Letter from America - Rick Derr

Facing challenges head on

After 20 years working at A.C. Nielsen/D&B Research Company, Rick opened the first Learning Express Toys franchise in the Chicago area in 1996, and then became a sub-franchiser. Although leaving the corporate environment behind, he has combined his expertise in data and numbers with a passion for the toy retail space. This month, Rick encourages everyone to remain positive in the face of aversity.

Where do I start? A few things have happened since I wrote my last column. The toy industry is resilient and, as ever, we will get through the challenges we face, but at what cost? That to me is the real question here in the States. Because the small to mid-tier toy companies are right in the bullseye of the tariff’s implementation. Their pain is real; let me highlight a few of those affected; some you will know, but others operate mainly here in the US:

•  Learning Resources/Educational Insights

•  Mavi Bandz

•  Top Trenz

•  Baby Paper

•  SmartNoggin

•  FoxMind (stopped shipping to US)

•  Djeco (once warehouse in US is empty, they are pausing)

… and the list goes on.

The US consumer is also very much divided politically, and what makes communication so hard right now is that presenting the facts on tariffs is a tough sell. People simply want to jump to a political side rather than listen to the facts - it’s very frustrating.

But let’s back up for a minute and talk about what I had planned to talk about all along- sales in indies for the first four months of 2025 and post Easter holiday. The bottom line is that we are outperforming our forecast with sales up +10% YOY, with April extremely strong in terms of both traffic and sales. The top sellers were Pokémon, Wigglitz (3D printed mini figures), ZipString and assorted plush - a well-balanced mix of items. Up until early May (as I write this article), sales remained solid with no evidence of the US consumer cutting back yet. The tariffs will start to hit us in the summertime, and I expect consumers to see some spikes in pricing by late summer. To date, we have not adjusted retail prices even though some tariffs have come through on invoices.

Our strategy has been to feature a Value section this year, to compete with Amazon online, by highlighting $15 and under products that offer strong value to the customer. We will continue to offer this section as we face higher prices throughout the store, so we can always meet the needs of all our guests, whatever their budget.

I have chosen to view 2025 in three chunks of four months each: January to April, May to August and September to December. The first four months were on target. I see the second trimester also able to stay on track—forecasting 5% growth and not trying to outguess the tariff situation by overloading inventory. We want to stay flexible, nimble and act fast for new opportunities. We placed a few bigger orders for bestsellers - otherwise we continue to buy what we need when we need it. Lastly, we are making a conscious effort to support smaller to mid-tier toy partners who are in the most pain right now.

As I look at the all-important holiday season, I am still optimistic we can grow, and I will find the right toys and stock to fill my store. But if the tariffs do not get resolved, I will forego a printed catalogue for the first time in 30 years. It’s just too risky to bet on items that may or may not come. We have an established digital and a large social media presence that we will utilize instead; I believe it prudent to stay flexible and not alienate customers by showing them items that may not be stocked.

Lastly, despite the bumps in the road, this industry continues to provide me with so much joy, the chance to meet so many people around the world and see new products every day. I will stay optimistic and believe so deeply in play as a core value to good health, that we will find opportunities in this current chaos. I wish you, my friends in the UK and Europe, many new opportunities too.