Looking at what’s happening out in the big wide world, I sometimes wonder whether those of us who make an honest crust buying and selling toys (or writing about them) wish they had chosen a different career path? One thing’s for sure, the past year has certainly been fertile ground for grifters. Whether it was pub owners suddenly becoming overnight experts in PPE manufacturing or mates of MPs launching side-hustles as Covid testing companies, it has been amazing to see how much profit there is to be made out of the chaos.
Of course, many legitimate companies have also seen the chance to capitalize, arguably none more so than shipping companies. It is now a foregone conclusion that the shipping industry will post record profits this year – at least $80b and possibly even as high as $100b, more than treble the all-time record. It turns out that hiking prices when your customers have no alternative but to pay up is a solid strategy.
As shipping companies make hay, other logistics providers are also seeing an opportunity to cash in: air cargo rates are rumoured to be anywhere between 60-120% higher than pre-Covid levels. Meanwhile, a multitude of sneaky charges are creeping in throughout the supply chain; hold-ups have led to D&D charges (that’s detention and demurrage, not Dungeons and Dragons) doubling, while the general manager of the Far East division of a well-known global toy retailer told me that a friend of his went to collect a container, only to be told that there were no 40fts or HQs available…unless he was willing to pay a ‘premium’ of $165. Whether you compare this to Uber’s ‘surge pricing’ or just think it is another grubby example of bribery and corruption (‘slip me a few quid and I’ll make it happen’), the upshot is the same – ‘law of the jungle’ economics are perhaps beginning to spiral out of control. However, given our own government’s penchant for getting involved in a few cheeky grifts of their own, I can’t see them stepping in to curtail this behaviour any time soon.
Even if you are one of the lucky ones able to successfully ship product from the Far East to the UK, there is the little matter of getting it from warehouses into shops. Last week saw the German confectionery company behind inexplicably popular brand Haribo admitting it was struggling to get its sweets into stores because of a shortage of lorry drivers. The government has moved swiftly to address the situation, temporarily extending the number of hours a driver can work. Great, just what we need – a bunch of exhausted drivers in charge of 7.5-ton vehicles on the roads. What could possibly go wrong? Mind you, one major toy chain owner was telling me that he still has a licence to drive a 7.5-ton lorry – so he has no excuse, albeit he would surely be the UK’s highest-paid trucker?
So, where is all this heading? Rumours that Philip Schofield’s ‘How to spend it well at Christmas’ is to be renamed ‘How to find a toy at Christmas’ have not been officially confirmed, but I think we can safely assume that there may well be shortages in some areas. And surely prices will rise? If all the grifters can get away with it, maybe toy suppliers and retailers facing legitimate cost pressures should not be feeling guilty about realigning prices.
Could we even see some ‘sacred’ price points needing to be reassessed? Very possibly – to quote our PM on the subject of easing restrictions, “if not now, when?” One former buying controller who now runs a toy company based out in the Far East spent quite a while this week explaining to me that even if price rises led to a small drop in sales, retailers would be making more money on each item sold as the gross margin would be higher, so he feels it would at very least balance out, and more likely go in retailer’s favour.
And what if sales don’t actually drop at all? I remember one retail owner admitting he was furious when a well-known supplier increased the price of a popular item by £1 overnight, and how annoyed he was when it didn’t make the slightest bit of difference to the rate of sale, having told the supplier the move would see sales dropping off. Sometimes, we all fear the worst; there is a strong argument to suggest that toy prices have remained artificially low for a while, largely due to non-specialist toy retailers’ approach to the toy category. Maybe now, when many parents have saved money working from home and not going abroad on holiday, it’s time to see what happens if we stop the race to the bottom. I say again, “if not now, when?”
Finally, it has been good to finally be able to announce a few big stories this week which we’ve been looking forward to revealing for a while. First, big news in the Wheeled category as United Wheels (part of Covation Holdings) has signed a licence agreement which means that Disney bikes will now be available from a single source rather than seven or eight different suppliers. On the people front, Just Play has strengthened its team with the appointment of Katie Gritt as head of marketing EMEA. For the past five years, Katie has been handling retail marketing and PR for The Entertainer, so she’ll be stepping ‘over the fence’ in her new role.
Another person who famously made the transition from retail to the supply side is Character Options’ Colin Fox, who announced this week that he will be retiring at the end of September. Colin has had a fantastic toy trade career, and colleagues and friends have been queueing up to pay tribute to the ‘king of spreadsheets’ (long before spreadsheets were a thing). I remember visiting the Makro office as we approached lunchtime one Christmas Eve, as I planned to spend the festive season with Colin’s assistant, the former Anita Watson (now Anita Baulch). As I walked into the room, Colin’s boss, the legendary Dave Cave shouted: “Jonny’s here, it’s Christmas – open the champagne.” Colin looked over and said: “I’m just finishing off these spreadsheets Dave, I’ll only be half an hour.” All those people who marvelled over Colin’s organisation and his attention to detail…it’s all true. I’m sure there will be many people wishing him all the best over the next few months – as a proud survivor of Colin’s stag do in Prague (no man left behind), it’s been a pleasure to know him and work with him over the years. Enjoy your retirement Colin.