2017 is in the books and its time to turn our attention to 2018. 2017 was a surprising year for many of us. I think there are very few people who, at this time last year, would have predicted a Toys "R" Us bankruptcy, a record number of store closings or a proposed Mattel / Hasbro merger.
So, with that in mind, what should we looking out for in 2018? Here are my thoughts:
Will Toys "R" Us Liquidate in 2018?
I think it is unlikely but whenever a company is in Chapter 11 reorganization, as Toys "R" Us is, there is always concern about liquidation. Particularly by those in the toy community who have been around long enough to recall the demise of toy retailers Kiddy City and Child World in the early 90's.
What is more likely is store closings. There are reports that Toys "R" Us will close between 100 and 200 stores in 2018. Let's hope that that is all there is.
Will Toys "R Us Be Sold in 2018?
I conducted a survey (thank you responders) in which I asked our toy industry members their opinion. We had close to 100 responses. 46% of respondents said "No" and 26% said Yes.
If the company were to be sold, who would be the most likely acquirer? Would it be Amazon, Li & Fung or some other large, deep pocketed entity with an on-going stake in the toy industry.
This is a hard one to predict but I think the "Yes" group probably has it right.
Will Toy Industry Sales Be Up or Down in 2018?
The final numbers are still out for 2017 but BMO Analyst, Gerrick Johnson, is predicting that the industry will be down a low single digit. But what about 2018? I surveyed the industry about that as well and our responders were optimistic. 56% of respondents predict that the industry will be up while 34% are projecting that it will be down.
The industry has had several years of increases so a correction, particularly with Toys "R" Us being a challenge to the industry, is not unlikely. I don't want to be a pessimist but I think in this case that the "Down" responders have it right.
Will there be more or fewer store closings in 2018?
Bricks and mortar retail is struggling. Too many stores and a hungry digital retail world are vacuuming up customers and putting pressure on the economics of selling products from a store front.
Here is how Motley Fool puts it in their article: "17 Retailers on the 2018 Death Watch": "The past year has been a bleak one for many retailers. Over 20 retail chains — including Radio Shack, Toys R Us, and HHGregg — filed for bankruptcy, and some were liquidated. Things are not likely to get better in 2018. They may even be worse."
Our survey responders agreed. 78% are predicting their will be more while only 14% think there will be fewer. I agree. After all, we know that Toys "R Us plans to close stores.
Will Mattel and Hasbro Merge in 2018?
This was a hot topic of discussion in November as Hasbro reportedly made an offer to purchase Mattel. Since then the buzz has died down. Never-the-less our survey asked the question: "Will the Hasbro Mattel Merger Become a Reality in 2018?" 46% said No while 26% thought yes and 28% didn't know. I am going to side with the "No" vote on this one.
What else should we be looking for in 2018. Let us know.