Okay, Okay I confess...this is not really a blog but rather a compendium of my articles, editorials and rants from the Toyjobs Executive Monthly newsletter. We're doing this because search engines really like new content and they want to be fed on a regular basis. To do a real blog, I would have to post at least two or three times a week and therein lies the rub. If I had to come up with unique, interesting and pithy commentary that frequently, I think I could do it ..... for about three or four months. My office staff disagrees. They seem to be of the opinion that I have the ability to produce an endless stream of "snarky comments". Huh....perhaps it's just that they inspire me so. Fortunately, the inmates don't run the asylum around here.....yet. And my marketer's intuition tells me that within six months you'd be bored and more importantly, I'd be bored of my continual blabbering. I guess at a minimum this format gives you an idea of how I think about, and have thought about, this neverending "Perfect Storm" we call the toy industry. So toyblog? Not really. If you subscribe to our newsletter, please feel free to skip it. If you don't? Well then you're about a month behind.
U.S. employers have continued to hire at a steady clip bringing the jobless rate down to its lowest level in nine years. That’s good news for toy manufacturers as ‘Sell Through Season’ is going strong with total retail sales up sharply.
Foot traffic at stores has been somewhat thinner than the frenzied human herds of years past after retailers began offering discounts as early as Halloween and many Thanksgiving weekend promotions were also available online. Many Americans feel that it’s easier to shop from the sofa rather than to fight one’s way through the mall.
Reduced crowds meant reduced violence which can only be a good thing. That said, there did seem to be an increase in parking lot gunfights so you will still not see me anywhere near a retail outlet on that particular weekend. College kids promoting “Black Friday Brawl” videos online were left offering mostly tame fare and even resorted to posting previous years’ hooliganism under this year’s banner. There was a much shown wild melee in Modesto, California but if you watched it, you would have seen that those kids didn’t know how to throw a punch.
Sales of Hatchimals, Nerf guns, Star Wars Drones, and 4K TVs seem to be driving holiday sales but there is more than enough volume to go around. Here’s to a strong continued sell through season! Strong sell through makes toy companies happy. Happy companies hire. Here at Toyjobs, we like that.
(Sell through) Seasons Greetings,
In recent years, the Dallas Fall Toy Preview has been characterized by more and more toy manufacturers pulling out of the exhibition. This is the result of a split show which sends both manufacturers and retailers scurrying to Los Angeles, then Dallas, then back to Los Angeles, and finally to Hong Kong. Something had to give and it appears that now something has.
This year the dates of the Dallas show were moved forward so as not to conflict with the Jewish holidays, but that caused a direct conflict with Toy Show activities in Los Angeles. As a result, the entire Retail Midwest didn’t show up. There was zero representation from: Kohl’s, Meijer, Walgreens, Kmart, Costco, or Shopko. It was great to have large contingents from Wal-Mart, Target, and Toys ‘R’ Us. It’s always good to get as much face time with them as you can. But the reality is that they really conduct business in their headquarters. Most toy manufacturers will see them there and prefer to see them there.
I’ve always felt that at a trade show, it’s best to focus on mid-tier retailers. If they are all in one place and willing to give you some quality time, that’s where you can justify the cost of the show. Manufacturers can also save the time and expense of trucking to Menomonee Falls or Walker, Michigan.
Don’t get me wrong – I love the Dallas Show. There are open showrooms and toy executives have a fair amount of down time. If I can spend two days and meet thirty toy company Presidents, I’m gladly going to do it. In fact, most toy industry types I talked to like the show itself. It’s relatively inexpensive. It’s compact and people get to see friends and acquaintances from across the industry because everyone is pretty much in the same place day and night. That said, the show can’t go on if it doesn’t make financial sense.
After 2016’s lack of retail support, I’m predicting a thirty percent decline in exhibitors in fall of 2017, followed by a 2018 Zombie Walk. Clearly a better solution must be found. The composition of the TIA Executive Committee and Board of Directors seems to be less dominated by Mattel, Hasbro, and Lego than they have been in quite some time. That may provide an opening for less table tipping in trade show planning. It’s time that the show moves to Los Angeles. I often hear that there isn’t a good venue, but that’s hard to believe. There’s the LA Forum and the Los Angeles Convention Center has lots of different size halls available. Truth be told, we only take about two full floors of the Dallas Market Center. I can imagine that two adjacent hotels with exhibitors taking out suites and conference rooms might work. If you think about it, that’s really not so different than the old New York Toy Building.
The real problem has always been timing. The larger companies: Mattel, Spin Master, Jakks Pacific, MGA, etc don’t want to show at a time when buyers may be distracted by their smaller, nimbler (and more creative?) competitors. One answer would be to have a seven to ten-day show with one part dedicated to large companies at their headquarters or El Segundo showrooms and another part focused on small and medium sized companies located at some centralized venue. Manufacturers could be able to choose which group they wanted to join but might find it difficult to command buyer attention if they picked a group that was inappropriate for them. In any case, that’s my two cents. I am now going to duck and cover in a probably vain attempt to avoid incoming poison arrows.
As for the toy industry itself – things continue to be strong. Toy sales have grown 6-7% for the last year and a half, despite somewhat sluggish retail sales. That is making toy companies happy. Happy companies hire. Here at Toyjobs, we are on track to have the third best year in our thirty-five-year existence. In fact, I’m ready to proclaim that toy industry hiring is “Back to Normal.” 2016 has brought a resurgence in toy company hiring of Marketing and Product Development people. From 2009-2015, toy hiring was all about: Sales, Sourcing, and Safety. Sell more – make it cheaper – get us through the regulations. I believe that the strong increase in Marketing and Product Development jobs indicates that toy companies are being less defensive and are now aggressively pursuing new products and new initiatives. That can only be good for the toy business as a whole.
Looking ahead to the holidays sales season, I see no reason why strong toy sales should not continue. Unemployment rates continue to come down. Median household incomes have surged over the last year. Consumer confidence is climbing. This should translate into continued strong toy sales. Robust sales should mean that happy companies continue to hire through this year and into next. May it be so.
All the best,
P.S. My “Back to Normal” comments apply only to toy industry hiring. One need only look at the current election cycle to see that the world at large is certainly not “Back to Normal.”
To better understand all the conflicting economic indicators being reported, one needs to dig a little deeper than the headline numbers. Hiring has been strong for most of the year which has lead an increasing number of people who left the workforce to rejoin it. More jobs has meant higher consumer confidence and a greatly increased consumer spending. Some of the increased consumer spending has also been driven by banks.
Bank profits have been squeezed by long term, record low interest rates. To make up for it, they have been pumping credit cards out to more people and increasing credit card loan limits while at the same time increasingly loaning that money to riskier borrowers. Over the past year, US banks have added $54 billion in loans to consumers through loans on credit cards. After contracting during the financial crisis, credit card debt is not expanding at its fastest rate since 2007.
You would think that economy would be booming but GDP has only grown at a 1% rate thus far this year. The problem is that businesses have been holding back on spending on everything from computers to new equipment and factories. We need both consumer and business spending otherwise it’s as if the economy was trying to ride a bicycle with only one pedal.
If businesses are confident enough to hire, why aren’t they also putting money into expansion efforts? Oneexplanation is that workers are relatively cheap and also easy to get rid of should the economy slow. There is also plenty of spare production capacity, so companies don’t yet have much incentive to devote funds to new projects. Most companies will be conservatives with their balance sheets until they see signs of a growth rebound. They will also hold off investing until they have a better sense of the future tax and regulatory regimes that they are likely to face next year. Business spending should begin to pick up after the November elections, regardless of who is elected as businesses are better able to forecast.
The good news for the toy industry is that business is booming. Toy sales have been growing for the last year and a half at a 6 to 7% annualized rate. Strong sales have also mean that toy companies have been adding people. Toyjobs is having a bang-up year and is placing people at a level we haven’t seen since 2008. It is also heartening to see the return of hiring in the Marketing and Product Development sectors. Hiring in these areas has been extremely slow since the beginning of the financial crisis. I’m a little concerned that we haven’t seen the usual avalanche of toy Sales jobs that we usually see this August. Perhaps toy execs are all away on vacation. They better wake up! Fall Toy Previews are only four weeks away! I look forward to seeing everybody there.
All the best,
After a weak first quarter, Toyjobs followed up April, its best month ever, with a strong May showing. This mirrors the economy as a whole which, during the last couple of years, has had a series of weak first quarters following by markedly increased (although still tepid) growth. The latest projections from the Federal Reserve Bank of Atlanta are for second quarter GDP growth of 2.5%. Overall, it should come as no surprise that the toy industry has been hiring, even though some companies have experienced a bit of a Star Wars hangover. NPD has reported that toy sales in the US increased 6.5 % in 2015 and another 6% in the first quarter of 2016.
Moving forward economic signals appear to be mixed. US credit and debt balances have been soaring as consumers grow more comfortable carrying debt and spending money.
Pending home sales rose in April to the highest level in over ten years. April also saw consumer spending rise after a six-month slump. Wal-Mart rocked to a strong quarter even while many other retailers struggled.
On the other hand, the US has suffered two weak job reports in a row with the May report being particularly devastating. In May, employers added only 38,000 jobs – the fewest in almost six years.
Revisions to prior reports also subtracted a total of 59,000 jobs from payrolls in the previous two months. Add to that the numbers of Americans working part-time jobs who want full-time jobs shot up from 6 million to 6.4 million. These “involuntary part-timers” continue to be a sign of considerable weakness in the job market. Finally, although the headline unemployment rate dropped to 4.7% this was largely due to a steep decline in labor force participation as millions of people have left the workforce in frustration.
The future is murky. Two bad months do not make a trend, but they may be a sign that the economy is losing what momentum it did have. On the other hand, maybe this is just the annual summer doldrums beginning a couple of weeks early. In any case, this is not the time to load up on debt or go out and buy a new Ferrari. Uncertainty calls for caution.
Here at Toyjobs, we are cautious but also quite optimistic. Over the last fifteen months, toy sales have been much stronger than the economy as a whole. I have no doubt that in six to eight weeks, toy companies will realize that the 2017 toy selling season is coming up fast and will begin the annual mad scramble for new or additional Sales Executives. Be advised that the Dallas “October” Fall Toy Preview arrives a little early this year on September 27th. It would be prudent to start your sales searches in late July or early August if you want your new people on board and ready to go.
All the best,
In April, Toyjobs has logged its best month ever and we still have ten days left. In the toy business, a lot of searches are started early in the year but companies have difficulty arranging interview times and moving the ball forward in January and February due to all of the trade shows. Lots of jobs end up getting filled in March and April. That’s what we have seen in each of the last two years.
Search starts are continuing at a rapid pace. Toy sales were up approximately 6.5% last year. That makes companies happy and happy companies are hiring! Let’s hope it continues. Lots of hiring is good for everyone.
I’m sorry this is so brief but I gotta get back to work.
All the best,
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,
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
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,
Rosy forecasts but weak real world numbers make for uncertainty
Early forecasts for Holiday Spending 2015 have been quite optimistic. Households have been enjoying fatter wallets, thanks to lower gasoline prices and cheaper imports, thanks to a stronger dollar. Retail sales reflected this by growing from January to July. NPD has reported that toy sales were up 6.5% in the first half and is projecting 6.2% growth for the year as a whole. The National Retail Federation is forecasting a holiday sales increase of 3.7%. That sounds good but less so when you consider last year’s 4.1% gain.
Forecasts are fun and they can be helpful, but let’s not ignore what’s going on in the real world. A retail sales slowdown began in August and the Commerce Department recently revised the growth rate down to 0.0% for the month. September retail sales numbers were not perceptibly better with only a 0.1% growth rate. While low gas prices have been increasing disposable income and the strong dollar has led to some price deflation, consumers have been channeling additional spending toward services such as vacations and restaurant meals. Before we get pessimistic, let’s keep in mind that for economic data, some months counts less than others. August is rarely a good indicator – it’s summer! And September can often be a transitional month, especially when Labor Day arrives late, as it did this year.
Weak Jobs Reports
Concurrent to the slow-down in the retail sales is what we’re seeing in the job market. While job creation was strong in the first six months of the year, in September there were only 142,000 net new jobs. The numbers for July and August were also revised downward so that the third quarter monthly average for net new jobs was 167,000. That’s down from a monthly average of 198,000 for all of 2015 so far, which is down from 260,000 a month in 2014. While we should be concerned, again let’s not get overly pessimistic quite yet. Third quarter job gains have a historical tendency to run below average for the year and the deceleration often turns out to be temporary, rebounding in the October to December quarter. Again – it’s summer! …I’m going to wait for the October numbers before I really try to figure out what’s going on.
The big news last week was Wal-Mart. The retail behemoth said that, while sales would be flat, earnings could fall as much as 12% next year. The lower margins will be the result of “investments” in staffing at US stores and actual investments in ecommerce. When Wal-Mart experiences margin pressure – “Let the vendor beware!” – that can only mean bad news for its suppliers. Already they are asking all suppliers to pay fees to keep inventory in Wal-Mart warehouses and in some cases, they are strong arming vendors into accepting extended payment terms. One can only imagine that there will be more of this type of thing to come.
Strategically, changes needed to be made. Wal-Mart was falling behind in the retail wars. It’s difficult to compete with a company like Amazon, which is apparently comfortable not making any money for more than twenty years. From a timing standpoint, this makes perfect sense. New CEO Doug McMillon is a lifer who enjoys broad support. He is relatively young and will probably be in the CEO chair for another 10-15 years. He will be able to chart the new lows as his starting point as he goes about setting new strategy and rebuilding the retail juggernaut. He certainly has the time and resources to turn things around, but he has to get the strategy right. Not that he’ll notice, but we at Toyjobs wish him the best of luck.
Putting together a strategy to right the Wal-Mart ship is way above my pay grade, but I do have just one little question – we hear a lot about a “seamless customer strategy” and “click and collect” where a consumer can buy online and then stop by a store to pick up their purchases. My question is – why would I want to do that?? When I can simply purchase online and have my items delivered to my door. Just sayin’.
Dallas Fall Toy Preview
I found most people at the Dallas Fall Toy Preview to be very optimistic. The Frozen phenomenon seems to be fading fast butShopkins has been and Star Wars soon will be taking the world by storm. Wicked Cool had a very strong looking product line and over at the Auldey RC booth, people were busting through the doors.
Certainly there were the usual complaints – “Why are we here?” and “This place is empty.” But, when I asked manufacturers if their dance cards were full, they almost unanimously answered “yes.” In fact, in a completely new trend, instead of ambling in late, buyers were arriving for appointments early – even a day early. It seems that everyone wanted to get out of town as quickly as possible. I’m guessing that Thursday was completely dead, but can’t really tell you because I had already left for Austin to enjoy a much deserved long weekend of good food and good music.
October continues to be a crazy time in the toy industry with buyers and manufacturers pinballing between Dallas, LA, and Hong Kong at an accelerating rate and with even more disjointed schedules than ever. I know more than a few execs that will be in all three locations (simultaneously?) this month. The TIA still needs to figure this out. Things are getting messier, not better.
Navigating Conflicting Signals
What do we make of all of this conflicting noise? Should we try to make sense of things or just bury our heads in the sand? I feellike I’m crossing a deep river barefoot and just feeling around for smooth stones with my feet. Not that anyone listens to me but I am going to acknowledge, but not put much faith in, all of the conflictingsignals until I see the October numbers. Historically, October is a solid bellwether month. I’m optimistic but am going to be conservative in planning and spending until things actually happen. I think that there’s going to be an absolute ton of Star Wars merchandise sold but I also think there will be an awful lot of it left on the shelves. What then? “Curb Your Enthusiasm” and don’t become “Irrationally Exuberant.” It’s likely to be a strong holiday shopping season, but at this point that is far from certain. Be prepared for the aftermath. I am filled with both optimism and uncertainty and I’d prefer to be surprised on the upside.
May the force be with us,
image via Crowdfundinsider.com
Toyjobs has finally collected on its personal fraud suit vs. Ivars Sondors who is now operating under the moniker “Storm Sondors.” The case began in 2007 with Toyjobs winning a judgment case against Sondors’ company A-HA Toys in November 2008 and being awarded a judgment against Ivars Sondors personally in August 2011.
Toyjobs President, Tom Keoughan said: “We’ve chased Mr. Sondors for eight years across three continents. It’s good to finally collect what is owed us and put this matter behind us. I’ve got two big boxes of paper to throw out.”
Keoughan further states: “I have no way of knowing how he’s handling himself now, but it has been my experience that people over the age of forty don’t change much.”
While the toy industry saw strong search starts in the first quarter, a lot of hiring decisions were postponed due to the uncertainty caused by the weak economic and retail environment. Starting in Q2, we were rocking and rolling again. Search starts continued at a good pace, but now previously delayed hiring decisions were being made.
In July, toy jobs continued to be filled, although, as usual, search starts slowed due to seasonal factors. For the second straight year, search assignments restarted during the final week of July. I’ve been saying it for a long time, but it seems that toy companies have finally started to realize that if they want to add new members to their teams in time for the Fall Toy Preview, they have to start looking well before Labor Day.
From where I sit, toy industry hiring looks to be strong through the end of the year and beyond. NPD has recently reported that toy sales improved by 6.5% in the first half. They also project an increase of 6.2% for the entire year. This will be the strongest growth in the toy industry has seen in decades. Several hot properties and product lines have been leading the charge, including: Frozen, Shopkins, Minecrafts and Paw Patrol. Coming soon will be an all-out blitz by the Star Wars franchise.
Strong sales growth should create confidence in toy companies, which should in turn instigate their desire to grow. In particular, look for rivals to try to continue to bite off shelf space from still staggering Mattel. All of this growth will necessitate an increase in staff. I look for renewed toy industry confidence to spur hiring through the end of this year and into the next. May the force be with us.
All the best,