Keep the faith… it’s the Friday Blog!

Published on: 2nd December 2016

If you talk to anyone in the toy trade around this time of year, the chances are that the first question they ask will concern retail sales and whether they’re living up to expectations. Of course, that all depends what those expectations are in the first place, but given the percentage of annual toy sales that are made in the last eight weeks of the year, it’s fair to assume that most peoples’ targets are set on the high side.

Getting a straight answer to the question is rarely easy. For one thing, the prognosis probably changes daily. That is also true of retail prices. Anecdotally, I heard of one store manager who has apparently been receiving three pages of price changes from head office every day. Intriguingly, not all those changes involve prices dropping. It seems that many retailers are – in the words of one of my independent retail friends – ‘ducking and diving’, with prices not just slavishly following other retailers in a race to the bottom, but instead reflecting stock levels and consumer demand. If retailers have stock of a line which they perceive is in short supply elsewhere and they decide to let the price drift upwards, who can blame them?

The evidence of this behaviour is not just anecdotal – I’ve seen a report from a new data company which tracks price changes of other 10,000 toys sold online by over 20 major toy retailers. In Black Friday week, there were an astonishing 209,000 price changes made (of which Amazon accounted for over 85% incidentally). Of those 209,000 changes, over 40% were price increases, with Argos and Tesco amongst the retailers cited as having the highest price increase percentage. By comparison, Debenhams, ELC and Disney Store saw 95% of their price adjustments represented by price decreases. I’m not sure most people would have guessed that. Of course, we all know what they say about statistics, but if this data proves to be robust (and I’ve no reason to doubt its veracity), it would suggest there is a significant gap between perception and reality when it comes to price fluctuations.

Speaking of Black Friday, it strikes me that the event has developed into a predominantly online phenomenon. My Facebook timeline featured numerous photos of metaphorical tumbleweed blowing through shopping centres and retail parks on Black Friday – perhaps the unsavoury scenes of the past have put people off.

Regardless of the success or otherwise of Black Friday, the promotional offers keep coming. Tesco is apparently about to embark on its third ‘3 for 2’ deal this coming weekend, while Argos circulated a 12-page toy sale leaflet yesterday containing numerous interesting bargains. If you combine the frequency of high profile promotional deals with the fact that most retailers’ shelves seem to be well-stocked (I have that on good authority from someone whose job involves keeping an eye on such things), my guess would be that there is still plenty to play for.

With Christmas Eve falling on a Saturday this year, there is an expectation amongst retailers I’ve spoken to that many consumer purchasing decisions will go right up to the wire this year, and that sales in the last week before Christmas could be vital in delivering a positive festive trading performance overall. Some have suggested that the key to maximising on the final week will be having sufficient levels of stock. As many of you will know, my wife used to be a toy buyer, and she would always tell me that their biggest battle at this time of year would be with the finance or operations director, who would look at the level of stock in the warehouse and the orders for stock still to be delivered and turn white with fear. Their job was to persuade him to keep the faith, as the buying team knew the volume of business that could genuinely be achieved in the final weeks. If you are a retail buyer and you’re in that position, I sincerely hope your faith will be rewarded over the coming weeks.