Just getting on with it…it’s the Friday Blog!

Published on: 25th October 2019

Against a back drop of turbulent retail trading conditions, exemplified by significant retail job losses – 85,000 have disappeared over the past year, according to the British Retail Consortium – some retailers are just quietly getting on with bucking the trend. I mentioned Home Bargains last week, and this week it is the turn of another secretive retailer to post excellent results – Smyths. Of course, there was no press release or official statement to announce the figures; that just isn’t Smyths’ style. However, sterling work by the Irish Times (who presumably just kept hitting refresh on a tax filings website until they struck Irish gold), gives us a valuable insight into the retailer’s performance. Assuming they give an accurate representation, the headline numbers were mightily impressive: with E673m UK sales, a further E226m in Ireland and now E340m across the new European division, the group exceeded E1b sales for the first time in its history. Profits were strong too: the new European division alone generated a profit of E14m, from 93 stores in Germany, Switzerland and Austria. Even in the mature Irish market, sales rose by over 6%, delivering almost E5m profit in the process. An amazing performance in the current climate, even if the owners’ low-profile nature precludes them from shouting about it.

The opening of the new FAO Schwarz department at the Selfridges Oxford Street store was anything but low profile; the launch event had all the razzmatazz you would expect from a retailer which puts in-store theatre at the very heart of its experience. You can read all about the event here. Since The Toy Store sadly failed in its attempt to bring a stand-alone toy retail operation to Oxford Street, some have questioned whether it’s possible to challenge the dominance of Hamleys and, to a lesser extent, Harrods in the West End. However, I think FAO may be a genuine contender; it was a smart move to tie up with Selfridges, which has an established – and very affluent – customer base. The execution of the new store is great, and there is a real emphasis on interactivity and creating a sense of wonder for kids and parents. Contrast that with the sterile, ‘art gallery meets exhibition installation’ approach of Harrods. Some suppliers even went as far as to suggest that FAO’s wow factor outshone Hamleys, while everyone agreed that its strength was that it delivered a real toy shop experience, with a strong mix of brands and licences. Early sales reads are said to be encouraging, so it will be fascinating to watch FAO’s progress in London, as well as that of its other new store in Arnotts of Dublin, which opens next week.

Amazon has been back in the headlines this week after it was revealed that the retailer had allegedly been selling spots on its US holiday toy list for as much as $2m a pop, having told customers that the 1,700 items on the list were “thoughtfully curated.” Some have accused Amazon of attempting to mislead the public. However, of all the things you could choose to criticise Amazon for, I am not sure this would be top of my list. I don’t think it is any great secret that certain UK toy retailers base their Christmas lists to a greater or lesser extent on ‘contributions’, whether direct or indirect (such as in the form of co-op advertising and marketing). I just think it is all part and parcel of seeking competitive advantage at this crucial time of the year. That said, I do wonder whether a list with 1700 toys on it has any credibility whatsoever. It is like certain toy trade awards, where pretty much everyone receives some form of recognition: gold, silver, bronze, pewter, copper, tin, highly recommended, recommended, a little bit recommended etc. If literally everyone gets an award or is on a list of 1,700 hot picks, surely it renders the whole thing entirely meaningless? As for whether it’s genuinely worth paying $2m to be on a list with 1,699 other products, I’ll let you be the judge of that.

As the dust settles on the recent Hong Kong trip, it seems that at least one person hasn’t been reading my Blogs, as he emailed me this week to tell me he was about to fly back to the Far East to see one buyer (patting his back pocket en route, if you get my drift). Joking apart, I appreciate that change won’t happen overnight, but as an industry, if we’re going to take collective responsibility for moving towards a more sustainable future, things like this shouldn’t be impossible to address. Hopefully my friend will be avoiding the local Starbucks while out in Hong Kong; it appears that the owner of the local franchise had some less than charitable things to say about the protestors, with the inevitable consequence that Starbucks stores have been targeted in retaliation. Mind you, I was sent a picture of a vandalised branch in TST one morning, then a new picture of it almost completely renovated by the same evening. They clearly have a very different time scale on repair work in Hong Kong compared to the UK! It will be fascinating to see what awaits us when we arrive in the first few days of January, which will be upon us all before we know it.

I love this time of year: the crucial Christmas trading period is hurtling towards us (and, of course, this is when the fun really starts), but at the same time we are already gearing up for next year. I am attending my first preview of the year today, so the whole process is about to start all over again. One wonders what next year will bring – who knows, we may even have some resolution on Brexit and the US China tariffs at some stage?! Mind you, I did feel some sympathy with MPs this week, who were asked to pass the latest Brexit Withdrawal Agreement, having been given a matter of hours to read well over 400 pages of highly-detailed legal text and assess its potential implications. When you consider it takes some licensing companies 14 days to approve a simple ad with a few pictures and a smattering of text, I did think that was a bit optimistic.