Pinnacle Society Archives

PlayCon a Big Success – Toy Industry Adds Jobs!

In mid-May I attended my first PlayCon in Washington, DC, and I confess that I really didn’t know what to expect. I must say that I was beyond pleasantly surprised. The event was held at the Gaylord National Convention Center, a beautiful facility situated right on the Potomac. It was self-contained, easy to navigate, and within easy walking distance of several outposts of well know Manhattan restaurants.

After we were jolted awake by a combination of caffeine and an opening bagpipe ceremony, we settled in for a very meaty schedule of speakers. I’m not going to reveal here what they had to say (for that you would have to actually go) but I will give you a brief rundown of topics.

The first two speakers, Anita Frazier of NPD and Sean McGowan (who everyone already knows) provided hard data about trends in both the toy industry and some adjacent businesses. It was valuable to be able to confirm some things that you mostly knew in your gut, but more importantly some of the data was counterintuitive; especially on the hot topic of apps (it’s not just about product without inventory).

Well known children’s product consultant Tom McGrath then spoke at length about both the art and the science of license selection. Licensing can be very hit and/or miss, and Tom was very forthcoming about many of his wins and losses, why they occurred, and what he learned from them in hindsight.

Next up were Lego and Mattel. Everyone was thankful to them for opening the kimono on the why’s and how’s of their consumer research programs and I think we were equally grateful to Messrs. Wann and Barbour for refraining from revealing exactly what was under their kilts!

After lunch, Brian Torney of Kunoichi led an interesting panel about how to think about marketing in the digital world which also featured Hasbro’s Chief Visionary Steve Drucker. Steve peered into his crystal ball to prognosticate where technology might lead the children’s product business ten years in the future and beyond.

After breaking into workshop subgroups, everyone returned to see Bob Wann do a Q&A with senior Amazon executives Jon Witham and John Alteio. They discussed how to best do business with the online retail giant and also drilled down into the detail of how to optimize your product pages in order to sell more goods.

Lastly on day one, Bob Wann interviewed Neil Friedman who brings a unique perspective from spending a lifetime in the toy business including senior positions with both Mattel and Toys R Us. They talked about how manufacturers and retailers can work together more proactively and effectively. It is all about managing expectations; doing what you say you are going to do and most of all communication.

Day two kicked off with LeapFrog President (and former TRU senior executive) John Barbour speaking with TRU SVP Merchandising Richard Barry. After that we dove back again into the world of consumer research. First, with George Carey of brand strategy agency The Family Room who brought his unique perspective (backed by data, of course) on how families actually make decisions. It made perfect sense but was not at all what I thought it would be going in.

Renee Weber, VP Consumer Research for The Marketing Store, then spoke on the really big picture about some of her groups’ findings and how they have translated into the design of McDonald’s Happy Meal toys. Lastly, a lively panel on consumer research led by the very entertaining Paul Kurnit, toy advertising consultant at Kurnit Communications. (You can sign up for his RSS feed at psinsights.com)

Kudos go to Bob Wann and Shirley Price and the conference planning committee: Lourdes Arocho, Joel Berger, Mary Couzin, Richard Gill, Richard Gottlieb, Sharon Hartley, and Manuel Torres for putting together a program that was jam-packed with information. I would also like to commend all of the speakers for the spirit of sharing which prevailed throughout the entire conference. The content delivered at PlayCon was broad, deep, and thought-provoking. While everyone may know parts of this stuff, I think I can safely say that everybody in attendance was able to bring home some immediately implementable takeaways. If you weren’t there then you are just that much behind your competitors.

One thing I have learned over the last few years is that any event with Carter Kethley’s thumbprint on it is going to feature great food! At PlayCon, he did not disappoint and as always was the perfect host. Everything ran so smoothly that I realized that while the Toy Industry Association’s (TIA) Event Staff all appeared to be as serene as swans, they must have been paddling like hell underneath! Shout outs go to: Marian Bossard, Kimberly Carcone, Jackson Wong, Robyn Gibbs, and Kimberly Catucci.

PlayCon was a great place to network and meet new industry colleagues but more importantly for me a great place to solidify existing relationships away from the frenetic pace of trade shows where everyone is focused on selling – as they should be.

In other news (great segue, huh?) the U.S. had a pretty weak May jobs report. Employers added a seasonally adjusted 69,000 jobs last month and the estimates for the two previous months were adjusted downward. The unemployment rate moved up from 8.1% to 8.2%. To be completely accurate there has been some discussion that the Labor Department’s seasonal adjustment equation has been thrown out of whack. Read more here.

Factors contributing to the weak jobs report include the warm winter leading companies to hire seasonal workers earlier which boosted winter job growth while stealing from spring hiring. Additionally, renewed concerns about Europe with Greece, Spain and Italy all having trouble borrowing to finance their government spending has been unsettling. This could potentially lead to a domino effect amongst financial institutions. More importantly, the European recession will be a drag on global economic growth especially now that Asia (which has Europe as its largest customer) is now starting to slow. Lastly, there is the domestic political situation including the pending fiscal cliff which could drive the US into recession and may be causing businesses to hold off on hiring.

Anecdotally, here at Toyjobs we have seen toy companies continue to add to their staffs at a rapid clip. Toy search starts have also continued to be strong. That said, we are just about to enter the summer doldrums where for thirty years Toyjobs has seen certain regular patterns in both good economies and bad. I expect search starts to slow in the next week or two as the annual summer slowdown begins. Jobs will continue to be filled through the first three weeks of July as searches that began in May and June are completed. At that point things will be very slow until the last week or two of August when search starts begin to ramp up in response to the upcoming fall sales season. (Fall Toy Preview will be right around the corner.)

My concern is that due to either an implosion in Europe or continued brinksmanship and bipartisan idiocy in Washington, DC, employers may sit on their hands come late August and that the annual search start bounce will be muted. Most pragmatic people realize that the current tax and spending regime should be extended through 2013. We’re going to have an election in November to determine which ideological (idiot-logical?) path the country is going to take, but in the meantime let’s hope the politicians do not drive the bus off of a fiscal cliff. Since an extension is likely to be what happens anyway, let’s root for it to happen now so that businesses can plan which will hopefully lead to hiring and business investment. In the current political environment, however, I am not going to hold my breath.

Moving forward, we do have a few reasons to be optimistic. The biggest job loser in May was construction, which shed 28,000 positions. The industry lost hundreds of thousands of jobs as the residential housing market collapsed. In May, heavy construction jobs also began to be cut as the money for “stimulus/roadwork everywhere” has begun to come to an end. However, few other sectors actually cut jobs. Most simply did not hire much. One exception was the transportation and warehousing category, which added 35,000 jobs, mostly in railroads and trucking. Transportation is generally considered to be a leading indicator of economic growth. Secondly, Wal-Mart is growing again. First quarter earnings rose 10% as the retailing behemoth saw US customer traffic and average purchases rise.

So, the US economy is still growing albeit not quickly enough and faces headwinds in European and Asian economic slowdowns and a few potential landmines from Europe and Washington DC. I’m moving forward but cautiously with the feeling that if we can just avoid the landmines everything will be alright although not as good as I would like it to be.

Overdue Updates

Since the beginning of the year, I’ve been running so hard on the hamster wheel that a few things have popped up that I didn’t really have time to digest so I’ll share them with you here:

Toyjobs received a Constant Contact 2011 All Star Award for our newsletter which you are reading now. I would like to thank all of our readers for taking the time out of their busy schedules to look us over every month or so. I would also like to thank all of you who send in positive feedback after each publication.
Secondly, I have been elected to the Board of The Pinnacle Society as Treasurer. The Pinnacle Society is a group limited to 75 of the top executive recruiters in North America and I would like to thank their membership for being in excellent long-term educational asset as well as for putting their faith and trust in me.

So that’s it. Enjoy the summer slowdown. I hope you all have a chance to step off of the daily hamster wheel and spend some time relaxing and recharging your batteries for the next go round.
Moving Ahead Cautiously,

Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00June 19th, 2012|ToyJobs Blog|Comments Off

Toy Jobs Hiring Surge Continues

Toy jobs hiring has continued to surge as companies continue to add people because “we just can’t get the work done.” The common refrain that I hear is that retailers continue to increase the number of hoops that a manufacturer must jump through in order to get their products placed. During The Great Recession, companies cut so many people that they no longer have enough hands on deck to push all the work through in a timely fashion. Search starts continue to be strong despite last month’s flat unemployment numbers. It will be interesting to see what Friday’s jobs report looks like

A week and a half ago, I returned from The Pinnacle Society’s Spring Conference. This is a group of seventy-five of the country’s top executive recruiters and they are truly “The Big Dogs of Recruiting.” As you might imagine, the years 2008-2011 were difficult ones for the recruiting business and approximately 40% of the recruiting firms that existed in 2007 are no longer with us. In speaking with fellow Pinnacle Society members in 2011, the mood was patchy with some recruiting specialties (notably IT, insurance and accounting) returning to a semblance of normalcy while others continue to flounder. At Toyjobs, 2011 saw great improvement over the depths of 2009 and 2010, but it was still nothing to write home about. Heading to 2012’s Spring Conference, I was feeling optimistic because since the end of Hong Kong Toy Show, toy industry hiring had been soaring. At the Conference, I soon learned that hiring was back close to normal across all industry specialties. Of course, these are the country’s top executive recruiters so their numbers are likely to be stronger than the economy’s as a whole, but I see this as a strong leading indicator of more good things to come in the US employment market. Let’s all hope it continues.

Cautiously breathing easier,
Tom Keoughan

P.S. What is it with these Wal-Mart Vice Chairmen? First, we had Tom Coughlin pocketing a cool half million in gift cards for his personal use and now The New York Times alleges that Vice Chairman Edward Castro Wright was involved in a regular program of bribing local officials to facilitate the granting of leases and building permits while he was running Wal-Mart de Mexico. To date, these allegations have not been proven and we should all remember that The New York Times has a record of being a little aggressive at grabbing headlines and a little lax in their fact checking (Does anyone remember Iraqi Weapons of Mass Destruction – not to mention yellowcake). That said, many of us are aware of the sometimes strange practices one has to engage in even here in the United States just to get a permit to add screens to a porch. As a Wal-Mart shareholder, I’m upset but have to admit that I consider this a much better use of company funds than nicking three 12 gauge shotguns, a few half gallons of vodka, a large polish sausage, and a lone Celine Dion CD and hailing them back to your private compound for what must have been some sort of unholy (or at least unwholesome) secret Ozark ritual. In any case, just don’t be caught trying to give a Wal-Mart buyer a soda.

By ToyJobs|2020-11-20T08:51:01-06:00May 2nd, 2012|ToyJobs Blog|Comments Off

He’s baaaaaack!…Neil Friedman Returns

After just a few short weeks in “retirement” Neil Friedman has returned to the retail side of the desk by being named Toys’R’Us’ US President. This comes just in time for the upcoming TRU IPO (good for him!). Early in his career, Neil spent ten years at Lionel Leisure before moving to the toy manufacturing side with Hasbro, Gerber and finally Fisher Price and Mattel. He also spent an additional short stint at Lionel Leisure in the early nineties.

The toy industry should benefit nicely by having Neil in such a prominent place at Toys’R’Us which has been looking awfully “Targety” lately. It should certainly be helpful that he understands and empathizes with the challenges that manufacturer/importers face. Congratulations to Neil and good luck to the toy industry which hopefully will find it just a little bit easier to do business with TRU.

Mr. Friedman’s alma mater, Mattel, just lost the most recent round in its “total war” with MGA. Most toy industry executives that I have spoken with are absolutely flabbergasted. To hear MGA Chief Executive Isaac Larian crow “After seven years of fighting with Mattel, I’m finally vindicated” reminds me of Ollie North saying “I’ve been completely exonerated. It seems that Mattel and MGA are now tied at one and one with one “do over”. So what happens next? Appeal? Jumpball? Tiebreaker?

From my reading of the case (which is admittedly far from complete) it seems clear that Carter Bryant created the original Bratz drawings on Mattel’s time and dime. It seems equally clear that Mattel turned the concept down internally (oops!). That’s completely understandable. We’re in a fashion business and much of product selection is just guessing at what a very fickle group will decide they must absolutely have usually for a very short period of time.

I, of course, haven’t read Carter Bryant’s Mattel contract but I do know (as does everyone in the toy industry) that these contracts are meant to cover all intellectual property developed day or night or weekend while in a company’s employ. Both Carter Bryant and Isaac Larian must have known that in producing Bratz, they were on a very slippery slope whether there was some loophole in the Bryant/Mattel contract or not. On the other hand, it is also very clear that MGA overwhelmingly built the Bratz franchise through smarts and hard work.

So, what should be done? This isn’t the way “the law” reads or the way contracts were written but it I were King Solomon…First, no damages for anybody. I would guess there was an adequate amount of “stolen trade secrets”, dirty tricks, subterfuge and just plain smarmy behavior by both combatants. The original concept was probably technically owned by Mattel but the business was built by MGA. So Mattel should receive the highest customary inventor’s royalty paid in some sort of split by MGA and Carter Bryant who surely knew he was violating the spirit if not the letter of his contract.

I’m not particularly happy with that opinion. I am decidedly not an MGA fan but in trying to be impartial that’s where I come out. It’s just one man’s opinion admittedly based on a very limited reading of the evidence (mostly newspaper stories). If I had more first-hand access to the evidence, my opinion might be different. So please, there’s no need for huffy phone calls from either the Mattel or the MGA camp. You both need to focus on the next round of your battle (and I’m predicting there will be a next round).

On to more broadly important matters. Last week we learned that US manufacturing output has been rebounding at an incredibly fast rate. During the first quarter it increased at an annual rate of 9.1% compared to an estimated growth rate of about 2% for the US economy as a whole. This is due to a number of factors. In 2010 most large companies postponed purchases in order to hoard cash. Now that the deer in headlights portion of the crisis is over and the recovery has slowly begun, companies are beginning to spend to satisfy pent up demand. Large increases in corporate spending for computer and software upgrades are being seen.

Another reason in commodity inflation as US companies seek to jump on the bandwagon of rising prices and growing sales volume. Food price inflation is boosting spending world-wide on agricultural equipment. Globally rising metal and oil prices have encouraged spending on mines and oil and mineral exploration requiring additional equipment. As freight traffic grows, trucking firms are investing in vehicles with better fuel efficiency.

All of this heavy machinery will require additional people to build it. Additional workers will mean increased spending on consumer products and consumer products firms will need additional employees to fulfill demand. When the manufacturing sector does well the rest of the economy generally follows. The whole shebang is beginning to snowball albeit very slowly. Indeed in March, the unemployment rate edged downward in its fourth consecutive monthly decline. I’ll be leaving tomorrow to attend a Pinnacle Society conference with the other Big Dogs of Recruiting. It will be interesting to hear how employment is fairing in all of their various niches.

There are, of course, a few concerns. One is that the recent earthquake in Japan will lead to shortages of automotive parts, semiconductors and electronic components. That could slow production of some goods but thus far the effect seems to be relatively minor. A bigger worry is a spike in oil prices due to Middle East unrest. Saudi Arabia has enough spare oil capacity to offset almost any Middle East problems short of someone going to war with Iran (which doesn’t seem likely). The biggest danger would be if Saudi Arabia itself sank into crisis. If that happens…well, let’s just hope it doesn’t.

Toyjobs continuing forecast is for increased toy industry hiring of specific and necessary jobs and an increase in sales to toy retailers. Unfortunately, due to China’s slowly strengthening currency, rising labor costs, rising commodity prices and general inflation – we foresee lower margins. Things are so much better than they were a year ago but in 2009 the economy sank so low that it’s still not even close to normal.

All the best,
Tom Keoughan

By ToyJobs|2011-04-27T10:02:00-05:00April 27th, 2011|ToyJobs Blog|Comments Off