toy fair

Toy Fair – The Revenant Edition

Despite frigid temperatures, New York Toy Fair opened on Friday night, February 12 with the TOTY Awards. The Toy Industry cognoscenti staggered in under the weight of multiple bearskins to this always special event. This year, it was held at the American Museum of Natural History under the belly of a Great Blue Whale. After an Alan Hassenfeld speech, which was perhaps a wee bit too long, Disney’s Robert Iger was honored by being inducted into the Toy Industry Hall of Fame.

“And the Toy of the Year is… Doc McStuffins Pet Vet Checkup Center from Just Play!” The combination of kids and animals is hard to beat. I was happy that I didn’t hear the usual grumbling that “only the big companies win.” This year’s winners included smaller companies like Moose Toys, KidKraft, Learning Resources, Hexbug, and Razor. Even Just Play was only founded eight years ago. Their growth is a tribute to the leadership of Geoff Greenberg and Charlie Emby.

On Sunday night, Women in Toys celebrated its 25th anniversary with the Wonder Women Awards Dinner. Genna Rosenberg and her team organized a terrific evening and, as usual, made it look easy – although I’m sure there were plenty of fast paddling feet below pond level. Women in Toys has come a long way, baby – since it was founded by Anne Pitrone and Susan Matsumoto in the back of an Irish pub. One suggestion, though – don’t put a bar at the entrance or you will bar the entrance. Put what people want in the back. This is basic retail merchandising a la Walgreens and CVS. Congratulations to all the Wonder Women winners and nominees. May you wear your capes with pride.

Saturday was bitterly cold but the Javits Center had the heat cranked as Toy Fair proper began. People were in a jovial mood after a year where US toy sales grew by 6.7 %. The aisles were crowded and everyone was upbeat. It was even bustling down in the basement of gloom, which in 2016 turned out to be not so gloomy after all. My completely unscientific gut poll says that Monday was the busiest day but I’m not sure if that is truly correct. From the TOTY Awards through end of day Monday, new TIA President Steve Pasierb and TIA SVP Global Events Marian Bossard and their team ran a terrific event. Kudos for doing such a great job! I’m sure it’s a lot more work than anyone imagines. The only suggestion for improvement I can think of is (and we’ll put Marian on this) – softer floors.

“Wait a minute, Keoughan – you said TOTY’s through Monday – what happened to Tuesday?” On Tuesday, I was enjoying lunch at Galatoire’s. I had made my annual post Toy Fair escape to N’awlins where the temperature was 70 degrees and the oysters wereplentiful. I encourage everyone to do it. There’s plenty of room for y’all.

Looking forward, I’m expecting 2016 to be a banner year for the toy industry hiring. Last year’s strong sales numbers, led by Shopkins and Star Wars merchandise, have led to happy companies. Happy companies hire people. This year, I’m expecting big things from Auldey. I also expect that little known Propel RC to stop “flying below the radar.” And – lest we forget – we have another Star Wars movie.

It has been exciting to see the resurgence in toy companies hiring of Marketing and Product Development people. During the financial crisis, what hiring there was, was all about Sales and Sourcing (buy cheaper – sell more). I take the recent resurgence in Marketing and Product Development hiring to mean that companies have stopped just playing defense. The toy industry is looking to take risks and do new and exciting things again. That bodes well for us all.

May the force be with us,
Tom Keoughan

P.S. Tragedy struck at Toy Fair with the passing of Elise Lachowyn. I remember helping Elise land her first toy job at Buddy L Corp. back in 1994. She grew into the consummate professional. Always upbeat, always ready for the next challenge. Our thoughts and prayers are with Elise’s husband, Drew, and daughter, Skyler. Tech 4 Kids has set up a GoFundMe Campaign to help fund Skyler’s education: https://www.gofundme.com/eliselachowyn

Elise Lachowyn, R.I.P.: Boulder Exec Killed by Dump Truck in Trip to NYC Toy Fair

By | March 2nd, 2016|ToyJobs Blog|Comments Off on Toy Fair – The Revenant Edition

New York Toy Fair – Cold! Cold! Cold!

Several years ago, Disney, well known for its characters, movies, theme parks, and events, was able to Disney-fy Times Square. This year they achieved an even bigger coup by turning the entire Northeast into a celebration of the movie Frozen. Although not the snowiest, this was certainly the coldest New York Toy Fair ever.

As I crossed the Hudson for this year’s TOTY Awards, tugboats were breaking up ice so the ferries could get through. Carter Keithley, Marian Bossard, Robyn Gibbs and their gang put on a first-class event, as always. In fact, the whole trade show was extremely well run, although I do wish that Carter would quit lollygagging and get around to fixing the rock hard Javits floors, the electrician’s union, and the weather.

While last year’s TOTY Awards were largely won by smaller companies like Choon’s Designs and Just Play, this year was dominated by the big boys like Lego, Spin Master, and Crayola. A couple of smaller companies did slip through, like Moose Toys for Shopkins, which was named the Girls Toy of the Year, and Thinkfun’s Gravity Maze for Specialty Toy of the Year. Spin Master’s Zoomer Dino garnered both Boys Toy and Toy of the Year Honors and at the end of the evening, when it came time to announce Property of the Year, I’m sure that not a single person in the room was surprised when it went to Disney’s Frozen.

The Women in Toys Dinner was a charming event, as always. It almost has to be since there are so many women. Genna Rosenberg, Lourdes Arocho, and Shannon Gray did a fantastic job. Everything came off without a hitch so you know they had to do a lot of work. I think the best compliment I can give is – They made it look easy. The evening celebrated a Lifetime Achievement Award for Anne Kearns, who has spent her entire forty plus year career (since before she was born, I guess) at Sesame Workshop. We’ll be giving her this award again in another twenty years or so when she reaches retirement age. Congratulations to all Wonder Women Award winners and nominees.

Toy Fair itself was upbeat, if not quite as giddy as a year ago. I think last year was a little extra exuberant as the economy had just started to pick up after six long years of slogging through the swamp. Personally, I thought Saturday’s traffic was pretty good, although every single person I spoke with said otherwise. Eh, I have been wrong once or twice in the past. Sunday and Monday traffic seemed quite strong. My sources in the TIA tell me that throughout the show, traffic in The Basement of Gloom – uh, sorry! – Level 1 was very strong. As always, I saw a few toy company Presidents attending the show but not exhibiting in a booth. I tend to think that you get out of trade shows what you put into them. If you don’t put up a booth and have a presence because “this show isn’t that important” then that is going to be a self-fulfilling prophecy. After all, the major retailers like Wal-Mart, Target, Toy ‘R’ Us, Costco, Amazon, CVS, etc. are there in one place for four days. Every exhibiting toy company that I spoke with was happy to be there and had a full dance card.

Toyjobs had a very strong show. It’s always good to see everyone, slap a few backs, and tell a few stories. I came away feeling very positive about toy industry hiring moving forward. We’ll be starting a lot of new searches in the coming weeks so stay tuned. I’m also getting the feeling that the long awaited restart of hiring in marketing and product development jobs is about to begin. I don’t want to jinx it by calling it yet, but I think the tide is building.

It was great seeing everyone. May everyone have a fun and prosperous 2015.

All the best,
Tom Keoughan

By | March 4th, 2015|ToyJobs Blog|Comments Off on New York Toy Fair – Cold! Cold! Cold!

Toy Fair Has Upbeat Vibe – Toyjobs Has 3rd Best Month Ever

Toy Fair Has Upbeat Vibe – Toyjobs Has 3rd Best Month Ever

After the requisite snowstorm, New York Toy Fair opened up Saturday night with the annual TOTY Awards dinner. Shirley Price and her team did a fantastic job and this event was even more fun than usual. It was especially gratifying to see that six of the twelve category awards were won by companies that have been in existence for less than three years such as Goldieblox, Choons Design and blog1Just Play. Choons Design’s Rainbow Loom won three category awards as it cruised its way to the Toy of the Year. So much for the carpers and back benchers who say that only the big boys win awards.

There were several inductees into the Toy Hall of Fame including Jill Barad, who gave a rousing speech which graciously gave shout outs to numerous mentors. Jack Friedinan of LJN, THQ and Jakks Pacific; Horst Brandstatler, founder of Playmobil and Wham-O founders Richard Knerr and “Spud” Melin were honored as well.

Next on the event calendar was the annual Women in Toys Dinner. Somehow Genna Rosenberg, Ashley Mady and their team continue to make this event better every year. How do they do that? …and how will they keep it up? Amongst the Wonder Women Award winners were Rita Raiffe of Gund garnering a well deserved Lifetime Achievement Award and Debra Sterling of the runaway start up Goldieblox. I think the award for funniest acceptance speech of the evening probably goes to Michelle Litzky who pretty much cracked everybody up.blog2

The always elegant Joan Luks will be stepping down as President of Women in Toys. Joan is someone who always put way more in to the organization than she took out. I’ll not be surprised if she continues to do that in her post-presidential role. New President Ashley Mady will have a heavy torch to carry but she certainly has the talent and energy to do so.

Toy Fair itself was very positive and upbeat which was a surprise considering that October’s Dallas Toy Preview was a bit gloomy and toy sales didn’t exactly rocket to the moon this past holiday season. Despite the travel-snarling snow, foot traffic was up 14% on Sunday and 9% on Monday. Tuesday was up 3% and Wednesday? …I can’t really tell you because, as is always blog3the case, like a lot of people I went home. All the major toy retailers had buyers there and that includes Wal-Mart, Target, Toys ‘R’ Us, Amazon, and Costco.

What I heard from senior toy executives who were actually showing at the Toy Fair was very different than usual. What they repeatedly said went something like this: “While retailers have already decided on the core of their planograms, there has been a lot of indecision on the part of buyers. We were able to fill a few nooks and crannies simply because we were here.” Interestingly, I heard that from every single company with a booth that I spoke with – no exceptions. I only heard otherwise from several senior toy executives who weren’t showing but instead just walking the show, poking around, and taking a few meetings. From them I heard the usual: This show is so expensive and we’re “really all done anyway.” It seems to me that it is a self-fulfilling prophecy. If you’re not out there pitching at a place where you can meet twenty of your top customers in a period of four days – you may indeed be “really all done anyway.” I would encourage those people to talk to their friends who had full booths at the show and see what they have to say.blog4

Kudos, as always, goes to Carter Keithley, Stacy Leistner and the whole TIA crew for hosting an outstanding Toy Fair. They pretty much had their hands into most of the outside events as well. To paraphrase fast Eddie Felson – Toy Fair is Back!

 

Mirroring the regained enthusiasm at New York Toy Fair, Toyjobs has continued to knock it out of the park. After having out best month in thirty-two years in December, we quickly followed with our third best ever month in February. Toy companies are looking at new talent and they’re pulling the trigger. Best of all, companies are hiring senior people which means they’re not just doing patchwork. Toy companies are looking to do new things and they need senior people who can find and execute on new opportunities.

The increase in hiring is reflected in the economy at large as well, Non-farm payrolls grew by an encouraging 175,

blog5

000 (seasonally adjusted) in February despite severe weather challenges in much of the country. Even though Toys ‘R’ Us started rolling layoffs last Tuesday culminating in a “Pink Friday,” the economic picture is brightening. The point of inflection appears to have been at the beginning of last October. Let’s hope that the economy continues to improve and that hiring keeps on keepin’ on. It has every indication of doing so. Spring may at long last be at hand.

All the best,
Tom Keoughan

By | March 12th, 2014|ToyJobs Blog|Comments Off on Toy Fair Has Upbeat Vibe – Toyjobs Has 3rd Best Month Ever

Toy Fair: Without Snow II – The Return

For the second straight year we had Toy Fair – without snow. As a New Yorker, I think I might grow to like this whole global warming thing. What a Toy Fair it was, with busier aisles and a newfound upbeat attitude. Specialty companies were writing record numbers of orders and even the sometimes grumbly mass marketers seemed to be pleased. I haven’t yet figured why everyone was in such a good mood. In 2011, total retail sales were up approximately 5% while toy sales were down 2%. The general consensus seems to be that every family in America got an iPad for Christmas. Maybe everyone was in high spirits because they all were recipients of said iPads. Perhaps, more likely, is that people have realized that the world doesn’t end very often and since it just ended in 2009; it is unlikely to end again soon.

Things kicked off Saturday night with the TOTY awards. Once again Carter Keithley and his Toy Industry Association (TIA) team put together a terrific affair. The food was great and everyone seemed to be having a good time. The TOTY awards have received some criticism which I think is unfair. Some have claimed that TOTY’s are only won by the largest toy companies. However, if you look at the ballot you will see that over 50 companies had products represented. That includes such smaller companies as: WOWWEE, Fashion Angels, Cepia, Thinkway, Plasmart, Thinkfun, The Bridge Direct, Alex, Thames + Kosmos and the list goes on and on. Blip Toys and Innovation First both won TOTY awards in 2011 with Innovation First winning again in 2012. Most products are initially self-nominated by their companies but are then culled by committees that include retail buyers, toy industry, journalists, academics and inventor/designers. The winners are then voted on by a broad electorate of consumers, retail buyers, journalists and TIA members. While suggestions for tweaking should certainly always be welcome, I don’t think anyone can really say that this process is overly biased.

After a day of pounding the floors at the Javits Center, Sunday night brought the Women in Toys (WIT) dinner. While always a lovely affair, this year it was extra special. Genna Rosenberg and her team should be commended on their attention to ever detail. The venue – The Lighthouse at Chelsea Piers – was stupendous. I must confess that I did miss the dark paneling and overstuffed leather chairs of The Penn Club, but this was much more appropriate. Perhaps we’ll return to the Penn Club for the first annual Men in Toys Single Malt Scotch Tasting and Cigar Smoke-off. Meanwhile, back at the WIT Dinner, drinks were served and everyone was in a grand and chatty mood. Dinner was unveiled in a beautiful room and the food was “deelish.” Congratulations to all Wonder Women Award winners for their careers, their awards and their modest and succinct acceptance speeches.

New York Toy Fair continued with large crowds and good cheer (not to mention the usual bouts of “Javits feet”). Early Wednesday morning I snuck out of town and hopped a flight to New Orleans for a few days of good food, good music and a few glasses of wine in the evening (No! I do not drink Alabama Slammers – nor should you). Unfortunately my 8AM flight didn’t arrive until 9 at night. Note to self: US Airways – Never Again!

On the toy industry jobs front, the news has been good. Starting two weeks before Toy Fair, Toyjobs phone started ringing off the hook with job opportunities. Since then, Toyjobs search starts have exploded and though it hasn’t quite happened yet, companies seem eager to pull the trigger and actually hire talent once they find it. For various competitive reasons, we tend not to post our search assignments on our job board until we’ve finished most of our initial work on them so stay tuned – we’ll be updating it every Tuesday.

Now that the world probably won’t end again for awhile and the companies that were going to fail have done so; the rest seem to have decided that it’s time to get back to business. Many companies have cut staff so much in the last few years that they can barely get their work done. Companies have been running so lean for so long that there is a lot of pent-up demand.

Unemployment numbers continue to strengthen but we still have a long way to go. The economy continues to grow slowly but is vulnerable to outside shocks. The European Debt Crisis, for the moment, seems to be temporarily resolved. That said, markets are already betting that Greece will default again. Grey market pricing for the new, yet-to-be-issued “haircut bonds” is already selling at distressed levels and nobody expects Athens to lower its overall debt level to 120% of GDP by 2020.

Oil prices (and raw material costs for toys) could spike due to (election year?) sabre rattling in the Middle East. In an election year, politicians of all stripes will likely be promising increasingly “stupider” things. All of these present challenges. There is also a chance that the increase in job openings represents a temporary new year budget bump and will subside by June. But from my vantage point, barring any of these external shocks being realized (is that enough hedging for you?); we are beginning to see a return to normalcy albeit one moving much more slowly than any of us would like. The light at the end of the tunnel is growing slowly larger.

Muddling Thru,
Tom Keoughan

By | March 12th, 2012|ToyJobs Blog|Comments Off on Toy Fair: Without Snow II – The Return

Toy Fair (Without Snow) But Oil Clouds on the Horizon

Spirits ran high at the TOTY awards dinner and the Toy Industry Association did a fantastic job landing a great new venue – Jazz at Lincoln Center. The very fun evening was dominated by seeing lots of familiar faces and by Mattel’s Sing-a-ma-jigs. In a sense, the event was a well deserved Victory Lap for Neil Friedman who will be retiring from Mattel. Congratulations to all award winners, nominees, of course, Neil and Carter Keithley and the TIA.

The Women in Toys dinner was upbeat as always. Speechifying was kept mercifully short. Congratulations to everyone in attendance for being such a lovely and cheerful crowd.

Toy Fair itself was the best I’ve seen in several years with very strong traffic on Sunday and Monday even in what I’ve formerly called “the basement of gloom”. The bustling basement may have been the result of the strangely bifurcated main floor where it appears that the Teamsters are trying to secretly build a nuclear submarine. The smell of fear was gone. The falling have already fallen and the survivors were getting back to business. It was also nice to see major toy companies like Mattel, Lego and MGA supporting an industry wide trade show again.

The reason for all this cheerfulness was that the economy has been picking up. NPD reported that US retail toy sales for 2010 increased slightly from 21.4 billion to 21.9 billion. US GDP grew at a 3.2% annual rate in the fourth quarter. That’s up from the 2.6% pace in the quarter before. Toy industry hiring has increased as companies seem to have been much more comfortable putting together their 2011 budgets than they were for the previous two years.

Other positive post Toy Fair news includes John Barbour, everyone’s favorite Scotsman (with apologies to Bob Wann) being named President of Leapfrog. The company has always had great product but has been hurt by consistently tumultuous “leadership”. Mr. Barbour should be a stabilizing force that will allow the company to keep its eye on the ball. The toy industry should also welcome Tomy’s purchase of RC2. After their recent pull back from the US market, Tomy is showing confidence in the future growth of the US toy business. It also appears that they will be keeping most or all of the current RC2 team in place.

Now for the bad news. This has been the most difficult part of this piece to write because major events around the globe have been changing so rapidly over the last week or so. New information should naturally bring a shift in analysis and attitude. So rather than “phoning it in” like some Obvious Huckster in Ohio (OHiO) we’ve been repeatedly revising this as new information comes to light. The final revision was today – Wednesday, March 16 @ 8:57am (EST)

The – let’s call it what it is – Civil War in Libya has caused an upward spike in oil prices. This has already translated to a significant hike in the price of plastic resin. In their infinite wisdom the global community has opened an investigation into crimes against humanity thereby guaranteeing that Gaddafi will “fight to the last drop of blood” (Dudes! Do that – AFTER!). He has already begun to have his air force bomb oil infrastructure situated in rebel controlled zones so they can’t sell oil for currency or swap it for supplies. In Congressional testimony, US Director of National Intelligence, James Clapper stated that “Gaddafi is relying on two of his brigades which appear to be very, very loyal, disciplined and robustly equipped” – “his superior military forces mean that his regime will prevail in the longer term”.

The drop in Libyan oil production can be offset by Saudi Arabia which has significant reserve production capacity and acts as the world oil market stabilizer. Unfortunately, Mideast unrest has reached there as well. At this point, a few smaller protests appear to have been contained but, make no mistake, there are tiny but growing bubbles percolating in the Saudi streets. Saudi troops have also crossed the causeway into neighboring Bahrain after Bahrain’s police force was overrun by Iranian inspired Shiite protesters. Any real trouble in Saudi Arabi itself will cause oil prices to skyrocket and could cause the global economic recovery to stall.

Add to this the terrible triple disaster in Japan – quake, tsunami,and the Fukushima nuclear crisis which resembles a slow motion but ever escalating train wreck. Our hearts go out to everyone affected by this ongoing tragedy and their families. It’s just too awful to even think about…

Japan is the world’s third largest economy and an estimated 10% of their electricity is offline and is likely to be disrupted for the long term. They will need to import tremendous amounts of oil, diesel, natural gas and coal for a very long time. Over time, this will put significant upward pressure on the cost of these commodities and things made out of them (i.e. plastic resin). Japan is also a major supplier of electronic chips. There are several factories down and we could potentially see shortages of electronic components, wafer boards and chips into the late summer. Price hikes on these items have already begun.

What all this adds up to is that there is significant new upward pressure on the cost of making plastic consumer goods. This comes on top of already rising costs for wages, transportation, etc. Taking the good with the bad, Toyjobs’ (easy to make) forecast is for increased toy sales at tighter margins. That said, keep a wary eye on Saudi Arabia because if that blows it all goes Kablooey.

Again, our hearts and prayers go out to everyone in Japan and their extended families.

 

Tom Keoughan

By | March 16th, 2011|ToyJobs Blog|Comments Off on Toy Fair (Without Snow) But Oil Clouds on the Horizon

The Toyjobs Annual Review and Forecast 2011

Retail sales jumped out of the box quickly in November and overall holiday sales were strong despite a slowdown in late December. The International Council of Shopping Centers said that its index for November and December was up 4 per cent over last year, the most robust growth in the holiday shopping season since 2006. According to MasterCard SpendingPulse US retail sales, excluding automobiles, rose 5.5 per cent between November 5th and December 24th. Online sales grew 12 per cent to $32.6 billion, the highest total ever, according to tracking firm ComScore Inc.

While the big blizzard and rainstorms in California appeared to take a late month toll many retail analysts said the real culprit behind the weaker December sales was an avalanche of aggressive promotions in November. These deals pulled sales forward and raised unrealistic expectations about consumer spending for the rest of the year. In addition, promotional discounting was so deep that it affected retail profitability. Of course, we still don’t have the numbers for January gift card redemptions. Gift cards are particularly profitable because consumers tend to spend a bit more than the value of the card. Also 20-30 per cent of gift cards never get redeemed at all, making them the retail version of “printing money”.

So, in any case, after a fairly strong holiday sales season much of the toy industry sporting tender holiday heads, hopped on planes bound for the Hong Kong Toy and Games Fair. As I talk to senior toy executives what I am hearing is that US retailer attendance continues to grow lighter but international buyers have been upbeat. In the US, retailers overbought a little in 2010 and are now more cautious but not overly so. Manufacturers are pleased that Wal-Mart is expanding its toy aisle again, at least during the holiday shopping season.

The biggest discussion is about the continuing rise in production costs. China has a serious inflation problem and the authorities have been trying, mostly unsuccessfully, to repeatedly tap the brakes. Raw material costs are rising and the yuan is strengthening. Add to that a nearly 20 per cent hike in the Dongguan minimum wage and constant rumors that many workers will not return to southern factories after the Chinese New Year. Chinese authorities have been trying to push low-end labor intensive manufacturing to the north and west. Inexperienced factories and inexperienced workers will naturally lead to heightened quality problems. Add to this, that shipping back to the coast on overcrowded roads (such as they are) is bound to slow things down. Despite this I expect retailers to continue to confirm orders later and later leaving manufacturers with impossible to meet lead times. The big question is will they allow manufacturers to pass through rising costs by increasing their holy price points.

This is all, however, against a backdrop of an economy that is clearly gaining momentum. Private sector employers added 297,000 jobs in December. The gain over the November numbers was the largest in the reports 10 year history. Outplacement firm Challenger, Gray and Christmas, said that layoffs in 2010 were the lowest since 1997. The unemployment rate in December dropped from 9.8 per cent to 9.4 per cent and while some economists voiced disappointment, they seem to have forgotten that most companies operate on budgets. In late 2009, when 2010 budgets were being drawn up, many companies were still worried that the world was coming to an end. 2011 budgets put together in late 2010 seem to reflect that companies are “cautious but comfortable”. All eyes should be firmly focused on the January – April employment numbers.

Anecdotally, Toyjobs saw search starts pick up since late October. Companies were telling us “find people now that we can start in January when we have the budget”. Since January 3rd we have seen a huge surge in search starts. This isn’t yet reflected on our job board because we tend to post searches toward the end of our work on them in order to keep LRWRB (Lonely Recruiters Without Repeat Business) at bay. I believe we will see this surge moderate as we move into the May/June time frame because it represents pent up demand just waiting for a flip of the calendar page to make budgets available. That said, I do think that hiring will continue to be much stronger than last year but it won’t be wholesale hiring. It will be companies filling necessary positions that were previously left open due to a mixture of fear and budgetary constraints.

On the road (or maybe “in the road”) leading to Toy Fair I have been flipping through the trade press and perusing new products. I regret to announce that Toyjobs has to once again present it’s much avoided “You’ve Gotta Be Kidding Me Award”

Wild Creations introduces Poo in a Box. Yes, really. This nutrient-rich animal dung comes from an elephant, reindeer, or rhinoceros. From the Natural History Museum, the Poo in a Box begins at a British zoo or safari park and is treated to be germ and odor free. Kids can sow the seeds, water the cardboard box, and watch the plants grow. Poo in a Box comes in three styles. Elephant poo with Christmas tree seeds, Reindeer poo with rose seed or Rhino poo with a banana tree seed.

Toyjobs predicts, that if this product sells well, the nation’s schoolyards will see a lot of tiny tears wearing pigtails in the coming year.

After the not so secret stealth fighter, the Gates trip to China and Hu Jintao’s visit to the United States; our China Report (and I’m sure you too) have been inundated with a flood of articles on China. In a not entirely successful attempt to stick a thumb in the dyke of this flood of information we have tried to focus on content that is: the most important stuff, more analysis than news reportage and is from unique sources that many of your may not regularly peruse.

Lastly, I would like to say, personally: Kudos for Neil Friedman. Mr. Friedman has been one of those rare combinations of savvy toy executive, a strong manager and an all around great guy who treated everyone he dealt with fairly and with respect. He’s fun too! I know that I join everyone in the toy industry in greedily hoping that Neil won’t be hanging up his cleats and will pop up somewhere else soon – hopefully leading a small to medium sized company where it can all be fun again.

I look forward to seeing everybody in February. There will surely be snow.

Tom Keoughan

P.S. For those in the know: Infomercial Dave – what’s he selling Snuggies or slapchoppers? Just a further revelation of his Huckster’s Heart.

By | January 25th, 2011|ToyJobs Blog|Comments Off on The Toyjobs Annual Review and Forecast 2011

Product Safety Conundrum and a Fall Toy Preview Review

Just as the toy industry began to make headway in convincing government agencies to rationalize product safety regulations along comes Mattel with an eleven million toy safety recall from its Fisher Price unit. Jakks Pacific then chimed in with its own half million piece recall and Graco added a recall of baby strollers. One thing that all three had in common is that they all were “product safety” issues or – design flaws. Certainly, it’s nearly impossible to police every factory in the Chinese hinterlands who may slip in a little lead paint to increase their beaten down profit margins when the gweilo isn’t looking. These, however, are design flaws and there just really isn’t an excuse. I’ve heard the arguments that if you look at these toys you don’t intuitively see any danger. That may be true, but Mattel is the largest toy company in the world and has entire departments focused purely on product safety. They also used outside safety labs who were apparently asleep at the switch.

Ironically, the biggest beneficiary of the recall will probably be Mattel. Most of those toys were sold between 2001 and 2008 and the majority of them are already on the scrap heap. Under the Mattel regime, Fisher Price toys don’t seem to have the longevity they did twenty years ago (thinner walls equals lower costs). Few will be returned and there is no inventory to pull off of retailer’s shelves or languishing in Mattel warehouses. Rational changes that were being considered in safety regulations will now most likely be shelves. The current overregulation disproportionally affects small and medium size toymakers. Mattel is the only company which gets to use its own internal safety lab which I have got to believe is less expensive than going outside. It can also amortize testing costs and manpower over a gazillion products sold. Small and medium companies are hit much harder by testing costs, time to market and eyestrain (having to read through all those crazy regs). Creativity has also been blunted as companies learn to play it safe. It’s very risky to produce a new and innovative product and take a flyer to see if it sells in the marketplace. Overregulation means that a company needs pretty large presells to be sure that a product at least breaks even. The unlevel playing field benefits Mattel quite nicely. No one believes that Mattel has been orchestrating large product recalls on purpose…but it sure makes you wonder.

Switching gears (kerlunk!) – the economy continues to improve albeit very very slowly. September’s unemployment rate was unchanged at 9.6% but U6, a broader measure of unemployment which includes people who have stopped looking for work and those settling for part time jobs rose to 17.1% from 16.7%. Government shed 159,000 workers half of whom were temporary census workers the rest are layoffs primarily from state governments and municipalities who have seen their tax revenues shrink. The somewhat good news is that private employers added 64,000 jobs. Unfortunately that is not enough. The US needs to add 200,000 jobs per month simply to keep up with the population growth of the workforce. It seems that we’re running harder and not even staying in place.

Despite what the media may say, the real disappointment isn’t consumers, who have good reason to be conservative given widespread unemployment and their damaged balance sheets. The real problem with the economy is large companies who are flush with cash but seem to be too scared of their own shadows to start spending. Economists are seeing an increase in the number of job postings but companies are very slow to fill them. It’s estimated that if openings were turning into jobs at the pace they usually do, the unemployment rate would be about three percentage points lower. One reason that companies are dragging their feet is uncertainty over the November congressional elections. Before hiring, business needs to know if what some call “the Bush tax cuts” but is really – the existing tax code – is going to be extended.

This was echoed at the Fall Toy Preview as many of the senior executives that I spoke with were finding it difficult to make planning decisions. As for the business of selling toys, most were upbeat. Sell-in has been good although margins are down. There is a feeling that the holiday season will have a very strong price focus which should help the toy business as most companies have been concentrating on producing lower cost goods. After the economic turmoil that we’ve had most companies want some clarity out of Washington and also want to cash their big January checks before they spend them.

Down in Dallas a common complaint was the lack of trade show support by larger toy companies. For years, the behemoths, Mattel, Hasbro and Lego have not supported toy industry trade shows. That practice is now being taken up by second tier companies like Jakks Pacific and MGA. Mattel and others were having their own “toy fairs” in LA in the two weeks following the Fall Toy Preview. Some buyers even left Dallas early to travel to Los Angeles. Certainly this makes business sense for larger companies as they know they are going to get their face time with the retailers. Obviously, they would prefer that buyers be totally focused on their product line rather than be “distracted” by hundreds of smaller competitors. Alright I get it, but the toy industry may want to consider whether they want these larger toy companies dominating the TIA board. Certainly, the TIA needs their dues but one of TIA’s main functions is to organize trade shows and industry events. In choosing not to support trade shows, these companies dominant place on the TIA board is a clear conflict of interest. One of a trade organization’s most important missions is to protect the interests of its smaller and medium sized members. The big boys have the ability to fend for themselves.

If the Fall Toy Preview was moved to Los Angeles at the same time that Mattel and others were holding their “toy fairs” then the larger companies would likely just switch weeks. I wonder if maybe all parties could be accommodated by having two shows in LA on consecutive weeks. The main show with small and medium size companies during one week. Mattel and other large companies could do their thing the following week. Any company that thinks it’s important enough to draw buyers away from the big boys would be welcome to take the gamble and show in week two. Of course, that may or may not work out for them.

“Everyone under one roof” is an admirable goal but it’s never going to happen. The toy industry can’t even get everyone in the same town at the same time. I don’t want to criticize the Toy Industry Association too much here. By all accounts, they have done an excellent job under the leadership of Carter Keithley. This is NOT the TIA of even just a few short years ago. However, TIA and the TIA board need to tackle this problem now. Meetings should be scheduled, smoke filled rooms rented, arms twisted and compromises made. Complaining quietly amongst yourselves doesn’t accomplish anything. I would recommend speaking directly with either Carter Keithley or your favorite TIA Board Member to ask how you can help.

Hoping I didn’t stir up too much trouble,

Tom Keoughan

By | October 25th, 2010|ToyJobs Blog|Comments Off on Product Safety Conundrum and a Fall Toy Preview Review

It Wouldn’t Be Toy Fair Without Snow

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.

Muddling through,

Tom Keoughan

By | March 3rd, 2010|ToyJobs Blog|Comments Off on It Wouldn’t Be Toy Fair Without Snow

Toyjobs.com: Review and Forecast

Same store retail sales eventually rallied after a late December snow dump to rise about 3 percent.  Of course, this was compared to the very weak year earlier period.  It’s also difficult to discuss retail sales trends without including Wal-Mart, but Wal-Mart doesn’t report monthly sales data anymore.  As a shareholder, I like that but as a chronicler it’s a pain in the neck.  I would assume that in the current economic climate they did well but we should also keep in mind that their December ’08 numbers were better than most which will skew current comparisons downward.

During the past year retailers seemed to get it just about right.  They navigated the tough economic terrain by discounting just a few items and offering other promotions but by keeping prices relatively steady for much of their inventory.  Of course in the toy aisle, Wal-Mart did its usual October price slashing which was then followed by much of the retail community.  NPD reports that overall US toy sales were down by 2 percent.  Obviously that isn’t good but it is far from being catastrophic.

While the congress fiddled (yes, the Nero illusion is intended) with a healthcare plan that almost nobody wanted, the rest of the country focused on jobs. The economy began to grow in the second half of 2009 but the jobs market lagged behind with businesses still being reluctant to hire.  Although the December headline (U3) unemployment number was unchanged at 10% from November, the broader measure of U6 – which includes those forced to work part time or discouraged from seeking work – rose from 17.2 to 17.3 percent.

Here at Toyjobs we had our worst year ever.  The overall number of searches was way down and many of the searches that were started were canceled or put on interminable holds.  Waxing philosophically, “Some days the fish are there and some days they are not but I’m out there fishing hard in either case”.  Perhaps a quarter of all search firms went out of business last year but thanks to three decades of success Toyjobs is in strong financial shape and I will be out there fishing well into the future.

Recent discussions with toy execs returning from Hong Kong reveal that the mood at the Hong Kong Toy Show was mostly buoyant.  Retailers were pretty clean on inventory and were looking to buy.  That said, toy companies may want to temper their enthusiasm.  Wal-Mart and Target are cutting back on toy space, SKUs, and vendors.

In Wal-Mart’s case, toys have never been all that profitable and have primarily been used to drive foot traffic during the fourth quarter.  The “groceryization” of Wal-Mart has worked out so fantastically – with the average customer visiting the store once a week rather than once a month – that toys are no longer needed to drive traffic.  Of course, they’ll keep their hand in and stock the obvious big company items backed by big advertising dollars, but they’re not going to think too hard about the toy business anymore – no more guessing at what will be a hot seller.  They’re just going to focus on moving merchandise.  Don’t expect them to take any chances.  I’m not sure of the thinking behind Target’s strategy (no grocery to drive traffic), perhaps it’s just a case of me-tooism.

This trend will obviously benefit big toy companies who are able to make big TV advertising commitments.  It also allows other retailers to create a larger toy footprint without having to compete with Wal-Mart’s crushing margins.  Sears has been testing getting back into the business.  Barnes and Noble and Borders, two retailers who generate a lot of traffic despite Amazon, are putting a greater emphasis on toys.  I suspect that other retailers will follow suit now that they won’t have to compete with Wal-Mart’s pricing.  Not initially, but over the longer pull, toy companies should be pleased with the ability to diversify their customer base and at higher margins.

The biggest beneficiary of the Wal-Mart/Target downsizing of the toy department should be Toys ‘R’ Us.  People like to shop specialty stores because of their broader product offerings.  Toys ‘R’ Us is also taking big steps to counteract their Achilles heel – the fact that they have traditionally been standalone – separate trip stores.  During the past holiday shopping season they opened more than 80 pop-up stores in malls and shopping centers.  The concept may have been quickly conceived and erratically executed but they should have it nailed by 2010 or 2011.  Toys ‘R’ Us has also been working hard to turn itself into a destination by placing its Babies ‘R’ Us and Toys ‘R’ Us stores side by side.  Babies ‘R’ Us can function similarly to Wal-Mart’s grocery business by bringing in customers for their weekly needs (diapers, wipes, etc.) and acting as a feeder for Toys ‘R’ Us.  We should all hope that this strategy works as the toy industry surely needs a stronger Toys ‘R’ Us.

Here at Toyjobs, search starts jumped significantly in mid December as companies anticipated a new year with new budgets.  It is still too soon to tell if this improvement will be sustainable throughout the year or if it is just a new budget bump.  It is also too soon to tell if these search starts will turn into actual hires or be canceled or put on hold as so many were in 2009.  I should have a much better handle on that by the time of our post New York Toy Fair issue.  I can tell you that the air is different than it was even six months ago.  It “smells” better.  Certainly some companies are still having problems and most companies are still cautious but the palpable sense of fear is gone and has been replaced by a feeling of “we’re working through it”.  My sense is that this will be a recovery year much like 2003.  It won’t be a good year but it will be increasingly better than last.  I just hope that we only have ONE recovery year rather than two or three.

Muddling thru,

Tom Keoughan

By | January 25th, 2010|ToyJobs Blog|Comments Off on Toyjobs.com: Review and Forecast

Toy Fair Outlook – Cautious

The February Toy Fair seemed to go pretty well. The Javits Center maintained its world record of having the hardest floors on the planet. I did notice that several mass market companies were not “showing” although some had representatives lurking in the aisles. Mass market companies that grumbled beforehand that this would be their last one all seemed satisfied and said that they would be back. Specialty toy companies were having a field day and seemed to be a much more jovial group. I think a company’s sense of success at the show was very much driven by their expectations coming into it. It’s an excellent show for specialty manufacturers but also a very good place for mass market companies to focus on second and third tier retailers. Over the last couple of years, most of the toy company executives I have spoken to at Toy Fair have been cautiously optimistic but this year I would characterize their mood as just – cautious.

Of course, there is good reason to be cautious with big recession thunderclouds on the horizon. I don’t get the sense that recession has hit yet. Despite anecdotal evidence of empty store aisles, retail sales were strong in February. Wal-Mart’s total sales were up 8.9%, Target up 5.9% and Costco up 11%. That said, everyone from businesses to consumers seems to be standing around very quietly wondering why they’re still on their feet. It’s like waiting for a tornado. The press may not be talking us into a recession but they are certainly hastening its arrival. It’s also a little unnerving that the balance sheet of a single company could throw us all into crisis. If MBIA receives a ratings downgrade all hell is going to break loose. I suspect there would have to be some sort of government intervention.

Add to economic backdrops the particular challenges that the toy industry is facing now – rising costs, the rising Yuan and stingy retailers only allowing prices to rise 5-8% – and you have the making of thinner margins and a very difficult year.

Because of the string of January and February Trade shows it is always difficult to get a read on toy company hiring at this time of year as companies are typically too busy to “pull the trigger.” I can say that search starts have been strong during the period and I have every indication that many of these will close during the coming month. I should be able to pass on a more definite outlook on the subject in my next communiqué. I just hope that it’s not coming from a bunker.

All the best,

Tom Keoughan

By | March 21st, 2008|ToyJobs Blog|Comments Off on Toy Fair Outlook – Cautious