Happy New Year! I hope you all had a wonderful festive season, that your batteries are fully recharged and you’re ready and raring to go for Toy Fair Season. 2024 is the Chinese Year of the Dragon – apparently, one of the most powerful and luckiest animals in the Chinese Zodiac – so let’s hope some of that power and luck rubs off on the toy community.
2024 has certainly started with a bang, following the news that Tesco’s trial partnership with The Entertainer to run its toy departments will now be made permanent and extended to Tesco’s entire UK retail estate & key stores in the ROI. That’s a major coup for The Entertainer team, who will no doubt be fired up for the next stage of the partnership. And it’s massive news for the UK toy community as a whole…
Barely a week went by last year without someone asking me whether I had heard how the Entertainer / Tesco trial was going. Indeed, whenever I have spoken to Gary Grant over the past year, I have raised the question as to whether it was likely to be extended, only to be repeatedly told that he didn’t really know.
With the festive season behind us, I wondered if I would get a call from Gary with an update… which finally came yesterday lunchtime. And the news was exactly what Gary and his team had been hoping for all along: the Entertainer’s relationship with Tesco is to be expanded to its entire 759 store estate in the UK and key stores in the Republic of Ireland, while it will also be supplying a toy range to Tesco stores in Central Europe. Suppliers’ direct relationships with Tesco will end on 30th October, after the transition period is complete.
You can read the official story here and I wanted to give a little extra context for those processing what this will mean in practice. To say this is a massive development for The Entertainer would be the understatement of the year: when the trial was first announced and I asked Gary what impact it would have on the business if it was ultimately expanded to the whole Tesco store estate, he admitted it would be a complete game changer – “the biggest thing to ever happen to The Entertainer”.
Both the Republic of Ireland and Central Europe are completely new markets for The Entertainer – and to roll out The Entertainer branded toy departments to over 750 UK & ROI stores with incredibly high footfall levels is a massive opportunity. That rollout will start in March, and I understand it is likely to take around 6-7 months to convert all the stores: some have only 2-3 bays, but others will have up to 25 bays.
Understandably, Gary is beyond excited: “It’s good for both Tesco and The Entertainer. For the partnership to work, that has to be the case. I think it’s also good for the toy industry as a whole, and an amazing opportunity for our 1800 staff to grow their careers with the joint operation.”
Of course, not everyone will be as thrilled as Gary – some suppliers have long-term relationships with Tesco and may not operationally be as close to The Entertainer. Gary’s message to those people was unequivocal: “I say this to all current suppliers of Tesco’s toy department, and anyone else who wants to be part of it in future – come and talk to us. Geoff Sheffield is the man to talk to. He will be available to sit down with every supplier to discuss what the future looks like and to look at where there is common ground. Even if you don’t currently deal with us, the door is not closed.” I have a feeling that Geoff is going to be a very busy man indeed in the coming months.
I also think this development highlights the fact that unless a grocer (any grocer, to be fair) is prepared to put in place a team of specialist, dedicated toy buyers who stay in their roles for several years, learning the intricacies of the toy market and building strong relationships with suppliers, it will be difficult for them to reach anywhere near their full potential.
Elsewhere, the situation out in the Red Sea remains complex, volatile, unpredictable – and deeply concerning for freight forwarders and importers. Long story short, from what I can gauge talking to people in the logistics field, things are likely to get worse before they get better – and ‘better’ might even be as far as 3-6 months down the line. Rates for a 40ft container have almost doubled to over $7k this week alone, giving importers some tough decisions to make. Industry insiders say this situation could end up having an even greater impact on the global economy than the EverGiven fiasco, with 30% of the world’s container traffic traditionally going through the Red Sea. To make matters worse, containers are now getting stranded in places across the world where they shouldn’t be, and there are rumours that insurance companies will soon withdraw cover from ships that decide to risk using the Red Sea route, making the longer / costlier Cape Horn route unavoidable.
And there is nothing much anyone can do, although here’s one thought – should retailers scrap any fines for late arrival of shipments until things settle down? Some importers will currently be working out whether it is cheaper to pay the fine or swallow the short-term rate increases – a tough equation to balance in some cases. We could certainly do with a bit of that ‘Dragon luck’ in the Red Sea right now.
One thing’s for sure, there will be plenty to talk about for those of us making the trip to Hong Kong in the coming days. I head off later today, for my first visit to the region since January 2020 – just a few short weeks before the world changed. I hope to see as many of you as possible while I’m out there, so do feel free to drop me a message if you would like to meet up next week.
As retailers often contact me when one of their retail competitors does something daft on pricing, I am genuinely thinking of introducing a new column naming and shaming the perpetrators – maybe we could call it tw*t watch? This week it’s been the turn of Game to induce groans of frustration from toy retailers, having reduced all the brand-new Lego January launches by 20% on day one (insert face palm emoji here). Several specialist multiple retailers had apparently already broken the embargo by putting the new items on sale before Christmas, but a blanket 20% discount from day one raised the retail community’s blood pressure several more notches. Maybe I’m being naïve, but it just seems daft to me – and surely unnecessary? Anyway, welcome to tw*t watch… more to follow no doubt.
And finally, keep a look out for our January issue, which should be arriving any day now – if you get a knock at the door, it’s probably because it won’t fit through your letter box. I just hope your postman has been in the gym over Christmas preparing – we don’t want to give him a hernia. Happy reading when it does land on your desk – and the digital version will be online on Monday.