Cyber Monday

Star Wars May Make Us – Then Break Us

The human herds at the annual Black Friday Disgrace were lighter this year as retailers started early, spread out the sales, and put many of the same bargains online. Still, like a scene from the zombie apocalypse, America was at its worst.

Why would anybody allow themselves to be anywhere near a retail store at that time? Well, if you look carefully at the videos – not just at the “combatants” but the gawkers, the bystanders and the “fratboy film crews” – “for them, this is just entertainment.” (Michael Caine as Harry Browne).

Over the Thanksgiving weekend, perhaps the biggest loser was Target. Not only did they have slow store traffic, but this year, rather than then letting the hackers in, they just let the shoppers break their website. I can clearly imagine a stream of profanity featuring elongated o’s volleying around the Nicollet Mall.

Elsewhere around the web, online sales have been smoking hot as mainstream consumers seem to have switched from danger and doorbuster deals to “shopping on the sofa.” Cyber Monday was historically strong. The ladies in the Toyjobs’ offices were unusually quiet that day. I’m sure they outfoxed me with their superior computer skills. I never caught them, but I suspect they were quite “busy” – not that I care, as long as they get their work done.

I expect strong overall holiday sales. Consumer confidence has improved and gas prices are down so consumers have a bit more discretionary income to spend. Frozen merchandise has slowed down in the second half, but Shopkins and all sorts of R/C drones have been “flying off the shelves” (sorry). Star Wars merchandise is everywhere, but I’m told hasn’t really started selling in waves yet. It seems as if Disney is releasing the film at the perfect time to maximize box office receipts, but late in the day for the holiday shopping season. I think there will be a ton of Star Wars merch sold, but also expect a lot of inventory carry over. That could impact toy company hiring in the first half of next year.

Employment in the US economy at large seems to have hit its stride. There was a slowdown during the summer, which highly paid Wall Street analysts have used all sorts of esoteric jargon to explain. I would suggest that it’s a simple cyclical phenomena known as “late summer.” Since then, we have had three strong jobs reports in a row

Now if we could just get the economy growing beyond its currently anemic 2.1% rate. By definition, companies will have a lot of uncertainty until the November 2016 election so I don’t expect a step up in corporate spending until then.

As for toy industry hiring – at Toyjobs, we are really cranking right now. We have lots of ducks in the air and are just waiting for employers to pull the trigger. I think the toy industry is generally strong but I see Star Wars leftovers and uncertainty ahead of the US Presidential election as potential drags on toy hiring. We’ll have to wait and see how that plays out.

In the meantime, the very best for the holidays to one and all.

May the Force Be With Us,
Tom Keoughan

By | December 9th, 2015|ToyJobs Blog|Comments Off on Star Wars May Make Us – Then Break Us

Another Black Friday Disgrace and Toy Industry Hiring Hits an Air Pocket

Things promised to get ugly as the annual orgy of spending by stampeding shoppers was set to coincide with a strike by Wal-Mart workers, but a number of factors came together to ameliorate what could have turned into a true national disgrace. Rather than concentrating all of their price cutting in one massive Black Friday push, retailers spread the bargains over a long super shopping week. Many stores even opened and started sales on Thanksgiving evening. Rather than door-busting human herds, consumers came sleepily staggering in like retail zombies when they should have been home, laying tryptophan sodden on the sofa, actively avoiding piles of dirty dishes.

Several retailers also had earlier starts to their layaway programs which surely eased Thanksgiving weekend traffic as well as locking in prices at earlier pre-sale levels. Online sales also had a broader time horizon as Cyber Monday grew into what could be called Cyber Two Weeks. Both online retailers and the web arms of bricks and mortar outfits have been racking up big gains. Online competition has been fierce as retailers use computer algorithms to adjust prices in real time.

While all this dampened the Black Friday frenzy, there were certainly enough wild melees, parking lot gun threats, “panty bar” cat fights and trigger happy pepper spray police to go around (Stampedes and Gun Threats During Black Friday).

Meanwhile, back on planet Earth – toy industry hiring, which has been quite strong since about April has suddenly slowed. My feeling is that this is temporary and that after negotiating this air pocket we will continue our long upward climb.

Toy industry hiring has always been very event driven with companies regularly putting off decision making on their staffing needs until the next: trade show, sales call, order confirmation, etc. Earlier in my career, I was always flabbergasted by this. “If you need a top Wal-Mart salesman, what does it matter what happens at the next golf outing?” Over time, I’ve learned not to judge and just accept reality for what it is.

Since we are in the midst of the all important holiday shopping season, it is only natural for toy companies to wait and see what happens. Many companies will also have new budgets beginning in January and three of the four most important industry trade shows take place in January and February which adds to the temporary standstill. These will pass like the pages of a calendar, but it is no surprise that toy industry hiring often slows at this time of year only to ratchet back up in March or April.

Much less certain is the outcome of the high speed chicken match going on in Washington, D.C. The brief spell of post election “happy talk” is now over. The two parties are as far apart as ever. In response, U.S. companies are scaling back hiring and investment plans at the fastest pace since 2009. Many companies have put together two 2013 budget plans for different outcomes to political negotiations over the impending fiscal cliff. Not only will going over the cliff probably throw the US (and global) economy into recession but it will be compounded by companies turning off the spending spigots.

Politicians of all stripes are up in their own heads trying to figger out which game theory scenario they like the best. Negotiate now or let it all slide over the fiscal cliff? Which helps me more? Which hurts him more? Who will get the blame? Never mind the economy or the public.

At the time of this writing there arn’t any substantial talks and the situation is in stalemate. Last week, Obama didn’t mention a “grand bargain” but rather “putting together a framework.” I think “framework” is code for “punt” and that things will be put off for six or twelve months. At that time we’ll be right back where we are now and things will once again devolve into gridlock and competitive finger-pointing. In the meantime, an economy that has been trying hard to recover continue sputtering along, once again left without enough fuel for takeoff.

Muddling through,
Tom Keoughan

P.S. – A recruiter, who we usually refer to as the Obvious Huckster in Ohio (OHiO) recently felt the need to publicly declare that he was indeed still in business. I guess nobody was quite sure. If you cross paths with him, I would suggest asking for references from five people that he has placed in jobs during the last six months. What you discover may surprise you…then again, it may not. 🙂

P.P.S – Lastly, I would like to share my condolences to all families and businesses adversely affected by the Superstorm Sandy. Personally, we took two feet of water into the first floor of our Hoboken home so I know what it feels like.

By | December 5th, 2012|ToyJobs Blog|Comments Off on Another Black Friday Disgrace and Toy Industry Hiring Hits an Air Pocket

Retail Zombies and Statistical Aberrations

The Human herds were out in droves like something out of a cheap zombie flick as the Thanksgiving weekend kicked off the holiday shopping season. Although the lack of “door buster deaths” could be considered a negative indicator; retail chains reported strong customer traffic and increased per capita spending. According to the National Retail Federation, the average shopper spent $365.34, up 6.4% over last year. Weekend web and Cyber Monday web sales also set new records.

After several years of relative thrift shoppers may be parting with their money more willingly simply due to pent-up demand which retail analysts have been calling “frugality fatigue.” That said, consumers have been trained to only shop for bargains. We may see the Thanksgiving weekend spike fade as shoppers wait to see if retail prices come down before buying, leading to a second spike right before Christmas. Let’s just hope that everyone buys more Dance Star Mickey’s and Squinkies than they do iPads and Microsoft Kinect Systems.

The toy industry is expected to have a solid up year and that should translate into increased toy industry hiring for 2011. Most observers were surprised by the increase, from 9.6% to 9.8%, in November’s unemployment rate and several economists have called it a statistical aberration after the positive jobs trends of September and October. It seems that after seeing the strengthening employment environment many people previously too discouraged to even bother looking for work – “entered the job market” therefore driving the percentage of unemployed job seekers even higher. However, if you look at a wider variety of indicators, the overall trend continues to show steady, if unimpressive, improvement.

Hours worked and wages have been rising (although they were flat in November). Both measures tend to foreshadow future job growth. As we have seen, consumer spending is up. Third quarter results from Visa, Mastercard and American Express showed US consumers spending approximately 13 per cent more than last year. Consumer sentiment rose in November to its highest level since June. November Job postings on Monster were up 22%. Lastly, the government revised jobs data for September and October to show stronger numbers than previously reported. It would not be surprising to see November’s numbers revised upward as well.

Anecdotally, here to Toyjobs, we have seen search starts pick up sharply beginning in the second half of October. My impression is that coming out of the depths of 2009, few companies budgeted for much, if any, hiring during the current year. When they found themselves in need of people they would start to look, they would interview, but would then find some way to postpone actual hiring. Now that the economy has stabilized and is growing albeit very slowly – they are looking to shore up their rosters and have that in their budgets for 2011. That does not mean that I foresee a wave of wholesale hiring but rather that companies are now looking to fill the holes that in 2010 they left vacant. This is the employer version of pent-up demand.

The US economy is firing on more (but still not all) cylinders and the recovery is just beginning to pick up steam. That said, there’s still a chance that it could disrail as many employers remain cautious about hiring due to the uncertainty over taxes, new health care and environmental laws, etc. Nancy Pelosi and Harry Reid appear to be oblivious to the “shellacking” they took in the recent elections. Fortunately most of the Democrats and President Obama (despite what he says publicly) seem to get it. It looks like in the next week or so we will see a compromise bill passed which will forestall any and all tax increases for a period of two years. Unless Congress acts, tens of millions of people could see their withholding taxes go up in January. That could dampen household spending and further weaken employment and the fragile recovery.

In the interests of full disclosure, I am an independent who has voted Democrat more often than not. I generally (but not always) admire Democrat’s social goals but often find myself concerned about the unintended consequences of their proposed actions. With the economy at a tipping point this is no time to be raising any kind of taxes on anything and definitely no time for continued uncertainty. If you’re going to make those kinds of changes, do it during “good times” so that the system can better absorb them. Once we get the economy steadily growing again, tax revenues will rise and it will be easier to attack the deficit. If you can get rid of all the agendas, dogma and histrionics (fat chance!) it pretty much becomes common sense – Econ 101. I’m going to shut my mouth now, before I get into any more trouble.

Muddling through,

Tom Keoughan

 

P.S. Sorry, I just couldn’t help myself from taking one last stir at the pot. In the last couple of weeks, Isaac Larian of MGA Entertainment had publicly accused the Toy Industry Association of being prejudiced against him and his firm. While I can’t speak either for or about TIA or MGA; I’m not sure that prejudice is always such a bad thing. I oftentimes find myself biased against working with nasty, unethical people and/or the companies they control. Is that wrong? I don’t think so.

By | December 8th, 2010|ToyJobs Blog|Comments Off on Retail Zombies and Statistical Aberrations

Foot Traffic Increases But Spending Slows

Over the Black Friday weekend, massive human herds were out in force but retailers pacified them with electric fences, cattle prods and lots of large blue salt licks scattered about.  It seems that even though foot traffic increased; the hordes were spending less on a per capita basis than even last year’s poor numbers.  Is it possible that these creatures spend more when they have been whipped into a full frothing frenzy?  Needless to say, I wasn’t to be found anywhere near any retail outlet for the entirety of the greedfest.

Weekend sales were balanced by a surge in both sales and traffic on Cyber Monday. Forrester Research projects that holiday season online shopping may grow from 6% to 10% of all holiday sales.  Even with this growth, online sales are still too small to push the overall sales needle by much and a lot of the increase may simply be the result of cannibalization of bricks and mortar sales.  This may portend a long term shift in consumer patterns more than it actually affects sales volumes today.  Employers may be concerned that most of this online shopping takes place during office hours which echoes trends seen at Toyjobs where our analytics show that our job board is accessed mainly during weekdays and drops off significantly during evenings and weekends.

It’s important to remember that Thanksgiving is a notoriously poor predictor of sales for the holiday season as a whole.  It is typically eclipsed by the last weekend before Christmas.  This year there is concern that light retail inventories will mean that there won’t be many choice goods left on the shelves by that time.  The most widely cited forecast for this year’s season calls for a 1% decline in holiday sales from last year’s already weak showing.  Furthermore, a 2005 study shows that retail forecasters have a tendency to overestimate sales.  All this leaves me with little solid footing in guessing (and that’s really what it is) where retail sales will end up.  I think it’s pretty clear that it won’t be “good”.  It just remains to be seen how “bad” they will turn out although I don’t think the end result will be disastrous.  We’ll just have to wait and see.

Last Friday’s jobs data seem to indicate that we may be beginning to turn the corner on the employment front.  Jobs lost in November were down to 11,000 (a drop in the bucket considering the size of the population) and the unemployment rate drifted lower from 10.2% to 10% (still incredibly bad).  Significantly, U6 (a broader unemployment statistic which includes: the underemployed, part timers, “consultants” and the totally disheartened) has gone from 16.3% all the way down to 12.2%.  While those numbers are an improvement, one month does not make a trend and economic indicators don’t usually travel in a straight line.

When you consider everyone affected by unemployment (spouses, kids, dependent elderly parents), the “percentage of the affected” is huge.  Throw in that one in eight Americans is currently benefiting from some sort of food stamp program and it becomes quite clear that we are a very long way from being out of the woods.

Anecdotally, Toyjobs has found that things are continuing to improve.  In fact, I would say that the improvement curve has steepened in just the last few weeks.  A year ago, when we would call longstanding clients about possible job opportunities – they would just laugh.  Currently there is a lot more chatter.  This hasn’t shown up on our jobs board as of yet, but I predict that it will over the next six weeks.  We have a lot of outstanding unsigned search contracts out there (these are contracts sent to clients at their request but not yet signed and the search not yet started).  Also we are having a lot of discussions with companies getting ready to start searches but waiting to see how holiday sales and the January Hong Kong Toy and Games Fair pan out.  What is less spoken of, and is probably the Joker in the deck, is how banks will deal with loans and lines of credit.  Things seem to be slowly loosening up but I still have a hard time believing that seasonal fashion businesses are on the top of anybody’s lending list.  I’m not yet ready to say that I’m cautiously optimistic.  I am more comfortable with the phrase – optimistically cautious.

Happy (?) Holidays,

Tom Keoughan

By | December 8th, 2009|ToyJobs Blog|Comments Off on Foot Traffic Increases But Spending Slows