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Saints and sinners …it’s the Friday Blog!

Published on: 21st April 2023

I’ve spent quite a bit of time this week talking to – and talking about – retailers, and frankly, I have seen both the good and bad. Shall we start with the positives?

I visited Swindon (no, obviously that’s not the positive…) to attend the Toymaster supplier meeting – the retail group’s first such presentation for six years. I think it is fair to say that the pandemic was relatively kind to specialist, independent retailers, in a way that they (or indeed anyone else) could not possibly have foreseen at the start of the whole mess.

Of course, they had sleepless nights, as did all business owners. But after the initial shock, their inherent reactive, nimble nature served them well, allowing them to reposition their business models swiftly to take advantage of the new ways of selling toys to consumers. Their unrivalled product knowledge and personal service have continued to attract consumers now that stores have re-opened, and it was lovely to hear that Toymaster members have been outperforming the market: over three quarters of Toymaster members traded up last year versus 2021, and member sales increased by 14%, in a market that – lest we forget – was down by 3%.

No wonder then that the meeting was packed, as toy suppliers assembled to hear all about Toymaster’s strong retail sales performance and healthy underlying financial position, while being presented with a range of options to maximise their trading relationship with Toymaster members moving forward. Closer working partnerships and support to achieve a healthy margin mix were on Paul Reader’s wish list for suppliers, and he also highlighted the opportunity to launch new ranges exclusively through Toymaster stores: as he rightly pointed out, “Collectively, the 280 stores of our members offer serious shelf space for brands at launch.” Suppliers were also encouraged to support other key marketing initiatives, such as the Christmas catalogue – “our biggest and most powerful marketing tool” according to Paul – window displays and the Toymaster product hub.

As well as inviting Toy World to attend the meeting, Yogi Parmar also gave a personal thank you to the whole Toy World team by name, for the incredibly close partnership we have developed in recent years – and like suppliers, we are absolutely delighted to continue that special relationship with the Toymaster team and its members going forward. A healthy specialist independent channel can only be good for the toy market as a whole, and Toymaster plays an absolutely pivotal role in facilitating that.

But having seen the very best of toy retailing, there is always another side of the coin. Can you guess where I am going to go next…yes, it’s a not-so-welcome return to the Blog for the pioneers of ‘computer says no’ negotiation, our old friends at Amazon. Over the past few months, we have written fairly extensively about the introduction of its new way of working with distributors, whereby Amazon appears to have decided to make them the primary scapegoat for the (perceived) lack of margin from the toy channel.

Of course, it’s far easier to ‘have a go’ at distributors than it is to pick on major global toy companies – even computer algorithms aren’t that stupid. But in doing so, is Amazon about to cut off its nose to spite its face? According to a few distributors I have spoken to this week, the common sense workaround that had been proposed – that distributors simply needed to provide reasonable proof that they had been appointed as the exclusive distributor by the brand owner – is apparently not working in practice. One distributor who only a matter of years ago was a platinum supplier to Amazon received a terse, impersonal ‘termination of business relationship’ email, despite providing supporting documentation to show it was the only authorised seller of the products in question in the UK. Apparently, despite accepting the veracity of the submission, the company and products in question were deemed not to “meet Amazon’s financial requirements.” Even offering a 45% discount off the retail price was adjudged insufficient, suggesting that the computer’s mind was firmly made up and it wasn’t open to any form of negotiation.

From platinum supplier to zero orders …no wonder distributors are perplexed. It is as if Amazon has declared war on an entire business model, irrespective of the number of companies across the globe who feel that it makes business sense to use this approach. Essentially, the response equates to: “Sure, we accept that you are the official distributor. But so what? We don’t care.” I wonder what happened to the pragmatism and common sense that Amazon was allegedly going to apply in this situation?

Separately, another supplier suggested on social media that Amazon had reduced its delivery window in Vendor Central (from ten to six days) at the same time as imposing worse terms, using the delivery window as leverage to force through the new terms (“if you want a longer delivery window, sign here…”).

Contrast that ‘gun to the head’ strategy with the impassioned plea from Toymaster’s Paul Reader for closer working ties with toy suppliers, and an offer of working together to benefit both sides. Personally, I am glad that most of our customers favour the Toymaster collaborative approach, rather than Amazon’s more hard line, hard-nosed imposition of conditions without negotiation, and the ultimate threat of closing the account always being a heartbeat away. Is that what a good trading partner really does?

I suspect that Amazon has reached the ‘can’t live with them, can’t live without them’ status for many toy companies. They’re too big to ignore, but there’s the real risk that long-term business models are going to have to be side-lined because Amazon has decided it doesn’t like them. As a community, do we really want to make ourselves hostage to that kind of fortune?

Finally, just time to say that with the LA event due to broaden out from Walmart and Target to a wider visitor profile – including distributors – in the next week or two, I hear that a grand total of two UK retailers are making the April trip. One is allegedly sending two representatives (a lot fewer than the number of team members who go west in September) and the other is a grocery account with ties to the US market. So, not exactly the full might of the UK retail spectrum – maybe talk of LA in April laying waste to numerous other buying trips and events is just a tad premature? Of course, it’s early days, and September remains the main LA event – the April trip may grow in years to come, but I wouldn’t write off other established alternatives just yet. And, who knows, maybe someone will invite Amazon’s UK arm to join the distributors’ week, so they can see first-hand how that part of the toy market operates.