About Toy Jobs

Time Warp to Toy Fair

Once upon a time, in a land far far away and a long long time ago…..

…..there was a New York Toy Fair. It all kicked in on a Friday night with the Toy of the Year Awards. The night belonged to MGA Entertainment as L.O.L. Surprise was named Toy of the Year. In accepting of the award, company president Isaac Larian was surprisingly well behaved…mostly. L.O.L also garnered awards for Doll of the Year and Collectible of the Year. As usual, Mattel and Lego also had good nights each winning several awards although Hasbro was strangely absent.

lol surprise right one

I always enjoy seeing smaller and newer companies win and it was great to see WOW! Stuff’s Harry Potter Invisibility Cloak and Zuru’s RainboCorns Sequin Surprise take home the hardware. I also enjoyed seeing Playmobil take home an award as I can’t recall them winning one before.

Harry Potter

The big innovation of the night was the shout out to toy creators and designers. These people are the soul of our industry and deserve much more recognition than they regularly receive. It was a good move to see them recognized on the screen but they should be put in the evenings program and anywhere else we can think of as well.

The Toy Association did its usual suburb job organizing and hosting the event. The only thing I’ll note is that we seem to be running out of room-we may need a bigger space. It’s a credit to the Toy Association that more and more people are attending this event every year.

As I hit the world’s hardest floors at the Javits Center on Saturday morning the word on everyone’s lips was “Shaq….” “Shaq…” “Shaq….” As the larger than life Shaquille O’Neal cut the ribbon at the opening ceremony. Kudos to Basic Fun for the landing him as the spokesperson for their Tonka brand. That coup should help them drive a lot of business.

2020 Toy Fair New York

I spent most of Saturday on the main floor and while attendance seemed a little light it was picking up by the afternoon. That had to be expected as travel restrictions and the closing of the China Pavilion meant that much of Asia was not in attendance. I spent much of Sunday in “the basement” and traffic appeared to be stronger.

It wouldn’t be a New York Toy Fair without the Women In Toys Wonder Women Awards dinner. Genna Rosenberg and Jennifer Caveza did a fantastic job as always. Everything appears to run so smoothly but there must be a lot of scrambling behind the scenes to put it all in place. Maybe I’m wrong about that. Maybe they just have it down pat. The event has grown to be so popular that like the TOTY’s they may need a bigger venue.

02232020: Women In Toys Wonder Women Awards

February 23, 2020: Women In Toys Wonder Women Awards at Pier 60, Chelsea Piers, New York, New York. (Photo by Edna Holifield)

Kudos to Ashley Mady on her Presidents-Award as she steps down from leading WIT for the last 6 years. The organization has added many new programs which have lead to substantial growth under her leadership. Incoming president Janice Ross will certainly do an equally excellent job.

Ashley Mady

Ashley Mady, Former President, Women in Toys, Licensing and Entertainment (WIT) poses at the 16th annual Wonder Women Awards, on Sunday, Feb. 23, 2020 in New York. (Photo by Diane Bondareff/Invision for Women in Toys, Licensing & Entertainment/AP Images)

Monday morning I was bouncing all over the place during my Monday Mop Up. Tuesday, at the crack of dawn, I hopped a flight for my annual “Escape from New York” trip to New Orleans where the weather was warm, the food was fantastic and the music was flowing.

 

I would like to congratulate Steve Pasierb, Marian Bossard and the entire Toy Association team for their excellent handling of the NY Toy Fair under difficult and constantly changing conditions.

Which leads up back to present day reality…..

 

 

 

The toy industry has been hit by a double whammy. First, the supply chain got whacked and now I am hearing that retailers are playing coy about finalizing orders. My extremely unscientific survey of the dozens of senior toy executives that I speak with each week has indicated that many/most factories started running again during the first week of March but with only about 30% of their workforce. Last week, I was hearing 50%-60% of workers had returned. That said, there are still problems with materials and components as the entire supply chain has been affected. Additionally, trucking to the ports has been disrupted by a shortage of drivers. Consensus seems to be that if the China supply chain isn’t somewhere approaching normal by early April the warning lights will go off and if they’re not there by May 1st the red alert will sound.

Retailers could help solve the second stage of the problem by starting to firm up orders as production comes online rather than playing their usual game of trying to push all of the risk onto their suppliers. They can’t expect to have both just-in-time inventory and just-in-time ordering.

Fortunately much of the toy industry is accustomed to navigating perilous waters. We’ve gone from product safety panics, to the financial crisis and from the collapse of Toy‘R’Us to the coronavirus. The toy industry is used to operating in troubled times and has learned how to quickly adapt. I think we’re also getting better at seeing crisis around the bend. Once factories are fully up and running – material costs will likely rise. For now, keep your head down and keep moving things forward as best you can. If we can put the Coronavirus behind us by mid-summer it is likely that an enormous wave of good feeling will wash across the land. The holiday sales season could be YUUUGE!

I’m no expert, so rather than listen to me drone on about COVID-19 I hope some of these articles are helpful and actionable.

 

 

Keep your head down and your hands clean

LIVE LONG AND PROSPER!

By | March 17th, 2020|About Toy Jobs|0 Comments

Toy Industry Navigates Constant Crises

Is it just me or does the reporting on 2019 annual toy sales seem a bit wonky. It’s a bit incongruous that annual U.S toy sales (as reported by NPD) would be down 4 percent while the National Retail Federation is reporting a 4 percent increase in overall holiday sales. In addition we’ve been in a favorable economic environment with strong employment numbers, rising wages and solid household balance sheets. As expected, weaker retailers such as Kohl’s, Macy’s, J.C. Penney, and Gamestop fared poorly but off-price chains like Costco and TJX hit it out of the park. Overall fourth quarter revenues at Amazon rose 21 percent and indeed online sales as a whole rose 19 percent during November and December. Of course, the high cost of doing business through Amazon means that vendors must absorb a margin hit. We are left anxiously awaiting reporting from retail behemoth Wal-Mart.

DisneystoreTarget seems to be a special case. Some of their woes likely stem from inflated expectations. Why did they expect holiday sales to jump by 4 percent? Did the population increase by that much? I don’t think so. I suspect that the Toys ‘R’ us.com/Target tie up happened too late in the year to make much of a difference. With Disney’s recent movies pretty much tanking, Target’s Disney “store-in-store” promotions likely hurt Target toy sales. While those initiatives may not have had much success in 2019, I expect that they will have a much more positive effect longer term.

So What happened? Where did the billion dollars go? First off the shortened holiday selling season made for very tricky comparisons. Secondly while NPD tracks about 80 percent of toy sales perhaps something important happened in that missing 20 percent? Lack of a screaming hot product to draw people into stores certainly hurt. Even previous standouts like Paw Patrol and PJ Masks have started to slow. Honestly though, I suspect that the demise of Toys ‘R’ Us continues to be the biggest factor. TRU carried an incredible array of merchandise which drove increased impulse sales once they were able to get people into the stores. More importantly toy giants like Mattel, Hasbro and Lego etc. had acre upon acre of real estate to both drive incremental sales and act as billboards for their wares. In the near term there is no way for those major companies to replace those sales. They may remain the largest toy companies but they will be smaller largest toy companies into the foreseeable future.

TRU

Speaking of Toys ‘R’Us we have haven’t heard much from them since holiday selling ended. The Candytopia tie up has led to a lot of consumer criticism over exorbitant ticket prices which cost a family of four about $100 bucks just to go in – and that’s without actually buying anything. On the other hand, the two Toys ’R’ Us experience based stores received an extremely positive response. That said, a handful of stores isn’t going to move the needle for overall toy sales. Hopefully these two experiments were “funding pageants” for proof of concept in a hunt for outside investors who can provide capital for broad expansion. If that’s the case, the Candytopia experiment could simply fall by the wayside and efforts can be focused on the TRU/b8ta side of the equation. After all, there is an awful lot of empty and presumably cheap retail space available out there.

phase 1

The biggest recent news in toy world was the signing of a Phase One Trade Deal between the U.S. and China. The deal is a de-escalation of the two year trade war with the U.S. committing to not impose any additional tariffs on Chinese made goods and also roll back some of the tariffs already in place. As for China, they will stop conditioning business licenses and permits on tech transfers to joint venture partners. They will also make it easier for U.S. intellectual property owners to prevent infringement and will impose stiff criminal penalties on violators as well as obligate the Chinese government to crack down on piracy and counterfeit goods. While that doesn’t include everything that the U.S. was demanding, it is much more inclusive than most people thought a Phase One Deal would be.

While President Trump says that talks on Phase Two will begin immediately few people expect anything concrete to happen before the U.S. elections. Phase Two is going to be the hard stuff, the stuff China is likely to say no to. It will include U.S. demands for China to cease subsidies to state owned enterprises. I can’t imagine that China will easily agree to change the way their economy is organized – especially since it’s been working so well for them. Other topics will revolve around the Made in China 2025 program designed to make China an advanced technology manufacturing powerhouse. I can’t imagine that China will agree to abandon that. What would we say if they asked the same of us. I suspect that the current status quo will hold until after the elections so the toy industry should be safe from the tariffs for the 2020 holiday sales season. Beyond that – who knows – it’s difficult to see clearly into the future when the world is changing 140 characters at a time.

We do know that the U.S. and China will continue to have conflicts in the future over broader security issues with or without Trump. The U.S. and a rising China will continue to battle over technological, security and ideological issues not to mention territorial issues in the South China Sea. Even while signing the Phase One Deal the U.S. has been seeking to limit the international expansion of Huaweii in 5G telecommunications while stepping up federal funding for U.S. 5G research. Toy companies would be well advised to continue to diversify their supply chains as conflict between the U.S. and China is far from over.

masks

Diversifying the supply chain just got a whole lot harder with the advent of the Coronavirus. Chinese manufacturing is mostly shut down for the Chinese New Year holiday. The holiday period has already been extended but factory closures could run even beyond that. Transportation is being limited and moving around China will be very difficult for the next few weeks if not months. The good news is that the Coronavirus is much less deadly than SARS or MERS for now (viruses mutate) but, the bad news is that it is spreading much more rapidly. At the current time we don’t even know what we don’t know but the virus has started to show up in other Asian countries that might be prime candidates for supply chain diversification. Numerous airlines have suspended flights to China and if the contagion spreads that could affect other countries as well. I don’t want to sound alarmist but at this time medical scientists don’t know when they will get their arms around this. The one thing that seems clear is that things are not going to come under control quickly.’

outbreak

Click through to John Hopkins Interactive Coronavirus map here.

In all of my years in the toy business I have rarely seen a period of extended smooth sailing. After all, we are in a seasonal fashion business – despite what Hasbro and Mattel may want Wall Street to believe. From product safety stumbles, to resin price spikes, to the financial crisis, to key retailer bankruptcies, it is one crisis after another. Technology has caused not only information but events to come at us at a faster and faster pace so that crises now seem constant. Only the cautious continue to survive over time. We’ve all seen many examples of “geniuses for a day” who quickly go down the tubes. Coleco anyone?

My best advice (not that anyone cares) to both companies and individuals is to adopt a defensive posture while looking for opportunities. Today’s champions are often tomorrow’s flotsam and jetsam. Rather than charging willy nilly into the fray, be fast followers keeping a wary eye on who ends up on the rocks and who makes it through the rapids. Then nimbly navigate the crisis du jour. ‘Tis nobler to finish second again and again and again than to come in first only to perish on the next go-round. There ain’t nobody handing out gold medals.

See y’all in New York

Tom Keoughan

By | February 5th, 2020|About Toy Jobs|1 Comment

China-China-China-China-China-China-China!

The Holiday Shopping Season is in full swing and sales are strong. U.S. shoppers increased spending over last year by 16% during the five day period between Thanksgiving and Cyber Monday. According to the National Retail Federation shoppers spent an average of $362 on holiday items compared with $313 a year ago.

Unemployment Rates

Note: Seasonally adjusted Source: Labor Department via St. Louis Fed, The Wall Street Journal

Driving spending is a strong job market with an unemployment rate of 3.5%, it’s lowest level in fifty years. This has led to an increase in wages of 3.1% over last year. Wages for lower income groups have been growing faster than for those in higher income cohorts. The upper crust is also feeling better about things as the stock market continues to hit record highs. One gets the feeling that this could be a record breaking Holiday Sales year. That said, the numbers may turn out to be a bit wonky since there will be six fewer shopping days between Thanksgiving and Christmas but that is really more about how the counting is done than the amount of actual spending.

wages

Source: Vivian Ngo, The Wall Street Journal

The economy continues to plug along at about a 2.1% GDP growth rate, down from 2018’s growth rate of 2.9%. I think we can chalk that growth rate decline up to one factor-tariffs and tariff worries. Current tariffs and concern over potential future tariffs have made it difficult for companies to plan ahead and have caused weakness in business spending on plants and equipment. The strong employment picture could be even better if companies were better able to predict what their profit margins and even prices would be moving forward. Toy companies are telling me that 2019 business is good and that they need to add people but that they are reluctant to do so until they have greater clarity on tariffs. I think this is likely true for lots of different business segments. If a trade deal with China is reached, I would not be surprised to see employment and economic growth numbers that are even stronger than they already are.

Hopefully we will have answers soon with tariffs set to be put on $150 billion of consumer goods made in China on December 15th. While much of the chatter seems to indicate that there will be a face saving partial deal at about that time there is also a lot of negative posturing being used as a negotiating tactic. Ever the cautious optimist, I am inclined to think that some sort of “skinny deal” will be announced where everyone gets to declare victory and kick the heavy lifting down the road but…..who knows? Even if a deal is announced it won’t be exactly built on bedrock. Anything can change on any given day with any groggy 4AM tweet.

 

Trump

In the meantime may everyone enjoy a strong “sell through season” and may you and your loved ones enjoy happy and peaceful holidays.

Tom Keoughan

By | December 9th, 2019|About Toy Jobs|0 Comments

Apocalypse Postponed

Open image 1By now, the Dallas Fall Toy Preview follows a familiar script. We arrive and everybody grumbles, “There’s nobody here” and “This place is empty,” but by the time that the Opening Night cocktail party gets underway, everybody realizes that things are actually going pretty well.

This year there was strong retailer presence with very few new no shows aside from Big Lots (shrug). That said, I did notice that a few additional substantial manufacturers were not exhibiting and that the 8th floor had all but disappeared.

There were the usual questions and concerns about having three trade shows in three locations over the same two or three week period. “How will the Toy Association fix this?” Personally, I’m resigned to the view that they won’t. Mainly because most of the toy manufacturers involved are reasonably happy doing what they’re doing. Companies showing in Los Angeles are happy showing in Los Angeles and are equally happy that half of the industry isn’t there diverting attention away from their product lines. Companies showing in Dallas like showing in Dallas as long as the buyers show up. It would, however, be helpful if Kohl’s and Meijer would attend so we can avoid treks to Grand Rapids, Michigan or Menomonie, Wisconsin. From what I’ve been told there was much less of an early October presence in Hong Kong. It’s probably too early to call that a trend, especially since it’s difficult to tease out the deterrent effect of the ongoing Hong Kong street protests. We should be able to get a better read on that next year.

By Thursday afternoon, most toy manufacturers in Dallas were telling me that they had very productive meetings with retailers. They also said they were able to create additional interest by laying out their entire product range. Additionally, I heard about a lot of positive surprises coming from walk-ins. The Dallas Toy Preview remains an exercise in quality over quantity. Continued success of the show will depend on The Toy Association maintaining and preferably increasing the breadth of retailer participation.

Open image 2

Source: justplayproducts.com

Recently, consolidation has been in the forefront of toy industry news. Jazwares has bought Wicked Cool Toys and Just Play is closing in on a purchase of Jakks Pacific. It’s interesting to note that most of the major players involved are former Jakks employees. Michael Rinzler and Jeremy Padawer were long-time Jakks employees who quickly built Wicked Cool into an exciting and innovative company. Both Geoffrey Greenberg and Charlie Emby previously sold toy companies to Jakks and then worked for them for a spell. They founded and built Just Play into a toy industry powerhouse. All this makes one wonder what Jakks might have become if it wasn’t saddled with such inept senior management.

Open image 3

Source: wickedcooltoys.com

Toys ‘R’ Us continues to create headlines but I suspect little else. Last time out, we discussed their 6 store “Flea Market” model where they will rent space and then in turn rent it out to toy manufacturers to try to sell their wares. With that they will also provide “powerful analytics” but since those will be based on such a small sample they aren’t of much real value.

They have now partnered with Candytopia on a two store “experience” model. Reported entry ticket prices look like they will be deal breakers for consumers. Reportedly it will cost $20 per child and $28 per adult to enter “the experience.” That means it will cost a family of four $96 before even thinking about purchasing a “shut up” toy on the way out. This is the opposite of the old Italian Restaurant model where everyone leaves happy after a free shot of Sambuca. Instead, it sounds like a lot of unhappy kids walking out the door with a roll of Smarties. Paying $96 to end up with a car full of crying kids doesn’t sound like an exciting prospect. Maybe families will go once…maybe.

Open image 4

Source: linkedin.com/company/trukidsbrands1/

Lastly, TRU has announced that it has essentially outsourced its startup e-commerce business to Target.  That sounds to me like the actual owners of TRU Kids Brands won’t give management the money necessary to build or buy their own e-commerce platform. If the owners of the company don’t have any confidence in the holdover management from the Toys ‘R’ Us’ collapse, why should we? TRU should have had a first mover advantage in kids e-commerce twenty years ago and have flubbed it numerous times since. Unless they can come up with some spectacular content that isn’t available anywhere else (put me down as skeptical), I don’t see them becoming the hot go-to location.

TRU Kids Brands “strategy” looks like a shotgun approach of schemes by a company that has no money, doesn’t want to spend any money, but wants to convince both toy manufacturers and consumers to give them money while they milk their brand for what they can, while they can. Even before this new reincarnation, the Toys ‘R’ Us brand had been badly damaged by shoddy stores, bad management, and undercapitalization. I don’t see anything different here except a fresh coat of paint.

Open image 5

Source: insidethemagic.net

That said, it’s good to see Target really stepping up and looking to grow its toy business. The Toysrus.com deal should help them to jumpstart that, at least in the beginning. After a few years I expect that Target will have eaten whatever lunch TRU has left. Putting miniature Disney stores into its locations should be a much more powerful long-term growth driver. Unfortunately, with Target one must always bear in mind the words of Mark Tritton that will forever ring in infamy: “We will refuse to accept any new cost increases related to tariffs on goods imported from China.”

Which brings us to tariffs. Late Friday, the US and China reached a truce on trade war escalation. While an all-encompassing trade deal would be better than a partial deal, a partial deal is better than no trade deal at all. Since the details still haven’t really been worked out, it’s better to view this as a cease-fire rather than even a partial deal. But that’s still better than continued trade war escalation.

Open image 6

Source: scmp.com

Next week’s planned increase in tariffs to 30% from 25% on $250 billion in Chinese imports has been put on hold. In return, China will greatly increase purchases of U.S. agricultural products. However, planned December 15th tariff increases on a wide array of consumer goods remain on the table at this time. Both parties are said to be discussing Chinese intellectual property rights, forced joint ventures, and technology transfers and increased U.S. access to Chinese markets. Those negotiations will be hard fought, and the devil is likely to be in the details. For a final deal to be struck, the Trump administration is going to have to give up its demands that China end its support for state-owned enterprises. The Chinese are not about to change the way their entire economy is organized – especially when for the last thirty years, it has been working very well for them. Also, the U.S. will have to cease demands that China dismantle its Made in China 2025 New Technology initiative. That demand is ludicrous. Its not hard to imagine what the U.S. would say if China demanded that of us.

I have no special knowledge or shining track record of predicting the future, but if I were to prognosticate – my guess is that there will be a series of “skinny deals” which will both allow a number of declarations of victory as well as eat up the calendar moving toward Election Day 2020. Only after the election will the U.S. reduce its China 2025 and state sponsored entity demands. In other words, I believe that the process is to a degree being staged managed. That doesn’t mean that the players have complete control over it and it doesn’t mean that things can’t still go wrong. It also doesn’t help companies making plans for business year 2020. Proceed with caution. Steady as she goes.

All the best,
Tom Keoughan

By | October 15th, 2019|About Toy Jobs|2 Comments

New York Toy Fair Review and Projections

The annual toy industry migration from Hong Kong to London to Germany finally reached its inevitable end at The New York International Toy Fair. All reports were that the outlook for the industry in 2019 gathered optimism and enthusiasm as the trade show season moved along.

The New York International Toy Fair opened with the TOTY Awards. A terrific event, as always, which was this year again held at the venerable Ziegfeld Ballroom. There was a big, buzzy crowd in attendance as companies vied for various Toy of the Year Awards.

TJ – Isaac LarianOne highlight was the Doll of the Year Award which went, unsurprisingly, to L.O.L. Surprise! The award was accepted by Isaac Larian of MGA who approached the podium and said – the least he ever has. It was a comically gracious moment…only to be later ruined when he climbed the stage out of turn and out of line to display his usual boorish behavior. That said, let’s give credit where credit is due – both under the byzantine TOTY process and by popular acclaim L.O.L. Surprise! garnered three TOTY’s and was the overall Toy of the Year. Mattel and Lego also had good nights as they each came home with three TOTYs.

TJ – Joe Burke

I always enjoy seeing smaller and up and coming companies win these awards so it was good to see wins by Zing and Tastemakers. The Rookie of the Year Award went to Victury Sports. This startup makes the OllyBall which can be played with indoors without breaking lamps, mirrors, and cherished family heirlooms. Just think about how much trouble we wouldn’t have gotten into as kids! Do Play Ball in the House!

Amongst the three new members inducted into the Toy Industry Hall of Fame was Joe Mendelsohn, former president of Kenner Products. In the 1970’s and 80’s, Kenner Products was The company. They had a fun Ideation and Product Development Group, professional Marketers, the toy industry’s best Engineering team and a rogue’s gallery of affable Sales talent. They came up with new and exciting product year after year after year. When the crowd gave Joe Mendelsohn a long standing ovation I took it to be a standing ovation for the entire Kenner Products team.

TJ – Crystal Palace Crowd

On Saturday, we moved on to the Toy Fair proper and the much dreaded Javits Center floors (hardest floors on the planet). In contrast to last year, day one was high energy and crowded. Strong attendance as well as optimism and excitement continued through the show’s end. Kudos to Steve Pasierb and his team and to the TIA Board for putting on a strong and productive show as well as the top notch TOTY event.

TJ – Show Floor 1

On Sunday night, anybody and everybody could be found at the Wonder Women in Toys Awards. I don’t know the official numbers but is it possible that this event was even more well attended than the TOTYs? Genna Rosenberg and her team did their usual exquisite job planning and pulling this thing off. The entire group of ladies making this show work do it while seeming so serene although I suspect they must be paddling like crazy underneath.

TJ – Marian BossardA shout out to Marian Bossard of the Toy Industry Association for winning the Wonder Women of Sales Award. Marian is one of the key people making all of the toy industry’s tradeshows and events go as smoothly as possible for the rest of us. Congratulations to all of the Wonder Women. As an employment expert, I suggest regularly wearing your pink capes to the office around salary review time!

One of the few negative undercurrents of the show was the question of “what’s going on with Toys ‘R’ Us?” As best as I can tell, they are going to continue on as an asset light IP company. In other parts of the world, they have licensed out their name to retail operators who will open and manage stores. They are looking to initiate the same type of arrangement in the U.S. They will also have an online retail entity which they will presumably either run themselves or partner on with their bricks and mortar licensee. TRU is also of the opinion that they have valuable product IP which they can sell to other retailers. Personally, I don’t think that the world is exactly clamoring for FastLane or Animal Alley. I suppose that they will sell in (saddle with) that merchandise to their retail partner.

After being so badly burned, will manufacturers actually do business with TRU? After all, Toys ‘R’ Us has the same ownership and largely the same management. Many have told me that it has been beyond difficult to see Richard Barry swanning around at Toy Industry events. Will they be able to just clean the slate of retail leases and then like a gang of deadbeats stiff their suppliers? To make matters worse, they then went out and sold their suppliers unpaid for merchandise at a discount, hindering said suppliers from selling their own goods elsewhere. Trust has been completely broken. It will not be repaired easily – perhaps ever.

I’ve heard many in the toy industry say that they won’t do business with Toys ‘R’ Us. That said, while I don’t know how many stores will be opened, I can’t see many toy companies not wanting to sell in to 50, 100, 200 doors. Perhaps one toy industry exec put it best when he told me: “I’ll be happy to do business with them depending on who their retail partners are and whether they have deep enough pockets to pay their bills.” Even so, I expect that they’ll be kept on a tight leash with short payable terms and little acceptance for chargebacks and the games they used to play in the warehouse.

What does this all mean for upcoming toy industry hiring? I am broadly optimistic. 2018 holiday sales numbers were not as bad as they could have been and the government statistics on retail sales seem to be a bit wonky. The negative government data, which was partly gathered during the partial government shutdown, looks to be at odds with strong retail sales numbers reported by Mastercard and by many individual retailers. It was also in complete disagreement with sales numbers reported by Amazon.

TJ – Crowd Pic

Much of the toy industry has made adjustments and is finding their way through a rapidly changing retail environment. After all, kids still want toys, we just have to find different ways (plural) to get those toys in front of them. The largest toy companies (Mattel, Hasbro, Lego) will not be able to readily replace the sales lost at Toys ‘R’ Us. They will now be big companies growing off a smaller base. Small fry beware! The big fish are stodgy and slow moving. It will take a couple of years but when they figure it out (and they will), they will be tenacious.

Meanwhile, this is a great year for kids movies like Frozen, Toy Story 4, Lego 2, etc. which will drive product demand. Fortnite is really only just getting started. The toy industry has pent up hiring demand. Over the last two years there have been so many lay offs that many companies are now having difficulty just getting the work done. Lastly, it looks like we have dodged the tariff bullet – at least for now. We are still waiting to see if happy talk turns into treaties, but we should be cautiously optimistic that we are going to evade a trade war.

In early January, all of these factors led me to cautiously predict that about two to three weeks after the New York Toy Fair, when companies finished crunching their numbers, that my phone would be ringing off the hook, with toy companies looking to increase staffing. That would be right about now.

What actually happened is that immediately after returning from Hong Kong, toy companies started calling. They were not only looking to fill jobs but Big Jobs. Last year, companies were occasionally looking for Project Managers/pairs of hands on the lower end of the salary continuum. This year they are looking for senior executives. This tells me that toy companies have left their defensive crouch and are now looking for opportunities to make things happen. I am broadly optimistic on toy industry prospects for 2019 – with the caveat – that we must dodge the Trump tariff bullet – which at the current time it looks like we will but…

All the best,

Tom Keoughan

By | March 5th, 2019|About Toy Jobs|0 Comments

Conditionally Predicting Increased Toy Industry Hiring

For 2018 the big story in the toy industry hiring was the closing of Toys ‘R’ Us. Almost every toy and juvenile product manufacturer lost its second or third biggest customer. That meant that most of these companies cut their budgets while they went out in search of new channels of distribution. Reduced budgets usually means reduced headcount and nearly always means a slowdown in new hiring.

Are toy industry hiring trends poised to turn the corner? 2018 holiday sales overall were strong, rising 5.1%, excluding autos, according to Mastercard SpendingPulse. Online sales grew even more quickly at a whopping 19.1%. Of course, there were retail winners and losers. Macy’s, Kohl’s, and J.C. Penney performed poorly while Wal-Mart, Target, and Costco hit it out of the park. Wal-Mart and Target could have performed even better but they were running out of inventory during the last two weeks of the holiday shopping season, which coincided with a surge in foot traffic.

These numbers represent retail sales of ALL goods but what of the toy industry? I’ve heard all sorts of whisper numbers that US toy sales were down 7% or even 15%, but the most recent numbers that I’ve heard were that US toy sales declined 2-3%. At the same time, nearly all of the senior executives at small and medium-sized companies that I have spoken with have said that their sales either grew or that they were happy with their 2018 results. That leads me to believe that the bulk of the lost sales were suffered by the big toy companies like Mattel, Hasbro, and Lego, etc. After all, if a small toy company can add a couple of extra feet of shelf space at a Best Buy or a Cracker Barrel, that can be pretty meaningful. For a Mattel, it doesn’t even move the needle.

I see 2018 as a transition year and look for the toy industry to gain traction and move forward in 2019. We have several things going in our favor. First, the economy, although it might grow at a slower pace than last year, is still forecast to be strong. Only a few months ago, predictions were that the Fed would raise interest rates four times this year. Currently, interest rates are projected to only be raised a time or two. Employment continues to be super strong. Both factors support an economy that continues to grow.

Cautious ordering in 2018 means that retailers have little inventory carrying over going into this year. This bodes well for sales early in the year and also minimizes manufacturers being held up for mark-down money and diminishes retailers’ need to have blow out sales. In addition, we have a plethora of strong licensable kid’s movies coming out this year led by new Frozen and Toy Story films. That should mean strong sales for licensors and also translate to better sales for all as blockbuster properties drive increased shopping for kid’s products.

That said, there are two potential problems which could disrupt growing toy sales. First, we are still early in the 2019 toy trade show season. Reports that I’m getting are that the mood in Hong Kong was buoyant although not quite jubilant. We shall see how retailers react to toy manufacturers wares at Nuremburg and in New York.

Secondly, there is still the specter of Trump tariffs on Chinese-made goods looming on the horizon. Recently most of the chatter about resolution has been trending toward positive, with the exception of the Huawei imbroglio. I would imagine that we’ll end up with face-saving half measures where all sides are able to declare victory OR further postponements which unfortunately means further uncertainty. As the big orangey fella often says, “We’ll have to wait and see.”

If we’re able to dodge a trade war then I see a strengthening toy industry investing in new talent to help drive growth. A lot of pent-up demand has developed over the last two years as toy companies have tightened their belts to the point of them becoming tourniquets. As companies come out of their defensive posture, somebody has to have the ideas and somebody has to do the work. My outlook is – as it usually is – one of cautious optimism.

I look forward to seeing you all in New York!

Tom Keoughan

By | January 28th, 2019|About Toy Jobs|0 Comments

Toy Industry Walks Through the Fog of Uncertainty

Most toy industry executives are telling me that while they certainly would have preferred to still have Toys “R” Us as a viable entity, that they have mostly replaced the shelf space and think that the year will turn out alright. That said, they want to make sure that they are on firm footing before they start investing in additional staff. They would like to put behind them the uncertainty of whether new product placement equals new sell through.

The good news is that consumers still want toys. We just have to figure out how to best get those toys in front of them and make them take notice. From cell phones to video games to WhatsApp to Fortnite to over scheduling by parents: kids have a lot more things competing for and dividing their attention than the days when we would just go out and play. To complicate things further, the array of choices is changing at an increasingly rapid pace. The challenge for Marketers is how to get their wares noticed on a increasingly pixelated and changing pallete of potential diversions.

At the same time, the retail landscape is undergoing revolutionary change. E-commerce is booming but physical stores still do the bulk of consumer sales. Buy online and then get in the car and drive to the store to pick it up is also increasingly popular although for the life of me I can’t imagine why. Manufacturers have to figure out how to best operate in this changing environment. Complicating that further is that you can’t just change from A to B. The retail formula is changing constantly and more rapidly all the time. The only certainty is the ever-increasing velocity of change.

Thus far, the holiday shopping season appears to be off to a strong start. Foot traffic over the Thanksgiving weekend was down somewhat but retailers began offering deals earlier which pulled some sales forward. The Black Friday weekend is still a good indicator but consumers are broadening their shopping window so there is much less of a pronounced spike.

black friday

In the meantime, online sales have been exploding with approximate growth of 25% over the long Thanksgiving weekend plus Cyber Monday. We should expect a strong holiday sales season. The economy is humming, and the consumer is flush with lower unemployment, lower taxes, lower gas prices and as of the last few months higher wages. Event more importantly, the consumer is willing to spend. Top line numbers for retailers should be strong but profit margins for retailers of all stripes may be challenged by higher labor costs for brick and mortar locations and higher freight costs for items purchased online. Retailers may be willing to pass some of these cost increases on to consumers, but it is likely that for the larger portion they will be looking toward vendors.

While the overall holiday sales environment looks quite positive despite potential back end shearing by retailers, there is another big concern for toy manufacturers. That is a potential Trade War with China. As of now, it appears that Xi Jinping and the Trump Administration have made small concessions that permitted each other face saving gestures and agreed to a temporary cease fire.

trump xi pic

That allows toy manufacturers to breathe a little easier for now but kicking the can down the road doesn’t alleviate uncertainty. In ninety days, when a full agreement still hasn’t been reached, tariffs on the $200 Billion of goods now set at 10% will be increased to 25%. The good news is that toys, as it stands now, still will not be affected. Unknown is what happens next. How long will the next negotiating window be? What will the consequences be if a deal is still not reached? Most likely, the next step of tariff escalation will include the toy business. Will the toy industry be able to ship goods for the holiday season of 2019 by, let’s say, June 1st? Especially, when you realize that vendors and retailers may be at cross purposes. Manufacturers will be trying to ship products as early as possible to try to beat the clock while at the same time retailers tend to try to postpone commitments to buy as long as possible.

trump -china

If there is any kind of silver lining in this fog uncertainty, it is that the toy industry is more agile and better equipped to navigate uncertainty than most other manufacturers. After all, even in a year that is all blue skies and smooth sailing (and I can’t remember that ever happening) we are in a seasonal fashion business. Turbulence is our middle name. We are used to it.

My view is one of cautious optimism – but that’s pretty much my default setting. Things tend to work out… eventually. The worry is how long will it take.

Crossing the River by Feeling the Stones.

Tom Keoughan

 

By | December 4th, 2018|About Toy Jobs|0 Comments

Dallas Fall Toy Preview AND The Zombie Awakens

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Day one, morning at the Dallas Fall Toy Preview was mostly grumbling as exhibitors complained widely that: “This place is empty.”, and “There’s nobody here.” Indeed, the main floors on 12 and 13 looked like a ghost town. I found it much busier down at the 4th floor Diverse and McManemin showrooms. That’s likely because with twenty to thirty companies crowded into each space there was a much higher population density.

Activity had picked up by evening and interestingly there seemed to be more people at the Tuesday night cocktail party than there were in the building all day. This led me to quip: “if they want to increase attendance, maybe they should serve beer.”

By Wednesday afternoon, the sentiment had changed. Most exhibitors I spoke with were saying “We had really good meetings”. Several companies stated that while they could skip the show and just travel to all the different retailers, they like that fact that with the Dallas showroom space they could put their entire line of product offerings on display.

It was good to see several TIA Board members actively starting discussions and eliciting feedback about the future of the show. As usual, there was talk of moving the show to Los Angeles. There are two insurmountable problems with that. First, the large LA based companies don’t really want their nimbler competitors around trying to “distract” retailers with their often more creative wares. If the show was moved to Los Angeles in an attempt to consolidate what has turned into four October trade shows, then the big LA based companies would simply change their dates thus defeating the whole purpose.

Second, a lot of companies have opened showrooms in El Segundo but they can be anywhere from a couple of blocks to a couple of miles apart which necessitates leaving the building and often getting into a car and dealing with LA traffic. I seemed to be the only who thought that could be solved by running a continuous string of shuttle buses. Then the real answer came out. “Buyers don’t like it. They don’t want to travel from block to block and building to building.” That’s it. Retailers are the ones we want to attract and convenience. If we want to change the Dallas format in in such a way as to attract more buyers, we can’t do it in a way that they have already told us they don’t like. For the time being, at least, LA is out.

Company owners told me they like Dallas because it is convenient, it’s centrally located, and both travel and hotels are relatively inexpensive. They also like the ability to put their entire product line on display. Their complaints were: “More Buyers”, and that renting booth space was very expensive.

From where I stand, I like the show as it currently is. I can fly in and stay in an inexpensive hotel and spend two days meeting with fifty toy company owners and Presidents because they have a lot of free time on their hands. That’s great for me but I’m acutely aware that y’all aren’t having the show for my benefit. If the show doesn’t make financial sense for toy manufacturers, then it will cease to exist. So, here’s my two cents on possible ways to improve the show for my clients:

  1. More Buyers. It was great to have Wal-Mart, Wal-mart.com, Target and Target.com in attendance but booth space is expensive so if more mid-tier retailers are represented that helps to justify the costs. It would be particularly helpful if Sales Execs could use the show to avoid an additional schlep to Menomee Falls, Wisconsin or Grand Rapids, Michigan. What can we do to attract broader retailer participation?
  2. Condense the Show in Space and Time.  Most manufacturers had two or three appointments on Thursday morning but also had plenty of downtime on Tuesday and Wednesday. The show could easily be compressed into two days. I confess that I have no knowledge of how this would affect the T.I.A.’s financial considerations but my understanding is that this show isn’t a big money maker for them anyway. Also, the show could easily be fit on just the 12th and 13th floors. That would create a busier and buzzier environment. How could the showrooms on the 4th floor and what’s left of the 8th floor be motivated and compensated to move upstairs?
  3. Serve Beer. But maybe don’t start until lunch. 😊

The big buzz in Dallas was various announcements about the potential rebirth of Toys “R” Us. Phase one will be a shop within a shop launch of Toys “R” Us private label brands at “a prominent Midwest based retailer.” Meijers? Kohls? That sounds like a Hail Mary pass to me. I can’t imagine that the public is exactly riveted by brands like Fastlane or Animal Alley.

zombie

Much more interesting is the prospect of opening 200-300 stores in 2019 under the Toys “R” Us banner. At this point, plan specifics are preliminary and unsurprisingly very sketchy. That said, we should remember that Toys “R” Us was a viable business if it hadn’t been loaded with all that debt. Now that debt is gone, they are mostly off the hook to vendors for 2017 shipments, they have wriggled out of their leases and there is an awful lots of inexpensive retail space to let.

A lot of people had the immediate reaction, “Why would companies want to deal with them again?” Really? I can’t imagine a single toy manufacturer that wouldn’t happily line up for a retailer with 200-300 doors – provided that the terms were right. That said, the new owners of Toys “R” Us should come to realize that there is a lot of bad blood between vendors and a certain Sr. Merchandising Executive who actively chased in shipments that he had to have known weren’t going to be paid for. TRU’s owners may have needed him to hold things together thus far, but if they want to re-establish trust with their vendors, he will have to be jettisoned. All trust there is gone and is unlikely to be repaired. It may be time for the man in the Geoffrey mask to go.

100318-geoffrey-feature

As I write this, Sears/Kmart is back on the ropes and wobbling badly like an aging prize fighter. They have announced they will close roughly 150 stores with an additional 250 stores put under review while about 300 stores that are considered more viable will remain open. Many toy companies continue to sell to Kmart while keeping receivables on a very tight leash, but I can’t help but think that I’ve seen this movie before… and I’ve seen it just recently.

Fortunately, other retailers are picking up the slack, Wal-Mart is increasing its toy department by 30% and Target is doubling its toy selection. Kohl’s and Penney, Five Below and Best Buy are all increasing toy sections for the holiday sales season and other retailers are following suit, Party City will open up to 50 pop-up stores for the holiday sales season and if successful, I would have to think that Spencer Gifts will follow suit with its Spirit Halloween division next year.

               U.S. unemployment rate, seasonally adjusted. Source: Labor Department

unemployment rateThis along with the lowest employment rate in fifty years, the highest consumer sentiment in 18 years and rip-roaring consumer spending should help toy manufacturers in 2018. The National Retail Federation expects that holiday sales-excluding autos, gas, and restaurants – should be up to 4.3 to 4.8 percent over 2017.

Most toy company executives are telling me: “though we would have done better without the demise of Toys “R” Us we think we will do okay.” They also say that they want to make sure that they are going to be okay before they start investing in additional staff. Toy industry hiring which was dead in the first half of 2018 picked up nicely in June but has not been as robust as it should be. I suspect that it will continue at the “better but not normal” rate until we make it through the holiday sales season and the January/February trade shows.

Steady as She Goes,

Tom Keoughan

By | October 17th, 2018|About Toy Jobs|0 Comments

Toy Hiring Gaining Traction

The sudden demise of Toys “R” Us has been very disruptive to the toy hiring market. It’s crazy out there. Many companies have laid people off but lots of companies are hiring as well. Oddly enough, many companies are doing both as they reorganize their rosters for the changes and challenges ahead.

Santa-Clarita-Toys-R-Us-Closure-

By the beginning of 2018, most toy manufacturers expected that Toys “R” Us was going to be a bit shaky moving forward and had instituted plans to limit any potential damage by shipping less, later and tightening payment terms. They were hedging their bets but remained confident that business would continue amongst constant reassurances by Toys “R” Us Execs to: “Remain calm. All is well.” Then shortly after the completion of the January and February Toy Shows, Toys “R” Us declared bankruptcy. While everyone knew that things were wobbly, nobody expected Toys “R” Us to fall so far and so fast. After all Kmart has been wobbly but still standing for over a decade.

In a typical year, very little toy industry hiring gets done in January and February as Toy Execs are overbooked and over busy crazily traveling the globe to attend anywhere from three to five shows. Not only are they too busy to hire they also would prefer to wait and see how retailers react to their wares before opening their wallets to add to staff.

WSJ store closing graph

Usually, about two weeks after the final trade show in New York, manufacturers put the finishing touches on plans and projections and the phones begin to ring here at Toyjobs World Headquarters. With the sudden and unexpected demise of Toys “R” Us, manufacturers had to reconfigure their expectations. Publicly there was a lot of finger pointing, magical thinking and gnashing of teeth. After about two months, forecasts were changed and plans were redrawn and search starts picked up in early May leading to increased but not overwhelming hiring in June, July and August.

Toy hiring follows toy sales and I would imagine that toy sales and will be somewhat lower in 2018 as  manufacturers search and battle for shelf space to replace their Toys “R” Us acreage. I would think that challenge will continue but to a lesser extent into 2019 as Toys “R” Us begins to fade into the rear-view mirror. I envision that toy sales and therefore toy hiring will remain disrupted but steadily gaining strength over the next year and a half.

I realize that is very much at odds with recently published NPD data. Toy industry grows its sales by 7 percent in the First Half!! Yeah, but … Consumers were lured into the Toys “R” Us stores by the trumpeting of huge markdowns which didn’t really look all that “yuge” once you were in the store. I know mothers who went to Toys “R” Us every couple of weeks in search of big bargains that barely existed. After all, if you’re going to lie to your employees and lie to your vendors why not lie to the public as well. Probably because traffic, even disappointed traffic, equals increased sales. Unfortunately, those sales didn’t help the toy industry all that much. They were sales of previously shipped and unpaid for merchandise. I would envisage that most of the proceeds went into the pockets of the bankruptcy attorneys rather than toy companies. So I see that 7% Toy Industry Sales Growth as a very flawed number in this period. Sales of toys off retailers shelves was indeed a very different things than sales by toy manufacturers.

That said they toy industry is reacting to and recovering from the Toys “R” Us debacle amongst a very bright backdrop. It’s better to face challenges in an increasingly robust economic environment. After all, this isn’t 2009 and the world isn’t going to end tomorrow. Rising employment, wages and tax cuts have consumer spending on a tear and US GDP rose to 4.1% in the second quarter, Wal-Mart just hit it out of the park. CEO, Doug McMillon was quoted last week as saying “Customers tell us that they feel better about the current health of the U.S. economy as well as their personal finances. They’re more confident about their employment opportunities.”

The evolving retail landscape toward online shopping continues but many brick and mortar retailers like Wal-mart, Home Depot, Nordstrom, and Coach have recently been reporting strong numbers while others (JCPenney, Bon-Ton, Claire’s) are either closing stores or going bankrupt. Weaker competitors are being weeded out and clearing some of the over capacity that has plagued retail. As a result, the remaining chains are growing even stronger.

The good news is that consumers still want to buy toys. Toy manufacturers will just have to be ever more nimble in getting their products in from of them.

Say what you will about Trump’s antics but the economy is humming. I’m still wary about Trumpian trade issues. I suspect, but can’t know for certain, that things will get worked out with Mexico, Canada, and Europe. That said, playing a game of chicken with China is a very different deal. Eventually, after much dickering, we will probably end up with face saving half measures (or more likely quarter measures) … eventually.

Free product idea for a Skill and Action Game:

The Game of Chicken: Trump, Trade and Tariff Edition

01-donald-trump.w710.h473

 

 

 

 

 

 

 

 

“Crossing the River by Feeling the Stones”

Tom Keoughan

 

By | August 22nd, 2018|About Toy Jobs|0 Comments

Toy Fair Revue and Prognostications

New York Toy Fair kicked off on Friday night with the 2018 Toy Of The Year Awards. Held at Ziegfeld Theatre, this was a fantastic event as always. The Toy Association staff led by Steve Pasierb has really got this down. I’d like to give a shout out to Marian Bossard, Kimberly Carcone, Robyn Gibbs, John Klein and the entire Toy Association staff for doing such a great job not only with the TOTY Awards but with New York Toy Fair as a whole.

Zuru WinnerTwo trends seemed to emerge among the award winners that night. First, collectibles continue to be a very hot category with WowWee’s Fingerlings and MGA’s L.O.L. Surprise! sharing top honors as “Toy of the Year.” In addition, Funko’s Mystery Minis won the “People’s Choice Award” which is chosen by tallying the votes of consumers.

The other big trend was that about half of the twenty awards were won by small and medium-sized companies. These companies have to run faster and jump higher with less resources (both human and financial) backing them up. They also have to be more inventive than the typical brand behemoth. I think this bodes well for the health of the industry which for a while in the early aughts seemed to be more about slapping licenses on sippy cups. Congratulations to the entire teams of all award winners for keeping kids smiling.

Sunday night was Ladies’ Night with the always wonderful WIT Wonder Women Awards Gala. As usual, it was held at The Lighthouse at Chelsea Piers. Please don’t move it. It’s a great venue. Event Co-Chairs Genna Rosenberg, Janice Ross, Jennifer Caveza and their entire Host Committee made it look easy despite what must have been an awful lot of work above and beyond their day jobs. Congratulations to all the Award Winners and to all the wonderful women of the toy industry.

WIT2018

New York Toy Fair as a whole seemed well attended and very upbeat. It also seemed that international attendance was quite high. The toy executives I spoke with exuded confidence and were bustling about their business. Now if we could just do something about those Javits Center floors.

TNT2018

Notable Toy Fair news included the election of Bob Wann of PlayMonster to Chairman of The Toy Association. Bob has toiled for both big industry players like Fisher-Price and Hasbro as well as smaller companies like Sababa Toys and now PlayMonster. He may be just the guy to balance the very different interests of those two groups. Maybe….. maybe he can even solve the annual October multiple location Toy Show mishegoss.

BobWannIn other news, Hasbro was named the global master toy licensee for Power Rangers. That might not impact the toy industry as much as Bandai losing what had been a long-time licensee. Lastly, Basic Fun announced that they had bought K’nex. K’nex has always been one of the most inventive and versatile construction toys in the pure product sense but never seemed to have been brought to market in the right way. Jay Foreman and his team should be able to change that.

Moving forward, with the exception of two monkey wrenches, both business and hiring trends look good. The toy industry only grew by 1% in 2017 but that was after three consecutive years of better than average 4-5% growth. The industry can afford to take a breather and still be able to move that trend line up and to the right. Buoying the economy is a strong labor market with unemployment holding at a 17-year low. Top-line wages are beginning to creep up AND, due to the new tax plan, take home pay is on the rise. Additionally, there is a growing wealth effect where consumers “feel” wealthier due to rapidly rising home prices and the stock market being near an all time high, despite February’s fluctuations. All this has led to skyrocketing consumer confidence, which indicates that consumers will open their wallets wider.

FeelingGoodChart

On the other hand, we have our two monkey wrenches. The first is Toys ‘R’ Us. During the New York Toy Fair, I asked everybody I spoke with about Toys ‘R’ Us. The venerable retailer had already announced that it would close 180 stores. That’s a lot of shelf space that won’t need to be filled. Most companies said that they had put Toys ‘R’ Us on a tighter payment schedule and had already forecast lower shipment levels to the retailer. Many said that they were done and weren’t going to sell to Toys ‘R’ Us anymore. I’m not sure that I believed all of them. Others cited that they would be moving to diversify their customer base. I’ve seen evidence of that. In the last year, Toyjobs has completed a lot of searches for Sales Execs specializing in mid-tier chains, E-commerce and the value channel.

ToysRUsClosing

Then on February 21st, the day after Toy Fair closed, The Wall Street Journal reported that Toys ‘R’ Us would be closing an additional 200 stores beyond the original 180. There were also rumors of laying off a quarter of the corporate staff. I’m sure that this news has sent toy executives scurrying back to their spreadsheets. Almost nobody had this baked in. Numbers will have to be crunched and decisions will have to be made. I’m guessing that many more companies will decide not to do business with Toys ‘R’ Us. Others will tighten the payment leash even further – cash on the barrelhead – a la Kmart. Competition for shelf space at other retailers will intensify. Bricks and mortar isn’t going away, just finding it more difficult to grow. Many heritage retailers had very strong 2017s. While E-commerce sales are skyrocketing, they are still less than 10% of total US retail sales. I also expect that toy manufacturers will start to really professionalize their E-commerce efforts.

The bottom line is that consumers still want toys but the way to get those toys in front of consumers is changing. It’s way above my paygrade but ultimately toy companies should think about banding together and creating their own mega E-commerce hub which will both attract consumers and keep manufacturers from getting sheared on their way to market. Think like a big media company. Content AND Distribution is far more powerful than Content or Distribution. The toy industry may be too small and fragmented for each company to do this on their own but banding together could turn out to be a “Grand Bargain.” Of course, the devil will be in the details. “Who pays for this? Who owns that?” but motivated people have a way of working things out.

ECommerceChart

As for the second monkey wrench, it goes by the name of Trump. On Thursday, March 2nd, Mr. Trump announced that he was going to institute a 25% tariff on steel and one of 10% on aluminum adding to his previously announced tariffs on solar panels and washing machines. The danger is that, if enacted, these will escalate into a full-blown trade war. Now that the economy is up and humming, this would be a very odd and counter-productive thing to do. Mr. Trump’s pronouncements aside (“trade wars are good, and easy to win”); a trade war is in nobody’s interest. It’s especially not in your interest to throw the economy into turmoil when it has been gaining strength while you have been President and you have mid-term elections quickly approaching.

TrumpThe only thing consistent about Mr. Trump is that his proclamations are much more extreme than his actual actions. I suspect that last week’s news burst was his way of opening negotiations since Chinese Trade Minister Liu He was just arriving in Washington. It is interesting to note that China doesn’t really export much steel, solar panels or washing machines into the United States. Steel exports have dropped rapidly over the last few years due to China’s own internal construction boom. They do ship a fair amount of aluminum here. That lends credence to the idea that these are really shots across the bow…. negotiating tactics. Would Donald Trump enjoy an international spectacle with him at the center? Surely he relishes the idea of global players rushing to him in order to curry favor. That said, the presence of Peter Navarro and Wilbur Ross in the Administration is troubling. So are we entering a trade war? Will he or won’t he? …..only his hairdresser knows for sure.

SteelChart2

SteelChart

Wrapping up, the overall terrain for business and hiring looks to be quite strong but we have two monkey wrenches coming at us fast. For Toys ‘R’ Us, toy companies can potentially ameliorate the crisis through planning, forecasting, tightening, diversifying and/or just deciding not to play. It will be a tricky navigation but presumably we should be able to come out the other side. As for Trump, there’s little to do but watch and wait to see if this is just negotiating bluster or if he has really decided to shoot himself in both feet. Hmm, I guess I’m cautiously ecstatic. Is that possible?

 

May you live in interesting times,

Tom Keoughan

By | March 5th, 2018|About Toy Jobs|1 Comment