Who would have thought a global pandemic wouldn’t be the biggest challenge facing the toy industry and indeed all of world trade. With logjams affecting nearly every pinch point in the supply chain, retailers are desperately searching for product to fill shelves and manufacturers are wrestling gators to bring product in and move it across the country.
I’m not going to pretend to have anything to offer those of your who are on the front lines of this battle every day. However, I will warn about the potential for echo effects in 2022. What happens when all of those containers bobbing offshore from Ningbo to Long Beach to Rotterdam and baking in marshalling yards from Shenzen to Savannah finally do get delivered? It could create a big enough pile to create an inventory recession. Could there be so many goods stacked on store shelves, in stockrooms, and in warehouses owned by every conceivable player that nobody needs to order anything for a pretty long time?
In addition, the consumer is quite flush now, I can see a euphoria of spending once the 2021 holiday sales season hits and hopefully COVID begins to wane. Will they overshoot their budgets? You betcha! Add to that, in July, Equifax reported that consumer borrowing was at ten year highs. That’s a recipe for a big spending hangover in the new year.
Let us not forget that, with movie theaters shut down for two years, there will be a mad rush of licensable films released in 2022. It can be extremely difficult to sort out the winners from the losers. We may be able to finger the clinkers but a lot of companies will make suboptimal choices.
With this triumvirate of risk, I would suggest that companies proceed cautiously with their weight on the back foot. Then again, what do I know. I’m just the headhunter.
Regarding toy industry employment – despite outstanding toy sales in 2020 which have continued into 2021, supply chain woes have affected hiring, too. In the spring, clients were telling us: “We’re busy. We need people but there is so much uncertainty in the supply chain that we’re going to hold off for now.” That all changed in mid-July and search starts have been through the roof since then. Those should start resulting in hires during the next few weeks. The surge in search starts is continuing which is a positive indicator for everyone.
That said, I do see Dark Clouds on the near horizon. Hopefully that’s just because I’m writing this on Hurricane Henri weekend but I don’t think so. Schools will reopen in a couple of weeks and most school districts have not prepared at all for at home or hybrid learning. Everyone wants schools to be open and children enjoy a better education when they are physically in schools – but – the powers that be seem not to realize that when it comes to the pandemic, we are not driving this tiger, we are riding it. Masks, no masks, three masks – it doesn’t matter. Everywhere you have groups of unvaccinated children spending the day sitting in classrooms together, you are going to have outbreaks. Outbreaks all over the map. Disease may not be as severe – or it may be. We don’t know. I see bad weather ahead. I wish that I didn’t. I hope that I’m wrong.
Stay safe and be well,