A few suppliers from both the UK and US have told me that they’re still waiting for confirmation orders from certain major accounts for this year. I guess that means that having everyone up sticks and head out to LA in September didn’t quite turn out to be the magic bullet in terms of getting early commitment from retailers after all. In fairness, you have to assume that the dreadful ongoing situation in the Middle East has had a significant impact on some retailers’ short and medium term plans.
I’ve been asked by several people what’s happening with potential price increases as a result of the Iran conflict, a question that is almost impossible to answer with any degree of certainty right now. Everyone in the chain needs clarity but it seems to be impossible, with things changing on a daily basis. Prices will be going up without a doubt, but by how much? That will depend to some extent on where the price of oil settles, as well as how long the disruption in the Strait of Hormuz lasts. As of today, who knows what’s really happening: is the Strait still closed, fully open or open on a selective basis? And how have we managed to find ourselves paying a toll to cross a body of water which was previously free? Who receives the toll money (Iran? The US?) and what effect will that have on supply chain costs.
Food inflation is anticipated to rise by 9% by the end of the year, but whether toy inflation will match that remains to be seen. I can imagine a lot of conversations are currently going on to try to make sense of where this will all end up, even though no-one really knows because there are still so many potential variables and endgame scenarios. As The Temptations – this year’s Licensing Expo opening night party act – once sang, “it’s just a ball of confusion.” (At least I know lots of their songs; when the headliner was Ja Rule a few years ago, I had to ask Mark what his big songs were…).
We’ve already received a communication from our printer informing us that a fuel surcharge is being introduced with immediate effect, and that prices are rising across the printing spectrum (paper, aluminium printing plates, energy costs) which are likely to impact our costs sooner rather than later. And like suppliers, we set our rates at the start of the year, so we can’t just automatically pass those on. Retailers have their own cost increases to factor in (business rates, rent, minimum wage increase, energy), so we’re all fighting similar battles and having to make sure it all balances out in the end. One thing is for sure – I wouldn’t like to be a struggling publisher, toy company or retailer at the moment. It’s a pretty brutal, unforgiving environment even if you are a solid, sustainable business; for those who have been clinging on, it can’t be a whole heap of fun.
What is evident is that many companies are looking closely at their own operations and how they’re structured, and this is leading to some frantic activity in the toy job market. This week alone has seen major moves in just about every part of the toy community – buckle up for a quick rundown of some of this week’s main developments…
Read the rest here.
