The New York Toy Fair brought both the annual snowfall and a sense of realistic optimism which was far more encouraging than last year’s dour face fest. The mood was upbeat but realistic and mostly devoid of trade show happy talk (We’re doing great! Everything’s fantastic!) although a few other toy industry commentators did suffer from a little “irrational exuberance.”
Traffic was very strong on the three days that I was there. I even saw smiles in the “basement of gloom” as downstairs traffic was much improved over last year. Several toy industry executives commented that the quality of the traffic was quite high and that there were a lot of mass market buyers in attendance. Exhibitors also said that smaller specialty stores were writing a lot of orders.
I’ve lost some weight so that my feet weren’t as sore as usual as I traversed the world’s hardest floors. There were a few clients and prospective clients that I didn’t get to see because they were always busy with customers. I don’t look at that as a bad thing: sell away, grow your businesses, add more employees – I am very happy with that.
There were a sizable number of mass market toy manufacturers not “showing” but still skulking through the aisles and taking meetings in the food court and other clandestine corners. Personally, I miss that room on the 13th floor of the toy building that had all the big leather comfy chairs. It was down the hall from “the mayor of the toy building” Bob Gellman’s showroom. It was great to see Bob at the Javits Center in 2010.
One complaint that I heard from several attendees and would like to echo myself is the demise of the printed Toy Fair directory. This was a very handy and useful tool that sat on or near the desk of many a toy executive, me included. Although billed as part of a “green initiative” this was clearly a cost cutting measure. One booth attendant told me “we tried to move it online but most of the companies didn’t sign up.” I do applaud “the virtual tote bag” program. What could I possibly do with another Homer Simpson key chain? Doh! We should try to differentiate between useful and just plain waste.
Part of the reason for Toy Fair’s optimistic tone was likely due to Wal-Mart’s strong showing for both the fourth quarter and the year. As the world’s largest retailer Wal-Mart’s financial reports are a closely watched barometer of the economy as a whole. For the fourth quarter total sales rose 4.6% with a 22% increase in profit. On an annual basis, Wal-Mart’s total sales rose only 1% (we all need to remember how awful the first seven months of 2009 were) and profits were up 7 percent. While the fact that same store sales (which don’t include the effects at Wal-Mart cannibalizing it’s own stores) for the fourth quarter were down 1.6% may be of interest to Wall Street analysts; as suppliers the toy industry is much more concerned with how much total stuff moved off total shelves. So, not a bad year for the world’s largest retailer in the midst of the worst economic climate since The Great Depression.
In other Wal-Mart news, toy industry executives were initially concerned with the announcement of a global sourcing partnership with Li and Fung. The unit will be called WSG and Wal-Mart has the option to take full control of it in 2016. Initially, that sounded a bit ominous to everyone but it appears that WSG will be focused on non-branded private label merchandizes. Due to Wal-Mart’s shrinking of the toy department, that’s not really what they’re buying for the toy aisle anymore anyway. In the short to mid-term though, I can envision Wal-Mart putting together direct to retail deals between licensors and its WSG unit. This could easily affect things like kids licensed backpacks and stationary and other items not requiring much tooling (or risk) and could possibly be expanded down the road.
As far as toy industry hiring, we are beginning to get some job offers. New search starts are continuing but at a slower pace than the first of the year new budget bump. I continue to see this as a recovery year where hiring will continue to gradually improve especially in the second half. It’s still not good out there but it is much better than last year. We all have to muddle our way through and hopefully by 2011 things will be mostly back to normal.