There has been a lot of activity in the toy retail channel this week, with interesting developments both on and off the record – some encouraging news, some not so positive. Let’s dive in and see what has been occurring…
First up, there was the huge news that Smyths Toys has acquired the French toy retail chain PicWic Toys. I first heard rumours at the end of last week that Smyths was in pole position, and despite several other credible bids, the court ultimately confirmed late on Tuesday afternoon that it had chosen Smyths to take over the running of the business. The move creates Europe’s largest specialist toy retail operation, and it made perfect sense for Smyths, who told Toy World that “we are confident that we can successfully introduce and grow our brand in France.” Given the success of the Smyths German operation, which saw the retailer take over the Toys R Us stores in that territory and turn them round successfully, you can understand that confidence.
Ahead of the acquisition, there had been some murmurs on LinkedIn that suppliers would be heavily out of pocket following the PicWic collapse, but a key part of the deal involves Smyths providing 9m Euros in compensation for creditors, as well as a sizeable contribution to the job protection plan and 50m Euro working capital being deposited, so you would hope that this mitigates the suppliers’ concerns.
Meanwhile, back in the UK, the CMA announced that it is investigating Amazon over some of its listing practices. It will be a long, drawn-out, complex investigation, so don’t expect a quick resolution – but this is a good opportunity to find out if the CMA has teeth. It’s anyone’s guess what the conclusion will be and what level of punishment will be deemed appropriate if Amazon is found guilty (which is a big ‘if’, to be fair). However, as several toy sellers have pointed out to me, they saw a tangible difference in their business when Amazon stopped selling non-essentials during the pandemic, so the platform clearly plays a pivotal role in determining market pricing, arguably even more so than Argos in its heyday. Too many times I hear of great products being killed as a viable line for other toy retailers by Amazon, and I wish we could find a solution that worked for the toy community as a whole. Amazon isn’t going away, and I appreciate that it can shift serious volumes, but it can also be a product killer and that really isn’t ideal.
Moving to the off the record news, I am hearing that certain key toy retailers have a buying ban in place. It’s difficult to offer comment, because there can be many reasons why a buying ban is introduced: maybe the retailers over-bought earlier in the year? Maybe there was a huge clearance parcel or two that hoovered up the available budget? Maybe demand is soft and coupled with carry-over from the end of last year, pressing the pause button makes sense in order to reset the balance ahead of the run-in to Christmas. Or maybe the accountants are winning the internal battle over the buyers – numerous people who have worked in retail over the years have told me that the internal conversations with their bean counters were often far more of a battle than conversations with suppliers.
I also heard of one major retailer which chartered its own ships from the Far East, which subsequently decided it didn’t need that level of capacity after all, resulting in some cheap deals being offered to suppliers to fill the space onboard the ships. It has certainly been tricky to get the balance right over the past year – it has often been a case of feast or famine when it comes to shipping availability and stock flows.
The latest Sainsbury’s / Argos results reinforced the perceived wisdom that non-food retail is having a challenging time, with Argos sales and Sainsbury’s general merchandise numbers both down double digits. Suppliers are still complaining that it is almost impossible to communicate with Argos buyers or get decisions – even on carry forward lines – so I hope the retailer can sort that out before the festive season kicks in. The last thing anyone needs is radio silence from one of the industry’s big guns ahead of Q4.
Despite the ongoing retail turbulence, there have been some uplifting stories this week; you have to take your swim cap off to the brave souls from the licensing community who swam the channel to raise funds for the Light Fund last week. Reading their first-hand accounts of the experience, it sounds absolutely horrendous, so well done to them for persevering and succeeding.
I also raised a smile at the ‘gentleminion’ trend which has been sweeping social media. Frankly, there have been some daft (and often dangerous) TikTok challenges over the years, but the thought of a bunch of teenage boys putting on formal attire to visit the cinema to watch the new Minions: Rise of Gru movie strikes me as one of the better things to come out of the medium. There have been a few claims of rowdy behaviour, but frankly if teenage boys want to put on a suit and tie to cheer the Minions on, that suggests all is well with the world. This is a franchise they’ve grown up with, and it obviously means a lot to them on an emotional level – and isn’t that what we want from entertainment brands, to resonate with the audience and evoke genuinely positive feelings? Minions may just catch a few people by surprise in the coming weeks, as it has been a bit over-shadowed by Jurassic World Dominion and Lightyear in some quarters thus far.
Just as some retailers may have thought Stranger Things wasn’t quite right for them – while other indies talk of selling over 1000 units over the course of a weekend. Never has it been more important to be open to the prospect of ‘different’ ranges, and to find a niche that other retailers may not be fully exploiting. This will always be the advantage that specialist toy retailers have over the bigger corporate retail operations– be nimble, quick and responsive and you always have a good chance of keeping one step ahead of the competition.