, Amazon is insisting on a 60-day notice period for the new prices to take effect (basically, “where the cost increase would have a major financial impact for Amazon” according to the Ts and Cs), but that is surely better than not having no real mechanism to put through price increases, which has essentially been the case for most vendors over the past year.

Indeed, across the board, retailers are looking at ways to make their operations more profitable and effective – and the ways in which they are approaching that goal are many and various. For B&M, it’s all about starting an online journey, with the trial launch of an online home delivery service featuring 1,000 products which includes toys. For BargainMax, it’s a brand-new state-of-the-art UK warehouse facility which will help the e-tailer support its continued growth. For Argos, it’s the launch of a new Insights Platform, which General Merchandise commercial director Paula Nickolds believes will “step change how we work with our supplier base, enabling colleagues and our suppliers to make even deeper and more informed data led decisions, providing a greater understanding of our customers and how we grow the business together.” Sounds great – now, as one supplier pointed out, if only they can sort out buyers being contactable by phone or encouraging them to reply to emails, they might be on to something…even if this new Platform does sound like the business is heading the way of Amazon. Let’s hope they can crack the data opportunity while maintaining close working partnerships with suppliers at the same time…that strikes me as a winning formula.

Let’s also be thankful that shipping costs are gradually coming down – that is another big tick in the plus column for toy suppliers and retailers. Although, it’s important to remember that is only one aspect of the supply chain; it is also worth keeping an eye on China’s Covid situation. This week, there have been reports of an outbreak in Shenzhen, which has triggered mass testing and a lockdown of some districts. Shenzhen is, of course, one of the main toy manufacturing hubs in China: if the situation there develops the way we saw in Shanghai and other major Chinese cities earlier this year, that could potentially disrupt the supply chain as we head into peak shipping season.

However, just like the currency situation, there is little any of us can do about the Chinese Covid status – we just have to focus on the elements which are within our control. Keep a finger on the pulse of the latest trends, keep product ranges fresh, be open to new opportunities and keep talking to friends and colleagues in the toy community so we can all benefit from the wisdom of the crowd. See you back in the UK next week…..planes, trains and automobiles permitting.

JB Says Relax…it’s the Friday Blog!

I am not sure if this is all the fault of Stranger Things (I hear YuMe/KAP Toys’ capsules are flying at retail by the way), but it’s all been feeling a bit mid-1980s around here recently. Kate Bush back at the top of the charts, Top Gun the number one movie…at this rate, maybe it’s worth putting a few quid on Transformers to win Toy of the Year, as it did in 1985 & ‘86.

It seems that Top Gun Maverick has taken a few people by surprise; a movie which has been kicking around since the start of the pandemic with a modest merchandise programme to support it, the film really seems to have caught on with the public and has helped to reawaken enthusiasm for cinema-going in the process. Jurassic World Dominion has picked up the baton admirably this week, with initial box office takings exceeding £200m. Blockbusters are back baby!

And even more importantly, I have seen some tremendous retail activations around the release of Jurassic World Dominion: The Entertainer’s in-store augmented reality dinosaur hunt was a truly fantastic immersive experience, while Toymaster launched its first-ever digital flyer featuring a selection of the Jurassic World products available in many Toymaster stores. Smyths also released a fabulous piece of stop motion content to promote its range, which has had over half a million views already.

The toy retail channel has missed event movies like this – not only do they generate excitement with consumers, but crucially they give stores the opportunity to drive footfall at a time of the year when it is badly needed. It puts money in the tills, creates a buzz and instills confidence in retailers at a time when they could do with a lift, following the relentless stream of negative stories about the economy.

Indeed, according to NPD, licensed toys are having their best year since 2008 – representing 30% of all toy sales in the first half of the year. Even before the launch of the movie, Jurassic World sales were up by 63% YTD, and that figure will surely soar even higher once kids get to see the film. Critics may have been less than kind, but I really don’t think it matters – the movie will put bums on cinema seats and sell an awful lot of toys, and that will make a lot of people in the toy & entertainment category very happy. And with sales of licensed toys flying, what better time for the market-leading UK toy magazine to be taking stewardship of a well-established but neglected licensing website and injecting some fresh ideas and passion to rejuvenate it? They say timing in life is everything…

We ran a story last week which had been provided to us by ParcelHero, which speculated that a Walmart event shortly to be held in London could potentially herald the launch of Walmart marketplace in the UK. It turns out that the theory was complete nonsense; to be fair, I did say “colour me sceptical” when I posted the story on LinkedIn, as I really wasn’t sure it quite made sense. But it was fun to ruminate on the possibility, and nice to find out that some key people in the toy team at Walmart read our website – and this Blog! I’m glad that what we do resonates with people at the biggest toy retailer in the world, 5000 miles away in a completely different market.

While my excitement at the thought of Walmart coming to these shores was short-lived, I did hear some positive news on the Amazon front this week: I have it on very good authority that Amazon is now prepared to accept price increases from vendors without needing approval from a vendor manager. There are some caveats involving the RRP not being adversely affected which might yet prove tricky to navigate, but as I understand it, most increases under 15% should effectively be accepted inside vendor central. Huge, if true – this has been a major bone of contention for many suppliers, and anecdotally, I have heard of quite a few companies pulling back from Amazon in recent months. Indeed, my understanding is that Amazon has not had a great start to the year in the toy & nursery categories overall, even allowing for how difficult it would have been to anniversary two years of pandemic trading. If Amazon has realized that its intransigence and lack of flexibility was beginning to harm its sales, then it’s good news all round.

The other big news story of the week saw Lego announce that it will be investing more than $1b to build a new factory in the USA, which will operate as a carbon-neutral facility with solar panels capable of covering 100% of the site’s energy needs. Great news for both US jobs and Lego’s carbon footprint. Of course, few toy companies have Lego’s resources, and reshoring would be a difficult and costly process for the majority; but this bold, ambitious move paves the way for others who may be looking to mitigate supply chain risk and not put all their eggs in the China basket. After Russia’s complete meltdown this year, that seems a sensible strategy (especially if you look at what is going on with China and Taiwan). On that subject, can it really be true -as claimed by one Russian distributor to a friend of mine this week – that “most toys are still freely available to us.” It could be bravado, but if it is the case, it certainly goes against what many of the big toy & licensing companies have been saying publicly.

In other news, Graham Gardiner has received a well-deserved promotion to commercial director at Rubies, while I gather the Japanese Toy Fair saw the grand total of 27 international visitors attending this week – including three from the UK toy community. Well done to those three brave souls who made the effort – I hope the organisers rolled out the red carpet for you.

Finally, good luck to all those people taking place in the Toy Trust Big Challenge this weekend – I know a lot of people don’t carry cash anymore, but there are some great prizes on offer in a prize draw and tombola, with tickets for both competitions cash-only, so make sure you pop to the cash dispenser before you go, or even raid your kids’ piggy bank if necessary. It’s all for a fantastic cause.

Exciting times …it’s the Friday Blog!

I hope all of our British readers – at home and abroad – had a wonderful Platinum Jubilee weekend. No doubt about the big winner from the whole event; take a bow, Paddington Bear. An immigrant who arrived in the UK by boat and managed to evade both the Palace Guards and Priti Patel’s Rwanda extraction squad to share tea and marmalade sandwiches with the Queen – a truly heartwarming vignette (if any of our international readers haven’t seen the televised segment, I can heartily recommend going on YouTube as soon as you have read the Blog. It may even have surpassed the Queen & James Bond film from the last Royal celebration, and that is saying something).

We’ve been doing some celebrating of our own this week, after finalizing a deal to acquire our competitor ToyNews and licensing website Licensing.Biz. Now you know why I wasn’t in Vegas this year; I couldn’t say anything until the deal was signed, sealed and delivered, and unfortunately these things always take a little more time than you hope, especially once the lawyers get involved.

Thank you to all those people who got in touch to offer their congratulations when we announced the good news– it was almost impossible to keep up with all the messages at one point, so I’m sorry if I missed replying to anyone or acknowledging the lovely comments. The whole Toy World team has worked incredibly hard to put us in this position – we are writing a great story, and there are plenty more chapters to write yet.

It’s our first-ever acquisition, and it only took us eleven years. For all those people asking who we will buy next, you may have to wait another eleven years…or indeed, you may not. However, I can say for certain that we aren’t going to start buying random titles in less interesting markets: I have served my time on magazines like ‘Plates n Sh*t’ (not its actual name, but how we referred to it internally), and I have absolutely no interest in going back there. But toys and licensing are inextricably linked, and as we already have a strong toehold in the licensing space through Toy World, this move gives us a platform to extend that footprint, while strengthening our position as the specialist in the kids’ and family entertainment space.

And, of course, it ‘right sizes’ the toy media space. Let’s be honest – there was never room for three toy magazines and websites. In fact, I genuinely believe I could make an extremely compelling case that one great UK toy magazine and website is all anyone really needs. There are enough challenges without triplicating time and effort (and budget) to reach a finite, defined group of retailers. We’re all time poor enough, so having all the information you need in one place will make everyone’s life a whole lot easier and make marketing decisions infinitely more straightforward. We can focus our energy on bringing you even stronger content, which in turn will make us an even more essential media partner for anyone serious about the toy business. It’s a win-win-win…and we all need a few of those right now.

Hopefully the Jubilee weekend and the half term holiday gave a bit of a boost to toy retailers: I gather that footfall in general was up, although there are suggestions that it was the grocers who were the main beneficiaries. And whether they sold a lot of toys, or just a lot of beer/wine, will be interesting to assess when the June NPD data arrives.

NPD recently released some global data for the opening months of the year, which suggests the rate of worldwide toy sales is reverting closer to pre-pandemic levels, with unit sales down but selling prices up, although how much of that is down to inflation would be interesting to evaluate.

Overall, UK toy retailers remain ever-so-slightly wary, with external fiscal headwinds tempering the boundless enthusiasm they have exuded for a while. No-one is over-reacting just yet, but there are a few signs of caution creeping in; one major retailer has apparently postponed all of its June orders until July, with suppliers expected to hold stock that was due for imminent delivery for a further month. Very frustrating, I’m sure. If it all ends up getting delivered in four weeks’ time, I am sure it will be a case of ‘all’s well that ends well’, and it could even be the case that a few retailers pushed for orders a little too early to mitigate possible supply chain issues that may not have transpired.

However, it is equally possible that this is an early example of retailers rebalancing order quantities to reflect a perception that consumer spending will be impacted, unless the government introduces tangible measures to support lower income families and the ‘squeezed middle’. A headline in Retail Week this week pointed to one potential trend to keep an eye on: “A quarter of UK households turn to second-hand market to beat cost-of-living crunch.” Let’s hope that this won’t be too widespread when it comes to toys; I like to think that parents will avoid this where possible, although realistically, there are probably going to be some who have little choice but to cut their cloth this year. However, it’s also important to remember that the entry price point for toys can be comparatively low, and there are many options available for all budgets.

There’s just time to round-up a few of the week’s main stories; congratulations to Ken Goodison on his new role as commercial director EMEA at Maxx Marketing, while I am delighted that Hasbro fended off the unwelcome intervention from activist investor Alta Fox by re-appointing all 13 of its directors. I am sure Hasbro has done the right thing, especially in not spinning off its gaming division, as had also been suggested.

And if you were off for the whole Jubilee week, as many seem to have been, you can catch up on the digital version of our fantastic June issue here. We have plenty more great issues lined up for the second half of the year, and we’ll be bringing you more on our plans to rejuvenate Licensing.Biz in the coming weeks. Exciting times.