Allegedly
Spin Master has announced its intention to acquire Melissa & Doug for a cool $950m. It’s a bold move that will expand Spin Master’s portfolio in what it describes as “the early childhood play arena”. Spin Master has a pretty decent track record with acquisitions, and the agreement is expected to be finalized in the first quarter of 2024. Until then, the two companies will continue to operate separately, although whether that will still be the case once the deal is signed and sealed remains to be seen. In addition to bolstering the company’s pre-school line, my good US retail friend Rick Derr pointed out that the acquisition should also strengthen Spin Master’s business with the independent channel and Amazon even further. And after his impromptu performance at the TOTY awards, I am awaiting Spin Master co-founder Ronnen Harary’s musical interpretation of the news any day… There has been a ‘conscious uncoupling’ between SuperAwesome and its previous owner Epic Games. Although this will sadly result in some good people losing their jobs, I definitely see an upside for the toy community: essentially, SuperAwesome will be returning to its roots, becoming independent once again and doubling down on its core under 18s business. To my mind, having SuperAwesome fully focused on kids as an independent business is good news for everyone… Looking at many of the retail top toys lists released so far, there seems to be a higher percentage of own-brand lines and exclusives than ever before. This approach make even more sense if you read Midco Toys’ owner Dave Middleton’s recent LinkedIn post, in which he bemoans the aggressive pricecutting activity of the grocers and other large retailers, which traditionally kicks off in October and is largely focused on high profile, higher priced lines. As Dave says: “We get told by suppliers to build stocks as supply will be short, and the next thing you know many of the products we have stockpiled are £10-15 cheaper in the supermarkets in their big toy events.” I am not sure this is an easy dilemma to resolve – it happens every year, so there must be some economic viability in the sales volumes driven by this activity. But does it ultimately discourage the indies (not to mention many other retailers) from chasing sales of hot toys in the £30+ category? I wish there was a simple solution that would work for everyone, but I’m not sure there is – although I doubt I would be pushing the lines that are going to be price cut to other retail channels (unless, of course, toy companies have literally no idea which products will be affected). It also explains why some toy companies secretly breathe a sigh of relief if they don’t make the top toy lists, as these are often the lines that cost-cutting activity is built around… Lego has also been making headlines recently, after announcing it would be scrapping plans to make its bricks from recycled bottles. Some media outlets interpreted this as “a blow” to the company’s ambitious sustainability goals, but I just think that is incredibly lazy journalism. Based on my understanding, this is 100% the correct decision and
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in no way should be interpreted as Lego rowing back on its commitments…quite the opposite in fact. Having established after two full years of testing that this approach doesn’t actually reduce carbon emissions, going ahead with it would simply have been greenwashing – and Lego is far better than that. I think we will see quite a few companies pivoting on their approach to sustainability, as more information becomes available and, crucially, new technologies and options become viable. I have spoken to many toy companies about sustainability, and there is absolutely no question that the collective will is there to meet the challenges head on – but it has to be done in the right way, and not impact the quality and integrity of the product. Make no mistake, Lego will get there – but it won’t cut corners or compromise its impeccable quality in the process. The quote from chief executive Niels Christiansen to the FT says it all: “There is no magic material.” Quite… It’s encouraging to see the UK’s leading specialist toy retailers thriving, as is evidenced by the financial results recently released by The Entertainer and Smyths. The Entertainer made a £7m profit and increased sales by 1% last year, which strikes me as a thoroughly respectable performance in what was certainly not a ‘business as usual’ year. The numbers compare favourably with the pre-pandemic results from 2020, even allowing for the far higher energy costs, increases in the minimum wage (+20% versus 2020) and the expansion of the senior leadership team over the past year. Meanwhile Smyths’ hugely impressive financial numbers saw its turnover exceed 1b Euros for the first time in a "record sales year" for the retailer, as revenue surged by 16% … Disappointed though I was to miss the Play for Change award ceremony after contracting Covid last month, I am delighted that the event went well and hearty congratulations to all the winners. When Mattel’s Sanjay Luthra first came up with the idea of a set of industry awards predicated not on sales, but on rewarding companies that were driving change in the toy industry, I knew he was on to something. I notice that some other global toy awards have now integrated similar ideas into their own categories, which is usually a sign that someone is on the right track… In addition to the Play for Change awards, TIE has also been working tirelessly with the EU to put forward the toy community’s perspective as the EU Commission considers revisions to the Toy Safety Directive. For anyone in the global toy community who sells toys to EU countries, it is worth reading the interview with Catherine Reeth and Sanjay on the Toy World website to get some insight into some of the potential challenges ahead. Decisions have yet to be locked down, meaning companies will probably have at least four years to comply. Nevertheless, if the EU pushes ahead with a proposed ban on a wide range of chemicals, the implications for the toy market – and especially smaller players – could be significant. Definitely a situation to keep an eye on.
