Well, it finally caught me – I landed back home on Monday after a lovely and long overdue holiday only to test positive for Covid. Sadly, my delusions of super-immunity have been shattered – it seems my body will no longer be required for medical science experiments. More importantly, it meant that I wasn’t able to attend this week’s BTHA Industry Day, which was a real shame – it is always a great day, and a wonderful opportunity to catch up with many people I haven’t seen since Toy Fair to gauge how everything is going out there. However the rest of Team Toy World report that the day was a huge success and they thoroughly enjoyed chatting with everyone.
Unsurprisingly, general economic indicators point towards a testing summer for retail in general. High street footfall fell 25% in May. Overall, footfall is estimated to be -48% lower than pre-pandemic levels, driven by declines in big city numbers as a result of hybrid working. Last week’s rail strikes didn’t help, as I am sure we’ll see reflected in the June data.
However, I am hearing that toy retail is holding up better than many other sectors: new Pokémon, Lego and Squishmallow releases and some ‘leftfield’ ranges such as Stranger Things capsules, coupled with lines from summer blockbusters such as Jurassic World Dominion, Minions and even Top Gun Maverick, are generating nice buzz and footfall at specialist toy stores and major retailers alike.
There will be challenges ahead, especially in the pricing area. This week has seen reports of Heinz and Tesco falling out over price increases, with some key brands temporarily absent from Tesco’s shelves while the two sides attempt to resolve their differences. It shows that while retailers are prepared to be a little more sympathetic to price increases than usual, there are still limits.
Mind you, the imminent government ad campaign, suggesting businesses should cut prices to help with living costs, strikes me as yet another example of the government fundamentally failing to understand the challenges which business are facing. They could reduce VAT on petrol, or even reduce fuel duty – both of which have seen huge tax windfalls as the price of petrol has soared. They could put pressure on the fuel industry to justify why pump prices have continued to rise despite oil prices falling for the past month. Yet instead of practical support measures that would support business and consumers, they prefer to tell businesses they should be absorbing their additional costs. Words fail me. I appreciate that many people in the government have never run a company (or even held a real job in some cases), but ministers like Nadhim Zahawi, who used to work for Fashion UK, must be mortally embarrassed to have to defend such ridiculous policies.
Over in the US, former Toys R Us directors in the US are facing trial over their conduct during bankruptcy proceedings in 2017, where they will stand accused of misleading suppliers over the retailer’s financial position. Anecdotally I was told by several suppliers at the time that they were encouraged to continue shipping to the struggling retailer, with assurances from unnamed senior people to the effect that “it will be ok, don’t worry.” It will be interesting to see how the Judge assesses those conversations – are individuals responsible for what they communicate to suppliers on behalf of their company, especially assuming they were under significant internal pressure to maintain that things were fine? Or should they have been more honest with their vendor partners, even in a ‘nod and a wink’ way?
There are some big names under the microscope – including David Brandon, Richard Berry and others – so it is unlikely that they will be able to claim they didn’t realise how bad the financial situation was. In truth, I don’t know which way the judge will go, but I do think this case will be very closely watched by retail executives in every sector – if Toys R Us directors receive heavy fines or even jail time for the way they conducted themselves, it will act as a very powerful deterrent for anyone finding themselves in a similar position in future.
And I do feel sorry for those businesses that have still operate successful Toys R Us operations across the globe – it can’t be good to watch the brand you have over your door or on your website dragged through the mud over the actions of some individuals five years ago. Within the toy community, we all know that these are all very separate businesses, but does the average global toy consumer?
Rounding up some of this week’s main news stories, congratulations to Tim Hall on receiving a Golden Teddy and huge condolences to industry friends and colleagues of Brightminds’ Alison Quill, who sadly passed away in April. I was also sad to see that Melton Toys has closed its doors after 12 years of trading, and that former Palitoy chief executive Bob Simpson passed away recently.
Finally, the July issue of Toy World has been landing on desks this week and available to read online now. It’s another fantastic issue, with some great features – you can read all about the Schleich global brand strategy and find out what US visitor Mike Derse from Learning Express Toys made of the Toymaster May show. Toymaster completed the Anglo-US exchange last weekend, when Paul Reader and Dave Middleton made the return trip to the Learning Express show in Florida – you can read all about their stateside experience in next month’s issue. I love the fact that we have two fantastic specialist independent organisations collaborating and exchanging ideas – in many respects the challenges faced by the specialist toy retailers are often the same across the globe, so co-operation can only be a good thing.
As well as these great articles, the July issue includes truly comprehensive features on the Construction, Tech Toys, Dress Up & Role Play and Stationery categories, plus all the latest news and views from around the trade as we enter the second half of the year. Indeed, Q3 starts today – let’s all do our best to make it a good one.