Every time I attend an industry event I learn a little more about the mood of the industry. The Dallas Toy Preview was no exception. Conversations with numerous sales reps, manufacturers and retailers provided me with the following insights:
Buyers are buying again. Most people I spoke with felt that the year was going to be a good one, adjusted for the flat economy. Basically, they felt that things are looking up because buyers are buying more freely and there are some hot toys that are driving consumers into the toy stores and toy departments.
But buyers are still too risk averse. Most people I spoke with said that though buyers are buying more freely, they are still not aggressive enough in terms of risk taking. Reduced sku counts plus an emphasis on fewer licenses is making it a real challenge for secondary licenses and toy manufacturers to break through with mass market retailers.
Producing toys is harder than ever. The combination of higher raw material costs, tough and prolonged safety inspections, increased freight costs, higher factory worker wages, Chinese inflation and upward pressure on the value of the Renminbi is making it harder and more expensive to produce goods.
No one is sure where toy manufacturing is going. There is a general awareness that this is the beginnings of a slow motion exodus out of China. It won’t happen overnight but because of the increased costs, more companies are looking for alternative sources of manufacture with Viet Nam being the country du jour. The challenge for the toy industry is that there is no country or any group of countries than can remotely match the infrastructure and manufacturing base of China.
Interestingly, despite the fact that much of this is a bit disconcerting for an industry that has been at home in China for decades, there is no sense of panic or insecurity; just the pragmatic attitude of many in the toy industry that, just like in the past, whatever happens they will still be standing. Based upon the number of familiar faces at this year’s Dallas show, I would bet that they are right.