Well it was another very strange and unusual year. The hangover of inventory coming out of 2022 compounded by the slowing of discretionary consumer spending patterns in the first half of 2023 was a nightmare for most in the industry. Buyers were holding back on issuing purchase orders, slow rolling shipments, and delaying replenishments. We saw lots of empty slots on shelf with the mindset being “sell what we have more than sell what the customer wants.” Fortunately, things started to clear out and pick up in July and the second half of the year. While not great for most things, the business did start get back to more normal rhythms. The good news for many is that the first half comps this year will be a lot easier to beat given the softness in the first half of ’23.
From a retail perspective, the back half of 2023 felt flat, with sales finally building during November and into December, and with the help of discounting, promotions and specials the year finished up slightly—most likely with the help of inflation. So, now we all stagger into 2024 hoping for a return to a more traditional flow and cadence of selling in, buying, and selling through. Clearly, there are clouds on the horizon beyond our control from Ukraine to Israel and the Rea Sea, tension with China, and, of course, the upcoming election. It will be bumpy, but keep the seat belt on and pedal to the metal to drive forward and make all we can out of this coming year.
What we all can control is where and how we pitch our new lines for ’24 as we already begin to think about ’25. The reviews of our first—and likely last—Fall New York Toy Fair were mixed at best. Personally, Basic Fun had a great show, and we felt the traffic was solid and quality during the show, but no doubt many others felt it just didn’t pay off. The fact that there is no show in 2024 seems to be a boon for the Nuremberg Toy Fair this year, as many North American buyers are heading over to check it out. Word is they are mostly “trend hunting.” Not to take a shot at our friends in Europe, but frankly I can’t recall the last trend that came from Europe! The trends seem to come primarily from the US, Japan and Down Under, but who knows? They might find one in Bavaria? Getting to Nuremberg isn’t easy from many parts of the US with travel times for some as long as going to Hong Kong. So, it will be interesting to follow up and see if these buyers get anything out of traveling to the show outside of a bit of jet lag and some good beer!
I’ll be at the show with Basic Fun for the first time with a full set up in many years. It’s a sign of how important it is for us to grow and diversify our market channels. We’ll be in Hall 4A during the show and will hope for a few orders on our new Littlest Pet Shop program along with some schnitzel and suds! We’ll also be in London, as that’s been a big market for us and one where we sell our products direct to retail. Europe is a crucial market for the industry, so it will be interesting to sense the mood at the show given the challenges with the economies of so many countries in the EU.
By the way, let’s not forget Hong Kong, please! Yes, Hong Kong is still an important place for our industry. Most all companies in our industry have working offices in Hong Kong, and there are still a few—including Basic Fun—that have showrooms open and operating year round. Heading into the traditional early January market week this year, things looked grim. Typically, we have 150-to-200 appointments this time of year. This year going into the end of the year we had only 25 confirmed appointments mostly from Asia and Latin America. However, momentum started to build late, and we ended up with 50 appointments and wrote enough new business to justify the expense of the showroom. Shout out to Chris, Nico and the guys at Tiffany’s bar for making the trip. It was nice to see some friendly faces in town after more than three years.
Clearly, it’s going to take time for Hong Kong to return as a serious buying destination. I think it will take a few years, but eventually folks will remember why for 100 years toy buyers have been coming to this gateway to China city. Despite the distance, we can all agree that the first two weeks of January is actually the best time to buy toys for the fall of the coming year. We know that October is too close to the LA previews, and March first is likely too late for many accounts to finalize fall buys. January is exactly the right time to finalize or set a plan. Watch this space to see how things develop over the years.
Now to the elephant in the room: New York Toy Fair! Here is my suggestion to all: Sit with your sales and marketing teams between February 19th and March 4th. This is the traditional time period of NYTF in the past—and the date of the next show in 2025. If you determine that you are missing sales and promotional opportunities you will be ready to book into NY for ’25. If you come to the conclusion you are not missing anything at all, then you will likely not book into the show. If you are someplace in the middle, then you will likely book in with a smaller foot print. My guess is that the show will see a bit of the changing of the guard with companies that do significant specialty toy business taking the lead and retaining bigger foot prints. Companies like Melissa and Doug, LEGO, Ty, and others may lean in. On the other hand, companies like ZURU, MGA, and Jakks will conitnue to pass on this show, and the likes of Moose, Just Play, and Basic Fun will take smaller spaces. This will open up more space on the floors and enable smaller up-and-coming companies to be able to step up and expand their spaces. I will say that this past show with the more open booth format was much more dynamic, welcoming and fun…looking and feeling. I’d recommend this continue as a policy.
Time will tell, but the time to think about Toy Fair ’25 is in about a month. That also goes for retail buyers. If you are a buyer or department manager and feel like you are missing something by not being in NY that time of year, let your vendors and the association know and signal early that you would plan to attend. Without our retail partners, there is no show. We need you. Companies need to plan very far in advance, and the show is a huge expense in time and money for companies, and it all comes down to the buyers showing up.
No doubt the buzz continues on LA as a location for buyers to converge. I’m hearing more than 150 companies are looking to find space for the fall preview period—fewer for spring. That’s good news and bad. Remember, LA is not a convention center, and it’s not as convenient to traverse as Mody Road in Hong Kong or the old Toy Center district in NY. There is a central district in El Segundo around the Mattel HQ, with 400 Continental and Grand and 1960 Grand housing showrooms and a number of stand alone offices within a few blocks. However, there are a few outliers, which take buyers out of this area and restrict the time buyers have to shop more showrooms. Hopefully, buyers will start to extend their LA trips and spend at least three full days in LA and better even four, five or six. As I write this blog I just got an invitation already to a cocktail party at 1960 for September!
Well, I’m off to London and Nuremberg this week for the shows. Feel free to say hello if you see me! In my next blog, I will address two serious issues that are affecting our industry and will for the foreseeable future: the West’s relationship with China and what that means for sourcing and shipping of toys. For now, all the best to us all in the industry in 2024. Let’s hope for a great year at best and at the least a more “normal“ year.
Always remember we are in the best industry in the world, and as we say at Basic Fun “We’re Making Toys Here”. What better thing can a person do with their career than bring joy to kids and families?
