With all the ludicrous parliamentary shenanigans this week, a surprise increase in the headline inflation rate in February and a subsequent rise in the interest rate slipped under the radar somewhat. However, these developments will have far more impact on consumer confidence and the retail channel than whether or not Boris Johnson took a call from Angela Merkel while doing a conga (yes, international readers, this is where we are in the UK political arena right now).
To be fair, projections for both inflationary pressure and consumer sentiment are far brighter for the latter part of the year, but this latest blip suggests that no-one should be complacent. Retailers are reacting to the current economic headwinds in different ways. Amazon announced this week that instead of getting rid of 18,000 workers, it would actually be adding a further 9,000 redundancies to its plans, 50% more than had been suggested in January. While it is clear Amazon wants less human interaction with its vendors and more automated communication, it is also plausible that Amazon over-hired last year, presumably in the belief that it would be able to sustain the phenomenal performance it saw during the pandemic. Whether that was over-ambitious, hubristic, or just plain naïve, I will let you decide. Without doubt, some consumers fell in love with the convenience of online shopping during lockdowns, but I would guess that many shoppers were delighted to be able to get back out into physical stores once again. Just as Deliveroo and many other online-first businesses are finding, replicating lockdown numbers was never going to be easily sustainable when the world re-opened.
Meanwhile, the brick-and-mortar world has its own challenges. John Lewis is mulling over moving away from its 100% employee ownership model in a bid to raise up to £2b of new investment, while Argos has apparently made some significant organisational changes of its own. When it closed the Milton Keynes office, the official line was that the retailer would be focusing operations on its Coventry facility. In practice, I gather some functions have gone a little further afield…to India to be precise. It’s not uncommon for large companies to outsource certain tasks in this way, but some toy companies are concerned that this move will lead to a drop in service levels and a lack of communication. Being given generic email addresses that are not monitored (allegedly) isn’t likely to instil confidence in the supplier base, who are rather concerned about account management, prompt query resolution and the flow of information going forward.
While I fully appreciate the need for businesses to keep costs under control, I do wonder whether the ‘fewer people, more automation’ route is really the answer. If you’ve ever hung on a line waiting for 55 minutes for someone to answer the call (as I did with HMRC recently) or have sent emails to a generic ‘sales / finance@…’ address which you know no-one is ever likely to respond to, you’ll know how frustrating it is when you cannot engage with a real person to get a swift and satisfactory resolution. A famous song from Cabaret suggests “money makes the world go round,” but there’s a slightly less well-known song from the 70s called “People make the world go round” which I think is equally valid.
Elsewhere, we announced this week that popular toy industry stalwart David Allan will be leaving Toynamics at the end of the month and is looking for a new role. David knows the toy market inside out and has many great contacts, so I am sure he will be a tremendous asset to the right company.
The toy market is currently in the process of gearing up for Easter: some exciting new launches and collections are hitting retail over the coming days and weeks, while Toymaster has unveiled its spring catalogue. Kids will be breaking up from school soon, and that will hopefully give a nice boost to sales. Even the recent teacher’s strikes have helped to lift sales (Toy Barnhaus described them as akin to ‘one day half terms’ in their latest column), so a full-blown two week holiday should hopefully have a big impact. New business rates come into effect next month too, and I understand many independent retailers should see their bills fall, so that will help them to stay competitive. And once we can finally turn the central heating off, I am sure we will all feel significantly better off too. All we need now is the major retail selections to start trickling through; remind me again why some people think the end of January is too late for the Toy Fair when selections haven’t been confirmed two months later…
Finally, I was honoured to be invited to the red carpet premiere of the new Dungeons & Dragons movie in Leicester Square last night. Official premieres are always glamorous occasions, and this was no exception (despite the less than glamorous London weather). All of the cast were there, along with the directors, and they all spoke enthusiastically about the movie in interviews beforehand. The film itself was thoroughly enjoyable: as you would expect, it had plenty of action and high production values. But it also had a lot of heart and some nice self-deprecating humour, which you don’t always get with the fantasy genre. Although I am not a D&D aficionado, I got the impression there was enough in the movie to excite the hardcore players, while it was also accessible enough to appeal to a wider audience. Overall, it was great fun, and I’m sure it will bring new players into the world of D&D, as well as giving existing fans a movie they will love. Well done to everyone at Hasbro, eOne and Paramount Pictures. D&D has certainly come a long way since I used to visit TSR Hobbies in Cambridge all those years ago…