I had a nice early start to the day in order to write this week’s Blog, as I’ve been down at BLE all week. Goodness me, licensing people can certainly talk (I know… Pot. Kettle. Black.), so I apologise if anyone calls me today and I sound like Charles Bronson on a bad day. I guess the main difference with BLE and the numerous toy fairs I attend is that there isn’t any product on show at BLE, so instead of a conversation being a brief pre-cursor to viewing a product range, it takes up the entire meeting.
The most frequent conversation topics include the show itself, new properties (both the person I’m meeting and other people’s), how business is shaping up, gossip and, inevitably, the parlous state of the pound. I’ll aim to cover some of these talking points as best I can in the time and space available.
As far as BLE goes, given all the potential obstacles in its way this week – the Southern Rail Strike, Yom Kippur falling on the middle day of the show (not even the first or last) and a big percentage of the toy trade heading off to Hong Kong (a trip which had all but died out a couple of years ago, but which seems to have bounced back strongly), the show seemed as busy as ever. The first two days in particular were thronging, whilst even the last day was solid.
I haven’t got space to detail all the interesting properties I saw, but I’ll be writing a report for the November issue when I’ll cover that aspect of the show. Most people seem to be of the opinion that we’re still on track to deliver a decent festive trading season, but my previous suggestion that we may see less discounting this time around may perhaps have been a little over-optimistic, based on what I am told one particular retailer recently announced at a trading conference.
In terms of gossip, I understand that Jacqueline Taylor-Foo will be leaving Spin Master at the end of the year to become European MD for Melissa and Doug, while Julian Page has rejoined VTech as national account manager.
As for the pound and the ramifications of its steep decline, it finally hit the headlines this week as a result of the spat between Unilever and Tesco, given an extra frisson by the fact that Unilever was Tesco CEO Dave Lewis’s former employer. The point this brief media storm neatly underlined is that it is clearly not just a toy industry problem, but one which will affect every importer, retailer and, ultimately, consumer. It may be uncomfortable, but people are surely now left in no doubt that prices will rise next year. Well, I say that: I was told this week that one retailer has been asking suppliers for price reductions for 2017! I have to believe it’s just a misguided, heavy-handed negotiating tactic, as if anyone truly believes that any supplier is in a position to reduce prices, they have either not read or watched the news for the past two months, or they don’t have even a rudimentary grasp of economics. In fairness, I feel sorry for the buyer who has been told to adopt this stance by someone above them: they must know how daft they sound, and it seems palpably unfair of their boss to put someone in that position.
So what are people going to do about prices? It was probably the single most-asked question of the week? Of course, there is no simple answer, but suppliers seem to be setting a benchmark increase of around 10 % minimum, whilst retailers seem to be attempting to keep increases in single digits. Retailers will point to the bigger gross margins that suppliers generally make, and possibly raw material price decreases in some areas (although to suggest that wages are also decreasing, as I understand some retailers may be attempting to claim, flies in the face of every shred of evidence I’ve seen over the past few years). Suppliers will rightly claim that if they had 15-18% ‘slack’ to play with to balance the currency fall, retailers will ask why their prices weren’t lower in the first place.
But maybe there is another option to consider: one supplier told me that one very large (possibly Irish, I couldn’t say) retailer raised the price of his range in store by 13% the week after Brexit. I asked if it had affected his sales volumes, and he said “Not one bit.” Perhaps the paranoia about raised prices automatically killing sales volumes has been slightly exaggerated? Maybe it’s time – and maybe there really is no choice – to let prices rise a little, for everyone’s benefit?
Finally, I’m glad to see that the Smyths TV ad is already encouraging men everywhere to throw off their inhibitions and express their true selves: first there was Turner’s Graham Saltmarsh with his Power Puff Girls nail art, then I saw Disney’s latest Princess on Facebook last night… meet Princess Evans!