There may be trouble ahead…it’s the Friday Blog!

Published on: 22nd February 2019

New York Toy Fair brought the 2019 Toy Fair Season to a close this week. I appreciate there are still domestic shows to come in Melbourne and Moscow, but I suspect that most of our core readership perceives Toy Fair Season to comprise Hong Kong, London, Nuremberg and New York. If you went to the show, I hope it rounded off the Season in true New York style. I read a couple of reports, including a critical article in the New York Post, complaining that there were more closed stands than ever this year. As someone who fondly remembers the ‘good old days’ of the toy building at 200 5th Avenue, filled with private showrooms – many of which adopted a stern ‘they shall not pass’ mantra – I have no real issue with closed stands. Granted, they may not appear welcoming, but in most cases, there are solid business reasons why it remains the most effective strategy.

Congratulations to all the winners of the US TOTY Awards: MGA cleaned up once more, winning a total of four awards, including the overall Toy of the Year award for – you guessed it – L.O.L. Surprise! Hasbro, Lego and Mattel were also victorious on the night, while I was pleased to see Learning Resources pick up an award for Botley the Coding Robot. It was also fantastic to see a British presence among the winners – Spin Master’s KumiKreator was developed by UK –based Fuse London, so well done to Pete Cartlidge and the team. And, of course, it was great to see British company Worlds Apart (via Moose Toys) pick up the joint award for plush for its fantastic Scruff-a-Luvs brand.

On the subject of joint awards, I wonder whether that might have been the answer to a conundrum that cropped up at the UK toy of the year awards at London Toy Fair. Spin Master picked up the award for Game of the Year for Jumanji….but as I understand it, a large percentage of the Jumanji games sold in the UK market in 2018 were actually made and distributed by Rachel Lowe. It’s a complicated tale, with the licensor (Sony) at the heart of the complications, granting overlapping local and global licences that resulted in 2018 being something of a ‘baton passing’ period. I gather Rachel even subbed in when Spin Master’s stock started to run short over the festive season. Maybe a retrospective joint award is in order?

The big UK retail news of the week was the fact that the hitherto spectacularly ineffective Competition & Market Authority (CMA) appears to finally be growing a pair. Having consistently failed to intervene in mergers and acquisitions previously referred to it, I had begun to think that its investigation process was little more than a rubber stamping exercise. How wrong I was. I’m not sure why Sainsbury’s Asda has turned out to be the ‘one step too far’, but the CMA’s findings were crystal clear. The report concluded that the merger would result in a worse experience in stores and online, a reduction in the choice available to consumers and higher prices at petrol stations. As a result, potential options open to the CMA include blocking the deal completely or requiring ‘Sasda’ to sell off a significant number of stores and other assets – potentially including one of the Sainsbury’s or Asda names. Sainsbury’s is said to be prepared to fight the ruling, so it will be fascinating to see what happens next. Let’s just say that rather than singing “We’re in the money”, Mike Coupe is more likely to be caught singing “There may be trouble ahead” this time round.

Sainsbury’s had already spent a fortune preparing for the merger, while I heard reports in Hong Kong that meetings with Asda buyers were generally tense affairs, with the conclusion that their less-than-positive mood was driven by the fact that they were fully expecting to lose their jobs soon. This may also explain the no-shows from Asda toy buyers at Olympia and Nuremberg. They clearly saw the CMA report as a fait accompli, so they must have been as surprised as anyone to see that – for once – it didn’t cop out.

I am usually fairly black and white when it comes to retail issues, but in all honesty, I am torn here. Like all mergers, there would be good and bad ramifications – though I remain to be convinced of the tangible benefits to consumers or suppliers. Indeed, I suspect the main beneficiaries would be Sainsbury’s shareholders and board members. But even so, is that good enough reason for the CMA to intervene to block it? I’d be curious to hear what suppliers think.

I did get some feedback on LinkedIn from former Argos toy doyen Ian Chaplin, who seemed to share my reservations: “If you look at Argos today, they have removed a number of the best-selling lines and replaced them with their own brand ranges, reduced promotions and in turn reduced sales. However, profits are up due to the closure of Argos stores and operational savings. So is that really in the customers’ interest or the shareholders’ interest?” All other feedback gratefully received.

Finally, elsewhere in the retail sphere, Poundland has unveiled transformation plans which include the introduction of a greater volume of product at multiple price points. I can certainly see the logic, as it must be getting hard to find items that can retail at £1 and still deliver a profit. The idea even involves the reinvention of the Poundland name to mean that prices are rounded to the nearest pound, rather than being purely indicative of the selling price. Nickelodeon’s Mark Kingston made a valid observation on my LinkedIn post about the move, expressing surprise that the concept of ‘5 Below’ has not come to U.K. yet – apparently one of the fastest growing retailers in the US, the retailer works on the simple premise that everything in-store retails at $5 or less.

So would such a strategy work for Poundland and resonate with its customers? Whenever I am in a Poundland store, even the items at £2 seem to confuse shoppers…”I thought everything in here was £1″ is a comment I frequently hear being made to shop assistants. I guess you only have to look at their store fascia to see why customers might be getting confused (see below). “So everything’s £1…except those items that aren’t?” Not such a snappy fascia slogan, is it?