Retail Interview - with Alan Simpson, founder and executive chairman of SMF Toytown

SMF Toytown turns 42

SMF Toytown founder and executive chairman Alan Simpson talks to Clare Turner about the pandemic, product trends and new store development plans for the independent toy chain

This month SMF Toytown celebrates 42 years of trading. The Belfast-based family business was founded by Alan Simpson in 1979 and has grown to become one of the largest independent toy retailers in the UK.

Reflecting on the past two years of toy trading, Alan says: “We’ve probably fared better than most retail through Covid because the deals that we do with landlords are totally turnover-rent based. "We started doing that 10 years ago and it’s a business model that works for us. In 2020 most retail would have had a very difficult time. Our profits actually increased - and it was a good increase, all things considered - and I’m predicting that for 2021 we will see increased profits again, even though we were closed for the first four months of the year.”

The specialist chain operates 33 stores: 10 in Northern Ireland, 10 in Scotland and 13 in England, ranging in size from 2,500sq ft (Doncaster)

Our expansion “ going forward will always focus on shopping centres ”

to 8,000sq ft (Merry Hill). The latter opened in the West Midlands shopping centre in May and was followed a month later by a 3,000sq ft branch in The Gyle shopping centre in Edinburgh.

“We’ve covered the main areas of retail where toy retailing is effective, and have fine-tuned and honed over the years,” Alan says, “so we’ve got high street units, outlet units, and concessions in some department stores, but the vast majority of our stores are in shopping centres. "Why? Because it’s the one area that guarantees footfall, and with footfall comes turnover. There are so few toy retailers in shopping centres, which is phenomenal, but it’s all to do with the operating margin. Our expansion going forward will always focus on shopping centres.”

SMF Toytown also has an ecommerce website at www. toytownstores.com but, Alan stresses, “my focus is very much bricks-andmortar and always has been. I’ve recognised that there’s a need for an online presence for selling, so it ticks the box, but it’s not my be-all and end-all. SMF Toytown is built on bricks-and-mortar retailing. "I want parents to bring children into stores and give them the ‘wow’ experience that they had when they were children. You don’t get that with the arrival of a cardboard box at your door.”

He recalls that as soon as lockdown was over, SMF Toytown was working on its Merry Hill branch and, he reports, “it’s trading really well. It’s the biggest in space and the biggest in turnover for us. The only other store we’ve opened this year is Gyle. We normally do four or five a year, and we would have done another three this year (one in Scotland and two in England) if it hadn’t been for the uncertainty of stock availability. So, we’ve put them on ice and pushed them back to 2022. And if everything is back to an acceptable level of normality, we may look at a couple of others, depending on what offers come along.”

Sellers

■ Pokémon cards ■ H. Grossman Pop Mats ■ Lego Mini-Figures ■ H. Grossman Fidget Box ■ Hot Wheels Basic cars

SMF Toytown prides itself on having one of the widest toy offerings available. “We carry a full range from all the key suppliers,” Alan says. “We don’t just cherrypick a few products to give a representation that ticks the margin box. Our ethos is we want to stock product that people want to buy - not just product that we want to sell. So SMF Toytown is where you will find product that a lot of other retailers have ruled out, for whatever reason.”

The comprehensive selection has both breadth and depth. Larger branches, for example, boast a 10-metre section of LEGO and a 4-metre section of Playmobil. In smaller stores, those sections measure about 6 metres and 2.5 metres, respectively.

“We cover everything, right across the board: preschool, plush, games & puzzles, action figures & playsets, arts & crafts, construction toys, fashion & dolls, pocket money toys… and we go out of our way to try to work closely with our key suppliers to give them as good a representation on displaying their products as we can. And that support is two ways: we give them support and they give us support. It’s a winwin scenario. We’ve built our business on being fair and I think that has stood us in good stead over the years. Our ethos is we want to stock “ product that people want to buy - not just product that we want to sell. So SMF Toytown is where you’ll find product that a lot of other retailers have ruled out, for whatever reason”

Changes at the top

Alan Simpson has three sons in the business and on October 1 he announced that he had been working on restructuring the management of the company as he prepares to take a further step back from the day-today running of SMF Toytown to focus more on an overseeing role, in what he views as 'semi-retirement' after 42 years in the toy industry. The board structure is now: executive chairman - Alan Simpson, managing director - Kris Simpson, commercial director - Brian Simpson, HR director - Mark Simpson, and operations director - Andrew Addley. Alan said: “I’m confident that this structure will enable the company to continue to thrive as it has done over many years. I look forward to visiting branches over the coming months, as we enter the most important trading quarter for any retail business, made even more challenging by the various issues we are experiencing currently.”

“We’re also known for making instant decisions. I think that’s the beauty of a family business: you make a decision today and then implement it tomorrow - we don’t have brick walls to climb over. That makes life easy from a buying perspective because suppliers know they will get an answer there and then. If they’ve got 5,000 pieces in a line, we make them an offer, barter over the phone and then say ‘okay, that’s fine’.”

When it comes to the wellpublicised threat of product shortages due to shipping delays, Alan took a pragmatic approach early on. “We looked at it and we thought, ‘do you know what, the suppliers are in the same boat here' (pardon the pun). They are going to struggle to get stock in. So, when everyone catches on that there are going to be issues, they are going to be piling orders. Some retailers won’t be able to afford to do that because they are working to very tight cashflows. We don’t have that problem: we are well funded, so we don’t need to number crunch through balance sheets. Therefore, we were able to say: let’s bind ourselves in now, while it’s available, and then we’ve got it to eek through to all stores.

What’s the most rewarding part of your job?

“We have more than 200 employees in our stores, and what gets me up in the morning is the fact that those guys are relying on me to make decisions to keep the business buoyant and flourishing the way it is. So, they know that at the end of each month, their wages will go in the bank, and they won’t have issues with bills. That, for anyone, would be a nightmare scenario.

That’s what keeps me involved in the business. I’m at a stage where I literally could walk away and have a very nice lifestyle. But this is a family business, and we treat employees as if they are family. We care about them. They’re not just numbers, they’re people. And they are people who have worries - and one of those is the fact that we’ve seen so many retailers hit the wall over the past year. They rely on me to make the hard decisions when I need to.”

What’s the most challenging part of your job?

“Being based in Northern Ireland, the challenges that we’re facing at the minute with Brexit are mega. We’ve had numerous bookings delayed because of all the paperwork involved. This is an ongoing major frustration. With Brexit we were promised heaven and, in my view, we have been delivered hell.

But in my four decades of toy trading, this is the most challenging time, without a doubt. The financial crisis [of 2008] was one thing, but I think that for businesses, it made everyone tighten their belts and focus on their figures and the majority got through it.

But [the current situation] is something that is totally out of our control. We need goods. Most goods come from the Far East and the shipping lines are holding everyone to ransom. And that’s not just toys, that’s right across the whole spectrum of the supply line. It’s bad enough that raw material, packaging and labour costs are going up, but to have that all minimalised by the freight rates… it’s just unmanageable.

“And then there’s the uncertainty: you can manage what you can predict, and you fear for the worst and hope for the best. But this is something you can’t actually bypass. You cannot get product from the Far East into the UK other than by ship (unless you pay a fortune and charter a plane). And I think that when the price rises start filtering through to the shelves, that’s when people will really baulk.”

■ LEGO ■ Mattel ■ Character Options ■ Spin Master ■ Hasbro

SMF Toytown opened a 3,000sq ft branch in Scotland’s The Gyle Shopping Centre in June. Located in the south Gyle area of Edinburgh, the 9,290sq m centre has two anchor tenants: Marks & Spencer and Morrisons.

In May, Merry Hill welcomed SMF Toytown’s biggest UK store (8,000sq ft), which has a dedicated Babyworld nursery department. The 155,200sq m shopping centre in Brierley Hill near Dudley has 250-plus shops.

“In June we knew price rises were in the pipeline. We knew the issues and we knew that would impact on the large suppliers. So at that stage we then set in motion ‘let’s buy in pre-price increase as much as we can actually get’. We bought domestically too, and filled our boots where we could.”

So what product categories are performing well? “The majority of our stores now have dedicated sections for fidget toys because that’s where demand is at the minute,” he says. “It’s all low-price items - there’s nothing that’s mega bucks - but it’s good repeat business. What we’ve noticed since reopening after lockdown is that there are not as many highticket sales. People are being cautious, but they also see the need to give their children play value without breaking the bank to do it.”

But Barbie and LEGO are selling strongly too, along with games & puzzles. “I think before the pandemic struck, a lot of parents didn’t have enough time to play with their children. Now they have been given that time and have enjoyed playing family fun games and doing jigsaws and crafts,” Alan notes. “It’s a whole new world and people have learned that there’s more to life than just solid work 24/7. They are making time to do stuff. They’ve realised how much they’ve enjoyed playing with toys and that in turn gives them a feelgood factor.

“Many parents think back to what they

enjoyed as a child - like Scalextric, train sets and LEGO, which they can now build together with their kids. People are able to relive their SMF Toytown is “ childhoods. I think those who have been doing that with children over the past months will now think a lot more built on about what their child will enjoy. And bricks-and- that will change their buying habits mortar retailing ” come Christmas time.” With the festive season on the horizon, Alan is positive. “We’re pleased with the level of business we’ve had across the board,” he says. “Figures are well above our expectations - whether that’s a sign that people are starting to shop earlier for Christmas, who knows? But I’ve been delighted with the numbers since reopening. Long may it continue!”