Let us start with a quick review. 2023 was a very difficult year for toy and other consumer goods companies due to a severe inventory glut. That left toy companies with less cash on hand entering into 2024. High interest rates also meant that companies were reluctant to borrow any more than they absolutely had to.

Early in 2024, the industry responded by tightening it’s belt. Large companies were engaged in major layoffs but at the same time many small and medium companies continued to hire. When we came to July, that hiring came to a screeching halt.

Shortly thereafter we entered the elongated LA Toy Preview Marathon. I’m going to qualify the following by stating that I did not attend so these observations comes from numerous attending toy executives that I have spoken with. Opinions were very divided with many attendees reporting that they were quite enthusiastic with the event while numerous others described it with a ten letter word that begins with cluster_ _ _ _.

It was almost universally felt that the whole thing was just way too long. Some were pretty disappointed by what I will call Pasierb’s Final Fumble. It seems that the Toy Association held all of their major events during a week when there were no buyers there: Oopsy!

Greg Ahearn

Fortunately, most people were confident that the ever-affable Greg Ahearn, who has a long toy industry history and many strong relationships within the industry will be able to make great improvements. That said, while I agree that he will be able to improve the situation, I fear that he faces an insurmountable obstacle. Major power players in the industry simply don’t want to cooperate. Mattel, MGA, and some of the large LA-based companies don’t want to show their wares to buyers at the same time as their smaller, nimbler, and more creative competitors. When the toy industry sets their dates, those larger companies can simply change theirs. Add to that the largest retailers Walmart, Target, and Amazon all seem to want their own weeks. This leads to a lot of downtime, heightened expenses and running back and forth for the industry as a whole. Although there are a lot of competing interests, I am pretty sure that Greg Ahearn can shorten the 6 week marathon but…can he bring it in at under 4 weeks? I’m not so sure.

homer

On the hiring front, I have been *predicting* (hoping) that after the shows, toy manufacturers would getback home and crunch their results. They would then look at the calendar and realize that if we start looking for people now, we can start them in the next calendar year and on next year’s budget. Sure enough, during the first week of October, my phones began to ring.

I have optimism for the holiday sales season as I notice that, despite high credit card debt, retail sales and spending has continued to grow. I do take note, however, that consumers seem to be looking for bargains which will likely crimp margins. Christmas, once again, will come and increasing retail spending should lead to increased hiring.

port

The pandemic’s ripples continue to get smaller but they are still with us. It’s never smooth sailing for the toy industry. Every year poses a new and exciting challenge for this industry of ours. In 2025, we will likely kick off the year with the return of the East Coast Dockworkers Strike. That’s just for starters.

 

Cautiously optimistic,
Tom Keoughan