This Blog was published on Friday 17th April. Here it is again in case you missed it:
We’ve been in lockdown for the best part of a month now and it’s all fine. No, really: ignore the fact that I put a bottle of wine in each room last night and went bar hopping. I’m only joking, of course – it was a bottle of spirits.
Inevitably, thoughts are now beginning to turn to what happens when lockdown is lifted, whenever that might be. I asked Priti Patel if she had any idea and she said Augtober the 39th – although she was reading off an autocue, so don’t hold me to that.
Other European countries are beginning to get some tangible answers: France has been told to expect restrictions to be lifted on May 11th, while Germany is expected to be a few days ahead of them, with small shops expected to be open as early as next week.
For citizens of both countries, this is great news in as much as they now have clarity and can plan accordingly. Unfortunately, for the UK, we are still in the dark about the lockdown exit strategy (lexit?). Guesses range from early May to early June, with some believing it may even have to stretch beyond that.
When it comes, the likelihood is that any return to ‘normal’ will be gradual. While we would all love a sudden boom with consumers going de-mob happy and throwing money around like crazy, I fear that may be an optimistic scenario. Confidence is likely to take a little while to return. Jobs will be lost; fewer workers equals fewer customers. Firms and individuals will have built up debt that they will want to pay off. However, one factor strongly in our favour is that parents will want to keep their kids happy, so discretionary spend may be weighted more towards children in the short term, and Christmas could potentially be huge. I also suspect that many Brits will not travel abroad this year (hands up who fancies getting on a plane with its re-circulated air right now…): UK resorts should benefit, particularly if lockdown measures are lifted by the summer.
I have read a lot of articles pontificating on the major changes that this crisis will bring in our daily lives, all talking about the so-called ‘new normal’ that awaits us when it is over. If you take many of these think-pieces at face value, things will never be the same again. No-one will shop at bricks and mortar stores; we’ll all buy everything online. People will not want to meet up face-to-face, and if they do, handshakes will be as frowned upon as farting in a lift. International travel will become a thing of the past; we’ll all avoid it like the proverbial plague. Trade shows and meetings will be replaced by virtual meetings, where young people will audibly sigh as older people inadvertently ‘break’ the tech and randomly push buttons in an attempt to rectify their mistake.
Except…. personally, I don’t believe any of this. Yes, there will be changes, not least because there is a very real possibility that this crisis is not a one-off, and we could easily find ourselves back in lockdown in the future. Anyone not planning for this would be naïve. Talking to Toymaster recently, their strategy has already been adapted: previously, they had advised members that if they weren’t going to fully commit to having an online presence, they were best avoiding it altogether. Moving forward, the feeling is that the future of specialist retailing lies in bricks and mortar with the facility to supply online as and when required. Those indies which have been able to do this will come out of the crisis in far better shape than those which didn’t. Operations like eBay and Down Your High Street have been falling over themselves to help small shops to start trading online, and now is surely the time for even the most hardened bricks and mortar stores to at least get themselves set up and testing the water. However, this absolutely does not mean that the future of retailing will be online only: the channel has been a godsend in recent weeks, but I suspect many people are missing the in-store experience, just as we can eat and drink at home all we want, but that doesn’t mean we won’t ever visit a pub or restaurant again.
The same is true for our offices. I won’t lie, I have missed being with the Toy World gang every day; the WhatsApp group and twice-weekly Zoom meetings have kept us in touch, but it’s impossible to replicate the close-knit interaction of all working together in the same room. When it is safe to do so, I will be back to our office like a shot – even if I do have to put on a proper shirt and trousers again.
I’m also missing international travel: when it is safe to get on a plane, I shall have no qualms about returning to overseas holidays and events. Quite when that will be, I don’t know. I have been repeatedly asked whether I believe the October Hong Kong trip will happen this year. The truth is that it is impossible to call at this stage. I’d be keen to get feedback on that from people who would usually go. It will be particularly interesting to compare the views of company owners with those of employees. Either way, international events will continue to play a pivotal role; I am interested to hear more about the virtual shows being proposed by the US Toy Association and Licensing Expo organiser Informa, and as a stop-gap measure, they may well have a valuable role to play. But I don’t see them replacing shows and events for many reasons, not least of which is the fact that many people view them as an important perk of the job. However, whether this will focus people on the amount of overseas travel – the number of trips they make and the number of shows they attend – is another matter entirely. I expect rationalisation in this area, as I do in many other quarters.
I would simply add one caveat: the time it takes for things to return to ‘normal’ may be quite a bit longer than some people appear to believe.
More than any of these working practices, the one thing which concerns me is credit insurance: I am hearing rumours that some pretty big toy retail names are having cover removed. There will be many challenges in getting the industry back to full speed, including the capacity of Chinese factories which have had their own major challenges to contend with (more on that in a future Blog), but widespread withdrawal of credit insurance has the potential to derail the recovery more than most other factors. Let’s hope credit insurers are more generous in their approach than banks have been in recent weeks: as we highlighted earlier this week, less than 2% of applications made for emergency government-backed loans have been approved. As Liz Truss would say, “Now. That. Is. A. Disgrace.”