I want to start this week’s Blog by passing on my deepest condolences to all of our many Israeli readers, and indeed to all of the many Jewish members of the global toy community. The horrendous events of the past week must have been incredibly difficult to come to terms with, and I can’t begin to imagine the pain you are all going through. Anything I say could never come close to being enough, but just know that you are in our thoughts and prayers.
The biggest toy story of the week came from North America, as Spin Master announced its intention to acquire Melissa & Doug for a cool $950m. It’s a bold move that will expand Spin Master’s portfolio in what it describes as “the early childhood play arena”. Spin Master has a pretty decent track record with acquisitions, and the agreement is expected to be finalized in the first quarter of 2024. Until then, the two companies will continue to operate separately, although whether that will still be the case once the deal is signed and sealed remains to be seen. In addition to bolstering the company’s pre-school line, my good US retail friend Rick Derr pointed out that the acquisition should also strengthen Spin Master’s business with the independent channel and Amazon even further. And after his impromptu performance at the TOTY awards, I am awaiting Spin Master co-founder Ronnen Harary’s musical interpretation of the news any day.
Back in the UK, there has been a ‘conscious uncoupling’ between SuperAwesome and its previous owner Epic Games. Although this will sadly result in some good people losing their jobs, I definitely see an upside for the toy community: essentially, SuperAwesome will be returning to its roots, becoming independent once again and doubling down on its core under 18s business. To my mind, having SuperAwesome fully focused on kids as an independent business is good news for everyone.
I saw a news report this week which quoted Christmas food suppliers complaining about the recent spell of warm, sunny weather, as it has apparently stifled early sales of their festive ranges. I guess the same could also be said of toys, but there are still over 70 days’ trading to go until the Big Day, so no need to worry just yet. I guess UK toy retailers will be very happy looking at the weather forecast for this weekend – it looks like our brief Indian summer is about to disappear with a vengeance.
Toy retailers have been doing their best to get consumers in the festive mood and thinking about Christmas purchases, with Smyths the latest retailer to unveil its list of top toys for Christmas. Following the trend set by other retail predictions, there is a healthy smattering of own label and exclusive lines in the Smyths list, which certainly makes sense from a margin mix perspective.
Equally, online retailer Wicked Uncle’s festive list avoids the big boys completely, opting instead for a more eclectic mix of product from a totally different group of suppliers.
These strategies make even more sense if you read Midco Toys’ owner Dave Middleton’s LinkedIn post this week, in which he bemoans the aggressive price-cutting activity of the grocers and other large retailers, which traditionally kicks off in October and is largely focused on high profile, higher priced lines. I’d recommend everyone to read Dave’s full post, if only to appreciate the impact on the wider toy retail arena of the October / November cost-cutting promotions. As Dave says: “We get told by suppliers to build stocks as supply will be short, and the next thing you know many of the products we have stockpiled are £10-15 cheaper in the supermarkets in their big toy events.”
I am not sure this is an easy dilemma to resolve – it happens every year, so there must be some economic viability in the sales volumes driven by this activity. But does it ultimately discourage the indies (not to mention many other retailers) from chasing sales of hot toys in the £30+ category? I wish there was a simple solution that would work for everyone, but I’m not sure there is – although I doubt I would be pushing the lines that are going to be price cut to other retail channels (unless, of course, toy companies have literally no idea which products will be affected). It also explains why some toy companies secretly breathe a sigh of relief if they don’t make the top toy lists, as these are often the lines that cost-cutting activity is built around.
Anyway, let’s end on a more positive note: congratulations to Ellie Moore on her promotion to sales director of both MGA and Zapf, and to John White on joining MV as senor national account manager. Also, a big thumbs up to Anna Knight and her team for their sterling work to ensure another great BLE last week, despite the best efforts of the rail unions to throw a spanner in the works. I wrote a Blog for our sister website Licensing.biz looking back on last week’s show, which sums up just how well the event was received by pretty much everyone I have spoken to.
Finally, you may not be entirely surprised to hear that the new ‘Toy Building’ located at 1960 on Grand in El Segundo has seen a spike in enquiries for space since the announcement that there won’t be a North American Toy Fair in 2024. It is becoming abundantly clear that there is considerable momentum behind the LA toy events in April and particularly September. As I have said before, to some degree I feel like an outside observer, as it is first and foremost a dilemma for the US toy community to resolve.
That said, the international presence at both events (exhibitors, retailers and distributors) is growing rapidly – and that very much makes it a dialogue that I should be part of. Assuming this trend continues (and there is no reason to believe that it won’t), there will undoubtedly be ramifications for other international toy hubs, especially Hong Kong, in addition to the current lively debate within the domestic US toy community about future trade fair locations.
As I have said previously, it is an extremely complex situation, and LA won’t necessarily suit everyone – especially small and medium size toy companies. However, it’s there, it’s growing and it certainly isn’t going away. While I can understand to a point why the Toy Association may be reluctant to hitch its wagon to LA, it’s impossible to ignore it. As they say, this one will run and run…