During the past year, toy companies have been hiring hand over fist. Toyjobs is poised to have one of its best years ever. Why then do I have this feeling of uneasiness? I think it’s because things feel like we are at the tipping point to a downturn.
Search starts appear to be slowing. That is probably due to one of two factors and at this juncture I can’t tell which. First, we are at the beginning of the 2023 sales cycle. Target and Walmart have been out in LA during the past couple of weeks. They, and many of the rest of their retail brethren, will be back out there a few weeks hence. That will be followed by a migration to Dallas for toy industry’s first trade show in a couple of years. Maybe that’s it. Toy companies usually pause hiring before a trade show in order to gain visibility into what business will look like in the year ahead. After that, they crunch numbers for a week or two and then move forward with staffing adds or changes – or they don’t. Hopefully, that’s all that is going on and search starts will rev up again in early October.
On the other hand, we are in an increasingly difficult economic environment. Inflation is running at 8 or 9%. Shoppers are spending more but getting less. We are in a recession, at least according to the generally accepted definition of one. Companies, in all categories, are growing cautious. Many have begun hiring freezes and even layoffs.
Closer to home in the toy business, even though container costs have come down dramatically and are also moving a lot faster, plastic resin prices are still high and obtaining chips is a difficult dance. I often hear people say that the toy industry is “recession resistant” but I can’t help thinking: “Sales may be but margins are not.” Target has been cancelling billions in orders while Walmart has been doing the same, as well as cancelling its own people. The retail names on every salesman’s lips these days are Ross Stores and TJ Maxx. This all portends a much uglier scenario.
So, which is it? Pre-trade show pause or economic slowdown? Probably some of both. That said, I can’t shake the feeling that the economy is like a car that has run out of gas but is still coasting. Moving slower and slower until it finally rolls to a stop. Yellow lights flashing…
All the best,