Once again it’s time for me, along with many others in the toy industry to make our annual pilgrimage to Hong Kong. Hong Kong is where the toy year really gets going and where we get our first real feel for pricing, buyer outlook and what products look like they are going to have the biggest impact on 2011.
My anticipation is that we are going to see retailers in a positive buying mood, more innovative products, higher price points and much higher prices coming out of China. Here is why:
Positive Buying Mood
This was a very solid Christmas selling season with The New York Times article “Retail Sales Rebound, Beating Forecasts” reporting that “[s]hoppers spent more money this holiday season than even before the recession….[R]retail spending rose 5.5 percent in the 50 days before Christmas, exceeding even the more optimistic forecasts….”
Also, improved inventory controls in many retailers resulted in good sell through and fewer markdowns. As a result retailers are going to need products on the shelf. This should put buyers in the mood to buy as they get renewed confidence in their ability to move the goods they buy, in the economy, their shoppers and, most importantly, themselves.
More Innovative Products
Expect to see more innovative products. The recession caused many companies to postpone and cancel the launch of new products, particularly those that had a higher price tag. Consumers are feeling more adventurous so expect retail buyers to be so as well. Manufacturers will have what they are looking for.
Higher price points
That same New York Times article reported that the sale of luxury items increased 6.7% this year.
That means the consumer is willing to buy more expensive products that they see as having value. I don’t think we’ll see a return to $300 robotic horses and dinosaurs but we will see toys selling with a $100 price tag.
China has been experiencing a very strong inflationary period due to a number of issues (demands for higher wages and working conditions as well as too much cash in the economy to name just two). As a result, they have had to allow the Yuan to increase in value. According to the RTT News Global Financial Network “The Chinese Yuan surged up to a new record high against the U.S. dollar in Asian deals on Friday, the last trading day of the year, on speculation China will allow the Yuan to rise in 2011 in an effort to reduce inflation.” This is going to mean higher toy prices with some buyers experiencing sticker shock. Once again, it will be interesting to see how this all plays out as manufacturers float their new prices and buyers push back.
I’ll let you know what I see, hear and experience in Hong Kong. It will be, as always, interesting.