Toy industry hiring has started off at a torrid pace. Here at Toyjobs we are currently on track to beat our best year ever (2000). It’s still early, and we haven’t hit the summer slowdown yet so realistically we are unlikely to eclipse the old mark. Frankly, we don’t even want to. Having a year like that takes a heavy physical, mental and emotional toll. Friends and family begin to get cranky – and I begin to get cranky too. As long as we keep raising the bar on our second (2004) and third (2005) best year’s, I’m a happy camper. It seems quite likely that we will be able to do that despite all the continued challenges facing the toy industry.
Oil, resin, transportation, labor and Chinese electricity costs continue to be high and this is keeping pressure on margins even as retailers continue to play hard ball on pricing while buying less goods. Toys ‘R’ Us store closures mean less shelves to fill and Walmart is actively cutting its inventory.
The results of this can be seen at some of the larger toy companies. At Mattel, Barbie continues in her death spiral (down 8%) while Hot Wheels and Matchbox also slowed (down 4%). Even American Girl which had been a star performer had sales weaken by 9%. The only bright spot was Fisher Price where sales were up 12%. I wonder if Neil Friedman is beginning to get all misty eyed while day dreaming about Buffalo winters. Hasbro did marginally better but still lost money in the first quarter. It looks like Rose Art sold out just in time with 5 Magnetix lawsuits to date. Over the years, Larry Rosen has been described using many adjectives (not all of them printable here) but to be fair; shrewd should always be counted among them.
The tough industry climate is also reflected in the fact that the toy business is now homeless. The TIA has to be viewed as the main villain here. They took an exorbitant amount of time to come up with a single option that was acceptable to almost no one but themselves. It was incredible to see that a working group consisting of mostly the same people as the TIA search group was able to come up with three or four new possibilities in the blink of an eye once they were free of TIA oversight. Unfortunately, what I’m hearing (not confirmed) is that all of those options have slipped through the industry’s fingers because it took too long for everyone to get their act together. It’s not easy herding cats.
The always opportunistic TIA in its seeming role as a for-profit trade show management firm, rather than that of the toy industry advocate that it should be is now charging an arm and a leg for Javits space that was made necessary by their own incompetence in finding a new home for the toy industry. Also keep in mind that there will be additional costs of building an appealing and closed trade show booth unless you want to get knocked off by everyone with a cell phone camera and an Asian connection. Once you have spent the money on that sleek new booth it will be easier for the TIA to overcharge you for space again next year…and the year after that…and the year after that…
Finally, we get to Walmart. It’s always fun to throw a few rocks at the big bully as long as you can run away and hide before he beats you up. According to CEO Lee Scott, “Walmart is making real changes.” Let’s look at them in order:
- Walmart will increase surprise inspections at foreign factories in an effort to make sure that its suppliers uphold labor and environmental standards. Gee, this is almost too easy. Apparently, Walmart will NOT be conducting any inspections of its own stores which have been under severe publicity pressure due to its poor treatment of store employees and weak environmental record.
- Walmart will increase diversity in its workforce. Yes, Walmart will constantly be on the lookout for any group of people it can employ at lower wages and with fewer benefits.
- Walmart will expand its share of the Hispanic market. Duh, Walmart will try to sell more goods to more people. It will also try to employ more Hispanics at lower wages and then sell products to them at “everyday low prices.”
- Walmart will sell more environmentally friendly products. Apparently Walmart believes that gasoline price squeezed consumers will be more anxious to spend $2 on an energy efficient light bulb than 19 cents on a standard one.
- Walmart will help competing local companies stay in business. Uh-huh…and pigs will fly.
The only “real change” that I see at Walmart is that CEO Lee Scott is heading off on a one month paid vacation. I would like to see any of Walmart’s store employees try to do that. In a related (?) story, a Walmart customer who was experiencing difficulties with a self-checkout system not working properly was arrested for allegedly punching it out. Always remember that a weaker Walmart, which still sells tons of goods but is less able to bully its suppliers, is not such a bad thing for the toy business.
All the best,
Tom Keoughan
