I was honoured to be invited to The Entertainer’s autumn conference this week. Store managers from across the UK, along with regional and area managers, plus directors and international franchise partners met in Stratford-upon-Avon to plan for the impending festive period. You’ll be able to read an exclusive review of the event in the November issue of Toy World; I found it a fascinating experience, both inspiring and eye-opening. As someone who has spent a career observing and writing about the toy retail arena, it is clear that we are all living in highly unpredictable – maybe even unprecedented – times.
There are some inescapable realities. Consumer confidence is at rock bottom. Gary Grant suggested that we are “trading against 2008 levels of confidence.” A report this week from the New Economics Foundation think tank goes a step further, suggesting that UK shoppers are financially worse off than they were in 2008. The pound you had in your pocket on 22nd June 2016 is now worth 73p. So it is little wonder that retail footfall across the UK is down.
The Entertainer management team has always spoken of ‘working the crowd’. So what happens if the crowd just isn’t there? The new mantra seems to be ‘work the basket’; make the most of the people who are there. Outstanding customer service has never been more important; engaging with the customer, using knowledge to help them with their purchase and maximise on the sale through add-ons. If you were trying to sum it up in a phrase, I guess it would be ‘trade well.’ My instinct tells me that whether we’re talking about retailers (large or small), toy suppliers or even trade magazines, those businesses which are run by people with good trading instincts will emerge from the current period of uncertainty in a far stronger position than some others.
By ‘trade well’, I don’t mean ‘start indiscriminately slashing prices’, although clearly there will be some tough choices to be made in that respect over the coming weeks. With a challenging sales environment, the option to chase turnover at the expense of margin must be a temptation. I would argue that it is crucial to hold your nerve, but then I am not sitting on warehouses and stockrooms that are full to the brim.
There is tangible evidence that some large retailers are already aiming to entice footfall through discounting; Smyths new catalogue launches today and it is rumoured that a ‘£10 off £50’ sale will start as early as next week. Asda has already instigated a sale featuring over 200 lines, while Sainsbury’s has ‘leaked’ the news that its half-price sale is expected to run from 16th-22nd October.
So it was encouraging to hear The Entertainer talk of not making knee-jerk decisions or changing its business model. Like every other retailer, I am sure it will react to market forces and deal with slow-moving items, but the over-riding message was that even amongst uncertainty, there are always winners, and that fully-costed, planned promotions are infinitely preferable to decisions driven by panic.
There is also the abiding feeling that trade will come late this year. Black Friday falls a week later this year – Friday 29th November: on the positive side, this means that people will just have been paid. Conversely, it increases the likelihood that some consumers will postpone purchasing decisions to see if Black Friday offers them extra savings. This may particularly apply to larger items, although of course there is a risk that with some retailers adopting a cautious approach to stock control, certain popular lines will be out of stock by then. One retailer posted on social media this week that so many customers had bought the LOL Glamper Van through his Christmas Club deal that his store-room currently resembles an RV Park. But at least those customers know they will get what their child wants.
What came through loud and clear at The Entertainer conference was that every team member has a vital part to play in the success of the business. In many respects, the store managers are like an extended family; like individual Toymaster members, they are often in contact with other managers in their area, asking questions, seeking advice or exchanging ideas. Whether you own an independent store or are managing a branch of a national chain, everyone benefits from that sort of support network. And in addition to the strong sense of camaraderie, the fact that The Entertainer has been responsible for over £2.75m worth of charitable donations over the past years shows that businesses really can be a force for good.
Away from the conference, there have been several other interesting developments this week: I became embroiled in a ‘lively’ LinkedIn debate last weekend about getting rid of plastic toys from fast food kids’ meals – which I dubbed ‘Mctat’ (other brands of plastic tat are available). So I was delighted to hear that Burger King has chosen to do just that this week –in my humble opinion, no more ‘BK tat’ can only be a good thing for the toy community. In addition to the obvious environmental benefits, I have long believed that the practice suppresses genuine toy sales; how many parents say “you’ve already got one of those” when asked to buy a real toy that their child just got a free version of with their ‘cheery meal’. And what do these freebies do to consumer perception of the price of proper toys? Good riddance to all brands of fast food tat as far as I’m concerned.
Finally, it was reported this week that The Range founder Chris Dawson is another retailer who is trading well – so well, in fact, that he was able to pay his wife a £25m dividend. As she is based in Jersey, she was able to save a cool £9.5m tax on the dividend, due to the local tax laws. Again, there is no suggestion of impropriety – simply questionable practice on the part of HMRC. So if you hear of a spate of spouses being asked to move to Jersey, it may not just be because of the temperate climate and the excellent standard of clotted cream.