Apparently Germany is basking in glorious sunshine and enjoying its hottest summer ever. Thanks to my German clients for sharing this wonderful news with me, I’m very happy for you. Meanwhile, we’re in the midst of a two-day deluge, where any inflatables sold by toy retailers will probably come in handy for getting down the street rather than being used in their more traditional swimming pool or beach location.
I’ve received quite a bit of feedback to last week’s comments about Argos’ commitment to expanding its own-brand ranges. There are even rumours suggesting that Argos has delayed significant volumes of branded FOB orders due to the abundance of Chad Valley it is currently sitting on, which – if true – adds an intriguing dimension to my comments about balance being the key. I was also forwarded an in-depth analysis of one particular category, which appeared to suggest that Argos is currently carrying much less own-brand product in this sector than would perhaps be expected (thus leaving them plenty of scope to grow the percentage of own brand on offer). As I said last week, it remains a fascinating subject with plenty of arguments on both sides.
Another story which has drawn its fair share of comment this week was the announcement of Toys R Us taking on Smyths in Ireland. The news itself is not new – I mentioned it in the Blog many months back – but more detail is now beginning to emerge to flesh out the story. The venture is spearheaded by Brian Donoghue, a former COO of Smyths who left the company in 2013. He has been awarded a franchise by Toys R Us, which has not provided any capital itself but has warrants over 20% of the Irish operation. Donoghue has personally invested 450,000 Euros, while his two business partners have invested a further 750,000 Euros. There is talk of the group spending five million Euros opening five outlets over the course of the next year, the first of which will open in Dublin at the start of next month. So that’s the financial nuts and bolts of the agreement: the big question is, how will the new stores perform? Minutes after our newsflash featuring the story was sent out, I received an immediate response from a good industry friend consisting of one word: “Insanity.” I think on first sight, many might agree with him. So for the sake of balance I’ll put forward a counter- argument: my principal point is that competition is healthy in any sphere. There were those who thought I was crazy to launch Toy World – one industry doyen even emailed me at the time to call me a ‘mad bugger’, although he now says he meant it affectionately! Four years later, firmly established as the UK’s number one toy magazine by a considerable margin, I would say it was most definitely worth the gamble. Admittedly, I wasn’t taking on anyone even vaguely comparable to the might of Smyths, but – whisper it quietly – there are those who believe that Smyths has placed more emphasis on its UK expansion in recent years, and that its Irish stores might even benefit from fresh competition and having to up their game. Indeed, I remember several people telling me at the time that Smyths was crazy to launch in the UK, and how they’d find it a completely different market from Ireland. I bet those people have changed their tune now. Furthermore, Toys R Us has little of its own cash invested, so in many respects their downside is protected. Will it be easy? As Ed Milliband would say, “hell no”. But starting a new business venture rarely is. So I’ll wish them all the best and simply say it will be fascinating to see how the next year pans out.
Finally, while we’re on the subject of Toys R Us, I can’t decide whether it’s truly ironic or just ‘Alanis Morisette’ ironic (i.e. not actually ironic at all) that it was a branch of TRU – in British Columbia – that broke the global embargo by putting Star Wars episode 7 merchandise on sale almost a full month before the official 4th September release date. After all, isn’t TRU supposed to be one of the major launch partners for the brand? Days after this story broke, some of the new Episode 7 action figures were being offered for sale on ebay for an eye-watering $125 each. I wonder how many more similar ‘accidents’ we’ll see over the next few weeks – conspiracy theorists might even suggest it could be a very carefully orchestrated campaign, especially as the figures appearing on ebay are not high profile characters from the new movie. One also wonders how retailers who are diligently observing the embargo feel about this.