Nico Blauw is President and CEO of BOTI, Ltd., and BOTI Europe, BV. Nico has an impressive resume, having founded BOTI and serving as the CEO of Upper Deck International BV/Upper Deck Europe BV. He is an outspoken advocate for the toy industry. Here is his take on the toy industry’s current situation.
Despite Covid, or better said, thanks to Covid, the years 2020 & 2021 were record-breaking years for the toy industry. The toy industry never wastes a good crisis, but opportunistic as the industry is, we also need to champion our own crisis.
Let me make a bold statement: The toy industry cannot just blame macroeconomic factors for the current despair in the market. The industry really needs to take a good and honest look in the mirror!
Covid dragged into the start of 2022, causing toy fairs to be canceled, and many markets remained under lockdown during January. China remained closed for the entirety of 2022, while Hong Kong started welcoming international guests in the 2nd half.
Logistics issues didn’t make 2002 start very well, not only causing sky-rocketing prices, but late arrivals of holiday season products (in Jan/Feb), causing severe inventory challenges for suppliers and retailers.
Putin decided it was a good time to invade Ukraine, causing human tragedy and a global (energy) crisis. For our industry, it meant no more shipments to Russia, one of the biggest toy markets in the world, and obviously, business with Ukraine became challenging. And whereas the shipping cost finally came down to “normal” levels, the currency exchange rates, in return, didn’t do many countries a favor.
The world is facing staggering inflation, and we can see an economic depression ahead of us. Is that bad for our industry? It doesn’t necessarily have to be if it wasn’t for all the (obsolete) inventory we face in our business.
Part of the inventory relates to late arrivals of 2021 holiday products into early 2022, honestly, out of our control.
But in addition, some went ahead and produced 2022 goods based on the success of 20/21. Like if these were normal years. Duh…there was nothing ordinary about 2020 and 2021! These were exceptional good years for our industry. Once covid regulations were released, consumers would start spending money on holidays, restaurants, and bars instead of buying another trampoline (how many can one have), boardgame, or swimming pool. Others just went ahead and produced according to shareholders’ expectations. And what do shareholders want? Year-on-year growth.
Many suppliers and retailers have more inventory than they can chew on. The inventory lists that are being shopped around are beyond shocking. Most retailers own huge inventories. So we have a product jam of immense proportions.
Obviously, the pipeline needs to be cleaned, but how much obsolete inventory can the industry absorb, and what will this mean for new products and innovation? What will this mean for the financial position of suppliers and retailers? What will that bring the industry for 2023?
We have an incredible industry. Let’s keep it wonderful by making responsible decisions for the sake of the business. Keep It Simple Smart (KISS)