Another week, another set of discussions and negotiations where it seems to be ‘two steps forward, two steps back.’ Surprisingly, I’m not referring to Brexit, although the description would certainly suit that epic fiasco equally as well. On this occasion, however, I’m referring to several ongoing retail sagas which seem to be struggling to find a successful resolution just as much as the government is.
Sainsburys and Asda have attempted to strike back in their protracted battle with the CMA, offering to sell up to 150 stores to help the deal go through. Whether this will be enough remains to be seen: it is plausible that the CMA may feel it has bared its teeth sufficiently and back down, although in many respects, this would simply reinforce the notion that it is a paper tiger, especially after it came out so strongly against the merger.
Mind you, some suppliers to Asda seem quite keen for the acquisition to take place, with the suggestion that Asda is somewhat in limbo right now. I’ve been hearing rumours that the ‘Big Toy Roll Back’ may have to be renamed ‘The Not Very Big Toy Roll Back’ this year, with suggestions of opening order quantities falling massively short of MOQs and no firm commitment to further phasing. When you hear tales (which may or may not be apocryphal) of initial order quantities not even reaching three figures, it’s hard to equate that with a retailer which is part of the Walmart family.
Meanwhile Debenhams shareholders face the prospect of total wipeout, as one of the options being explored by the beleaguered retailer is to raise £200m in fresh loans which would result in a complete loss of equity value for existing shareholders. Whether or not this is a scare tactic aimed at encouraging Mike Ashley to wind his neck in can only be a matter of conjecture. Although the fact that Shop Direct is rebranding to Very, with one of the reasons given is so people don’t confuse it with Sports Direct, did make me smile. It seems that retailers are reluctant to be associated with Mr Ashley, even when it is being done in error!
Against this backdrop of ongoing retail uncertainty, the CBI announcement that retail sales fell in March by the fastest rate for more than a year came as no great surprise. The CBI was in no doubt as to the principal cause of the slump – and yes, we’re back to Brexit! In fairness, even I wouldn’t suggest that Brexit is singlehandedly responsible for the subdued footfall numbers that some high streets are experiencing. But it’s a huge factor, without a shadow of doubt.
Nevertheless, I do think it is important to put the CBI announcement into context, especially from a toy perspective. With Easter falling late this year, the March numbers were always going to struggle to match last year – let’s see how the picture looks at the end of April for a fairer comparison. I spent a day at the Toymaster FOB roadshow in Swindon yesterday, and while the ‘B’ word cropped up frequently in conversation, other challenges were also mentioned, including the lack of a really hot new craze. Over the past two years, the first quarter has been buoyed by stellar performances from fidget spinners, squishies and L.O.L. Surprise! While the latter two categories are still selling well, it is often tricky to match the dizzy heights of the first rush of product, especially for those retailers who were early to market. While a few new introductions have got off to a promising start (Cuteitos from Basic Fun and Bananas from Bandai were both mentioned), there is definitely a gap for a ‘wow craze’ which retailers are hoping will be filled sooner rather than later.
For now, sticking with the tried and tested and placing repeat orders if something is working seems to be the order of the day. However, it is still important to be pro-active and take a few calculated risks – it is the nimble companies on both the retail and supply side that maintain an advantage over slower-moving operations.
Talking to the Toy Barnhaus boys in Swindon, they were under no illusions: “It’s competitive out there. You can’t just sit there – you have to make the most of the opportunities. We’ve got a new B&M opening across the road from our Crawley store – but we see that as an opportunity, it will be good for footfall. We just have to make sure they cross the road and come into our store.” It was Toy Barnhaus’ 10th anniversary yesterday, and with such a positive ‘can do’ attitude and spirit, coupled with a huge passion for toys (and an even greater passion for lunch), you can see why they’ve made a huge success of the business – congratulations to Stephen, Mark and the whole team.
So let’s keep our fingers crossed for a good Easter, some pleasant (but not too hot) weather and for someone in Westminster to finally get to grips with the Brexit mess. And if you think that Brexit is a convenient scapegoat and too easily blamed for the current retail malaise, it was interesting to hear that Irish Toymaster members were in particularly buoyant mood at the Dublin Toymaster event last week, suggesting that if you removed Brexit from the national conversation, a rather different picture would emerge. We can but hope the penny drops in Westminster sooner rather than later.
Finally, you have to admire a company which plans ahead – especially in the current ‘hand to mouth’ climate. One customer (coincidentally, a toy buyer himself) recently found out just how far ahead one particular toy retailer works, when he received the following out of stock notification. Unfortunately, I’m not sure the product will still be appropriate by then…