Legendary tact and diplomacy…it’s the Friday Blog!

Published on: 5th July 2019

I’ve been away this week, so unfortunately I missed the BTHA’s industry day. I’m all the more disappointed to have missed this year’s event due to the appearance of the Rt Hon Kenneth Clarke MP. I am reliably assured I would have enjoyed his presentation immensely, and I suspect my hand would have been the first in the air to ask a question afterwards had I been present. In the week that it was revealed by the Chancellor that a no-deal Brexit would result in a £90b hit to the UK economy, my question would have revolved around the sanity of the two candidates prepared to inflict such a burden on the country. I may or may not have been tempted to use the epithet ‘dumb and dumber’ in the phrasing of said question…as we say in the office, it’s all about the “legendary tact and diplomacy.”

The industry day also saw Andrew Laughton welcomed as the new BTHA chair and the presentation of an outstanding contribution award to Alan Munn. I am sure that Andrew will do a great job in the role, while Alan’s award was richly deserved, having made a significant contribution to the great work of the Toy Trust over the years. Congratulations to them both.

Back on the subject of Brexit, Sainsbury’s chief executive Mike Coupe has suggested that supplies of toys could be impacted by a no-deal Brexit. He made the comments in the wake of a decline in like-for-like sales in the retailer’s first quarter. Referring to 31st October as “not far off the worst day possible” for retailers, he suggested that “the nature of the supply chain (for toys and other non-food goods) means you can’t really stockpile this kind of item.” It’s an interesting perspective, and I would welcome other retailers’ thoughts on the matter; is this thinking largely the result of the way grocers approach the toy category at the moment, or will other multiples and specialists face the same challenges with the proposed Brexit date? I had assumed that the majority of Christmas stock would be in situ in retailers’ warehouses and on shelves long before this date, but perhaps I was being a tad optimistic?

Mike Coupe also raised the prospect of potential delays at ports and questioned whether the imposition of tariffs could cause problems, adding that a no-deal Brexit was likely to affect the UK’s trading relations with key countries where relations are currently governed by EU-based agreements. His comments were echoed by Tesco’s Dave Lewis, so it doesn’t appear to be a tactic to deflect attention from Sainsbury’s recent trading performance.

There are a couple of moves to report: Neil Mitchell has started a new role as toy buyer at Studio Retail (formerly Express Gifts), while Alpana Virani has been promoted to vice president for hardlines EMEA at Universal. Congratulations to them both on their new roles. On the subject of Universal, I assume we all know now who will be taking over as VP EMEA in September….?

Over in the US, the toy community breathed a collective sigh of relief after Trump announced the postponement of further China tariffs (for now at least), while 33,000 Toys R Us workers in the US were finally awarded a severance settlement of $2m by the court. I’m glad the workers received some compensation, but let’s be honest, it’s a pittance in comparison to the amount the lawyers got – $56m lest anyone forget. In a fair world, the sums would surely have been reversed.

Having announced a couple of new Smyths store openings last week, I was contacted by the retailer with exclusive information of further openings to come later this year. A new branch will open in Sunderland on August 22nd, while a new store in Warrington will follow a month later (28th September). While dates for October and November are still being finalised, apparently at least another four stores are planned to open before the end of the year.

As Smyths expands its store estate, it is also inevitably picking up more and more first to market launches. Several independent retailers have contacted me recently, not necessarily to complain about Smyths getting these exclusives (I think they understand how it works), but more to point out how swiftly the opening retail price is being reduced. There are numerous examples of prices being dropped within as little as two weeks. Of course, this may be a reflection of the new retail reality; lines have to prove themselves increasingly quickly in this unforgiving trading climate. Even so, a couple of weeks seems an incredibly brief window in which to judge the potential of a line and to establish a price perception. Does that really allow sufficient time for a line to settle? I suspect that price matching Amazon may play a part in some cases, but it is certainly having an effect on the rest of the market – there seem to have been occasions when orders have been placed by specialist retailers , but by the time it reaches them, the price has been cut dramatically. I can only imagine how these retailers feel, but I’m curious as to how suppliers feel when this happens to one of their new lines. I can’t believe anyone is funding markdowns that quickly, and it must have a knock-on effect on relationships with other retailers. In the past, one might have expected the grocers to be implicated when a situation like this arose, but I don’t really hear their names mentioned. Now it is the triumvirate of Smyths, Argos and B&M who – one retailer suggested – are locked in their own private pricing battle, almost like a real world Amazon marketplace. As usual, all input gratefully received -using “legendary tact and diplomacy” or otherwise.

The latest L.O.L range has been unveiled – and it seems that Isaac and the MGA team are aiming to sew up the acronym market, with L.O.L OMG. Smart move by my reckoning, although I will be interested to see how one particular specialist retailer reacts, given what most people would assume the ‘G’ in that particular acronym stands for. If it isn’t able to stock the range, I guess it will at least present more opportunities for other high street-based retailers.

I’ll sign off now, as I am spending 4th July surrounded by Americans, so have decided to fit right in and join the celebrations. I also watched the Lionesses defeated by the US in the company of dozens of Americans earlier in the week – and didn’t once turn my back. Unlike the Brexit Party MEPs this week, integrating and mixing seemed the only option – I am sure I am not alone in wanting to preserve British values of decency, tact and diplomacy. I would have loved to know what Ken Clarke made of that embarrassing display (the Brexit MEPs, not the valiant Lionesses).