TFE/TFE Licensing, February 2022

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Toys in the Time of Coronavirus by Nick Truss Despite best hopes and safety measures implemented the world over, the pandemic continued to cast its shadow across global supply infrastructures, leaving suppliers and retailers alike in the dark for yet another year. Holiday 2021 was impacted heavily by continued supply line woes, delaying critical retail products for many companies. Consequently, holiday products will be arriving on shelves in Q1 of 2022, necessitating possible shifts in marketing and sales strategy. We reached out to several key toy executives across the industry for insight on this consequence, and more. Andy Yanofsky, COO of WowWee says “From a sales perspective, Xmas in January will be a rallying cry for retailers and toy companies alike as they try to capitalize on pent up demand due to inventory shortages in Q4. Carry-forward items at brick and mortar will be well positioned to deal with price compression whereas non carry-forward items could be subject to liquidation strategies with Fall shipments still inbound. From a marketing perspective, I think toy companies will find themselves in the market for ads/media without pause from Xmas as is usually the case.” Andy Keimach, President at VTech Electronics, takes a glasshalf-full mentality, remarking, “We know the holidays are the most popular season for gifting, but people celebrate children’s birthdays year-round, and look for gift-giving opportunities throughout the year. We are partnering with our retailers to help move inventory and look forward to a strong first half of the year as we lean into more non-traditional holidays and gifting occasions. Customers will be able to find popular, award-winning toys on shelves as they search for the perfect gift.”

Sharon John, CEO and President of Build-A-Bear reflected on the unfortunate side effects of product delays, saying, “Some will be seasonally irrelevant, therefore that may cause certain manufacturers and/or retailers to pack-and-hold which will tie up cash for a year until the next holiday season. Another possible outcome could cause a glut of toy availability in the first half that may create downward retail pricing pressures due to supply and demand reaction. Unfortunately, many of the manufacturers and/or retailers may have already over-paid for the product when adding in the increased manufacturing and shipping costs, so it would add insult to injury to have to lower prices.” Some companies found themselves fortunately well prepared ahead of time, due to their vast, cultivated, and interconnected networks. Max Rangel, CEO and Global President at Spin Master commented, “Our supply chain and commercial organizations were very successful in working through global supply chain disruptions with our retail partners to ensure we delivered our goods to stores and digital shelves. We pulled forward finished goods production to increase capacity, and we invested in more tooling to dual source manufacturing of certain product lines. We leveraged our diversified third-party manufacturing footprint across China, Vietnam, India and Mexico to optimize availability, and we worked with our logistics providers to secure access to additional ports and shipping lanes. We think that because of these efforts our risk is manageable.”

Ultimately, consumers are likely to see some positive side effects as products hit shelves early this year. Laura Zebersky, President of Jazwares postulates, “The impact I expect in the first half of the year Isaac Larian, CEO of MGA Entertainment adds, “The demand for is that we will start to see better in-stocks innovative toys is very strong. MGA is fortunate to have many innovations. But, I believe there will be a glut of consumer goods hitting the at all retailers; a more robust retail promofirst half of the year that will clog the shelves for the first half of the tional cycle, and manufacturers being able year.” to offer discounts around Easter in mid-April.”

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