Supply chain woes continue to dog the toy industry from chip shortages to a severely cramped supply of shipping containers and container ships. Containers can cost as much as 60-70% more than last year. Also, as imports from China have doubled, exports have remained flat. That can mean having to return empty containers to Asia which in some cases can cost companies up to $5000 dollars.
While some observers are optimistic that there will be a “return to normalcy” in the third quarter that can leave importers gambling whether to ship now at higher rates or waiting and risking that their goods won’t get shipped on time. Compounding the risk is that if too many importers choose to play the waiting game, shipping costs could rise even further as companies become even more desperate to get their goods landed.
While some retailers are being somewhat helpful and responding to the situation as the “partners” they claim to be, others are acting solely in their own self-interest – at least thus far. Historically retailers have chosen to tighten the screws on margins up the supply chain rather than pass increased costs on to consumers. In addition, many retailers are demanding more costly June/July delivery dates and putting heavy fine systems in place for late deliveries.
Our toy sales forecast for the year is that governments are trying to reopen a little earlier than they should for political purposes and that cabin fever will lead most of the population (at least in the U.S.) to take them up on it. Whether it begins on Memorial Day or later in the summer, by September at least there will be a general reopening euphoria resulting in an enormous spending spree. While the big blowout will primarily be directed at restaurants, travel, events, etc., holiday sales will see more than their fair share of spending. Christmas comes every year and if people are in the mood to spend big that will include holiday gifts. I do suspect that the public will overspend and blow big holes in their now healthy balance sheets. That could cause problems in 2022 unless you are fortunate enough to land the right movie licenses in what will be an extremely “overmovied” year.
What we’ve seen in toy industry hiring is that, during that first quarter, companies were hiring like crazy. In April, search starts slowed to a standstill, which mirrored the disappointing jobs report. They have started to rebound in May but I suspect that they will remain somewhat subdued while companies spend conservatively until they gain more clarity on the supply chain situation. I expect hiring to then pop later in the year as it becomes apparent that holiday sales are going to be quite strong. Fingers crossed.
Toyjobs would like to offer kudos and congratulations to Marian Bossard on her recently announced retirement. She has been a key driver of the success of all of our trade shows in recent years. The toy industry has been a beneficiary of her hard work and smarts and is very happy to have her watchful eye looking at the next cycle of trade events. Congratulations Marian!
All the best,