The media has been getting into a lather about Lego shortages this week. I even got a call from the Press Association asking for comment. I suspect they were hoping for sensationalist tales of cynical manipulation by a greedy corporation (hang on, doesn’t that sound like the plot of the Lego Movie?). They were probably quite disappointed when I told them the truth: that it was simply a genuine capacity issue, a case of global demand far outstripping forecast. In short, a success story that most suppliers would love to have: a far better class of problem. In fairness, Lego is known for being extremely well organised in terms of its forecasting these days: a number of major retailers have told me that they have already submitted forecasts for each month of 2016. But who would have been brave enough to suggest a 20% increase the year after a major movie. The true story is that Lego will supply to forecast, which ultimately is all that can be asked of them. But I guess that isn’t quite the clickbait the press were looking for.
What I do find slightly strange is that some retailers are continuing to discount Lego, knowing the product is likely to be in short supply as we get closer to Christmas. If any trading directors would like to explain the rationale behind that approach to me, I’d be grateful, because I’m struggling with the logic of it at the moment.
Sainsbury’s is one retailer offering reduced prices on Lego as part of its annual half-price sale, which I’m sure is proving as popular as ever with consumers. I’ve felt that the grocery accounts have seemed a little subdued throughout this year, but maybe this is where they up their game. Tesco and Asda also have big promotions running, so perhaps they’ve all been keeping their powder dry for a big Q4 push. In addition to Lego, there are many other big brands featured in the Sainsbury’s sale – including Frozen, Star Wars, Cinderella and Crayola – so although some of the sale items were purchased specifically to retail at 50% discount, there are also genuine bargains to be had.
Asda has announced it is cutting back on its click and collect plans, which will see 29 jobs being lost at head office – no word if any of those roles are in the toy buying team, but hopefully not. Instead, Asda is concentrating on refurbishing 95 of its larger stores, around a third of its hypermarket estate. I think it’s called ‘playing to your strengths’, and it seems to make perfect sense. Click and collect remains a great option for consumers, but I wonder how cost- effective it really is. Asda’s move suggests it possibly shares my concerns.
Argos’ latest set of half-year results were a mixed bag: sales were down by 1.5%, but on the plus side the toy category was one of the sectors singled out as having bucked the trend by increasing sales. The results were accompanied by a warning that second half profits were likely to be lower than previously anticipated. Several people have suggested this might be the result of ‘systems issues’, a phrase which I understand has been widely used all year by Argos to cover a multitude of challenges it has been facing, and has become something of an in-joke amongst suppliers. Let’s hope the person whose job it is to sort out the ‘systems issues’ is on the case.
Talking to a variety of retailers around the trade, there’s a feeling that sales are maybe lagging a week or so behind this stage last year. Nothing to get too worried about, and indeed nothing that a good burst of inclement weather won’t help to address. I suspect patience may be the key.
The inaugural Toytopia show opens its doors at the new Liverpool Exhibition Centre tomorrow. The stage is set and there has been plenty of local publicity for the event over the past few months, so hopefully that will result in a great turnout over the next three days.
Finally, I’ll leave it to you to decide whether someone at M&S has been up to naughty tricks to get them some gratuitous publicity, or whether the rude message it displayed on the Christmas decoration section of its website genuinely was an accident caused by algorithms as the retailer has claimed. If that claim is true, that really is a system issue – take that Argos!