As the ongoing shipping crisis continues to make headlines across the globe, with consumer media finally waking up to the potential implications for the public at large, I thought I’d start this week by looking at how some toy retailers have been reacting to the situation.
First up, a special ‘tone deaf’ award for failing miserably to read the room goes to the global retail chain (who shall remain nameless, but they’re based out of Portugal with stores in South America, parts of Eastern Europe and other countries), which apparently is not only insisting that suppliers hold prices quoted months ago, but more importantly has contractually stipulated a 110% late delivery penalty. Yes, 110% – crazy at the best of times, but given the current situation, completely ridiculous. I think we can comfortably assume that this retailer will end up extremely short of stock, as I can’t see many toy companies desperate enough to sign up to such onerous terms.
Meanwhile, a major global etailer (go on, take a wild guess) has told one supplier that he is not “eligible” to increase his cost price to them. I understand that he is not alone in having been told ‘computer says no’, and also not alone in stopping supplying said etailer, which may also end up having availability issues in the coming months if toy companies stick to their guns. It is the use of the word “eligible” which undoubtedly sticks in the craw. Chinese currency has gone against international suppliers, somewhere in the region of 8%; raw material prices are up anywhere between 20-50%; printed material (packaging, shipping cartons) and labour costs have risen around 20% each; shipping and container prices are through the roof. Yet apparently none of this qualifies the supplier as “eligible” to increase prices. Really? One wonders just what would have to happen to make them “eligible.” In an act of unbridled generosity, the supplier has been told he can mark the items as ‘out of stock’ until he can supply them at the 2020 price…which may be around 12th of never based on current projections.
Of course, in the interest of balance, it is important to recognise that retailers have their own challenges: in the July issue of Toy World, which has been landing on desks over the past few days, there is a thought-provoking Viewpoint article from etailer Wicked Uncle’s Liam O’Shea, outlining his experience of how toy companies have communicated price increases. I won’t spoil it for you (it’s well-worth reading in its entirety), but it does underline how open, honest communication is important in navigating this thorny subject. Plus, of course, flexibility on both sides is important – not every line or range can take a price increase, just as not every line can be held at last year’s prices. Liam even printed a list of companies which had handled the situation well, although we did remove one name, because they were literally the only company to point blank refuse to accept a price increase from us last November (guess what, those paper and postage price increases you’re seeing …we got hit pretty hard too). We were told in no uncertain terms that if we added the proposed £30 to each ad, they would cancel their booking. While it seems they’re happy to explain to retailers why they need to raise prices, they just don’t believe that the same logic or rules should apply to them. Charming.
I’ll leave the last word on price increases to Gary Grant, who we interviewed in our July issue as The Entertainer celebrates its 40th anniversary (not only is it a fascinating read, but the nostalgic pictures are truly unmissable). Known in the past for his perceived ‘hardline’ stance when it comes to negotiating prices and margins, Gary was happy to admit that The Entertainer would be prepared in theory to accept price increases, providing the same increases are applied across the board to other retailers. But how do suppliers reconcile that perfectly reasonable position with a giant global etailer telling them they aren’t “eligible” to increase prices? Answers on a postcard…
In other news, in a further blow to anyone hoping to make it out to Hong Kong during October, British travellers have been banned from entering Hong Kong, after the UK was added to the territory’s list of “extremely high risk” countries. Thus, the theory about UK visitors being in a good position due to high vaccination rates has been blown completely out of the water. Of course, we have no idea how long the ban will be in place, but with flights from the UK currently suspended, it would take an eternal optimist to believe a Q4 trip is viable, while it even places a question mark over the January trip.
Removing the October Hong Kong trip from the equation will be welcome news for several other events targeting the global toy community, including Distoy and the LA Show. Distoy organiser David Potter tells me that he is cautiously optimistic, with a decent number of regular exhibitors already confirmed and visitor registrations starting to pick up. And I hear that some UK buyers are so keen to see what the key US suppliers have lined up for ’22 that they have already booked their flights to LA – despite, in several cases, still not being allowed to hold meetings in the UK with suppliers or not even being back in their offices yet. I’m not sure how they will be able to turn down offers of UK meetings, or even continue to work from home, if they are happy to jump on a plane to California. Several domestic events such as the Independent Toy & Gift Show and Autumn Fair are also intending to go ahead, along with shows such as Cologne’s Kind & Jugend, a nursery fair with a healthy toy presence – we’ll keep you posted on the latest developments on all of these forthcoming events.
In the meantime, enjoy reading our July issue and let’s hope for more good news on the football front this weekend – whisper it quietly….it might just be coming home (terms and conditions apply – past performance is no guarantee of future success etc).