12 March 2018
New York Toy Show Remains Buoyant Despite Toys R Us Gloom
The last show of the 2018 Toy Fair Season, the New York Toy Fair proved surprisingly upbeat given the uncertainty facing US manufacturers as the fate of Toys R Us – the country's largest toys and games retailer – remains unclear.
In early January, the HKTDC Hong Kong Toys & Games Fair marked the beginning of the 2018 Toy Fair Season. Now, with two further shows in London and Nuremberg finished for the year and with some 20,000 miles on the clock, the last leg of this annual odyssey looms into view, as weary toy execs delete their anti-Trump tweets and head off for the New York Toy Fair.
It's an event with a long and chequered history and one that has weathered many changes over the years. Arguably, its heyday was back in the eighties and nineties, a time when US companies clearly ruled the global toy market. Back then, hundreds of suppliers took to occupying the showrooms of two permanent buildings (200 5th Avenue and 1107 Broadway), while the smaller companies took stands at the Javits Center, the home of the show to this day.
In those days, toy ranges traditionally hit US shelves at least a year ahead of their European and Asian launches. By and large, this was seen as a positive state of play as it allowed American companies to gauge the potential success of their latest products and then tailor production capacity accordingly.
Should a range prove hugely popular in the States, there was then time to gear up to meet the likely global demand the following year. Conversely, should a product take an instant nosedive States-side, the outstanding stock could be diverted to the hopefully less particular international markets.
While this approach served the US toy companies well for many years, eventually its flaws began to become more than apparent. For one thing, international buyers would visit New York and head straight to the closeout aisles of the local toy stores. If they found new ranges being marked down, they would either avoid buying them altogether or head directly to clearance companies to see if stock could be picked up cheaply. It's fair to say that this didn't go down at all well with the US toy companies.
In addition, if a range was proving to be successful, the 12-month shipping delay with regard to the global markets was a godsend for grey-market importers and exporters. Again, the US toy companies were somewhat dis-chuffed at this particular outcome.
Realising the disadvantages of the staggered launch strategy in the-rapidly developing global retail market, US toy companies inevitably began to adopt a simultaneous global launch approach. As a consequence – and bearing in mind the Toy Season schedule – this made the New York show the last opportunity to see a product rather than the first. Over time, this change of strategy on the part of US toy companies saw the New York Toy Fair switch from being a truly international event to a predominantly domestic showcase. Nevertheless, the expo still seems to be thriving.
This year marked the 115th iteration of the event and saw it occupying 41,000 sq m of floor space. In total, it attracted 1,049 exhibitors, ranging from established companies to first-timers, with the latter always injecting fresh energy and a real passion to proceedings.
In all, 14,090 people visited the show, including more than 11,000 'trade guests' – classified as retailers, wholesalers, entertainment executives, importers and buying groups. The show also attracted 3,802 international visitors, with the top five countries / territories represented (not including the US and Canada) consisting of China, the United Kingdom, Hong Kong, Mexico and Japan.
Undoubtedly, the show remains an effective route into the US toy market. Valued at some US$27 billion, it remains the world's largest, although China is tipped to overtake it at some point not too far down the road.
Regardless of that, attendance is pretty much obligatory for the majority of the world's leading toy suppliers and retailers, not least because the US toy industry is widely seen to be on the rise again. This has seen its long-established giants – the likes of Hasbro and Mattel – increasingly being challenged by a new generation of highly innovative manufacturers, including Spin Master, MGA, WowWee, Wicked Cool, Basic Fun and Play Monster. With all of these companies exhibiting under one roof, this offers a unique and truly comprehensive insight into the state of play of the US toy market.
Unlike other global toy shows, a significant proportion of visitors to the New York Toy Fair come from outside the traditional toy industry's retail and supplier base, with many attendees actually representing national media outlets or financial analysts. Indeed, it is the weighty attendance from these particular sectors that ultimately keeps the show anchored in New York.
Given the propensity for the city – and thus the show – to suffer from February's traditionally adverse weather conditions, there have been suggestions that the event could relocate to the sunnier climes of Florida or California. While such a switch would not impact on retail attendance, it would certainly preclude many media representatives and analysts from visiting. Inevitably, then, the show will remain in New York for well into the foreseeable future.
Overall, the American toy market grew by a modest 1% in 2017. Given the global retail headwinds and the performance of the toy sector in many of the other mature markets, this was seen as a largely respectable performance. In terms of major developments, Amazon continued to exert considerable pressure on the US bricks and mortar retail channels and, with the stellar growth of online sales clearly a contributory factor, Toys R Us filed for bankruptcy protection in the autumn.
To date, the future of America's largest specialist toy retailer remains unclear. It is, however, known that 200 of its stores have been earmarked for closure, while a further 200 are rumoured to be at risk after poor Christmas trading. There are even rumours that Toys R Us' future may lie solely in the online realm, although that will presumably be a last resort for its owners.
Whatever happens, the fate of Toys R Us will have a huge impact on the US toy market in 2018 and well beyond. Unlike the UK, where Toys R Us has specialist competition in the form of Smyths and The Entertainer, the US market is devoid of any national retail specialist set to benefit from the current situation.
At present, there remains a concern that the disappearance of Toys R Us could result in American suppliers being forced to severely curtail any planned expansion of their ranges. With major retailers, such as Wal-Mart and Target, stocking significantly fewer SKUs, a cutback of up to 30% of the products under development has been predicted should Toys R Us fail to survive. In particular, the retailer's demise would adversely affect the small and medium-sized toy suppliers, many of which rely on Toys R Us for distribution.
To say the retailer is an integral part of the US toy industry ecosystem would actually be something of an understatement. With 80% of the US Toy Industry Association's 1,100 members turning over less than $5 million, you can see why it is keen to talk up Toys R Us' hopes of survival.
In light of all that, it may come as something of a surprise that there was a real buzz around this year's show, one that actually overrode any on-going negativity surrounding Toys R Us' tribulations. Nowhere was this more evident than at the Toys of the Year Awards ceremony, a glamorous upscale event attended by 700 people. Interestingly, the overall Toy of the Year award was shared for the first time, with the joint recipients – WowWee's Fingerlings and MGA's LOL Surprise – both worthy winners.
In some ways, it is easy to see why it was hard to choose between the two – LOL won the US sales battle in 2017, while Fingerlings arguably triumphed in the media arena. Predictably both ranges have been widely copied, with counterfeit products flooding the global market in the second half of last year, a problem that remains a key focus for the US Toy Industry Association.
With the 2018 Toy Fair Season finally done and dusted, toy retailers will now be finalising their line-ups for the festive season. They will be mindful of the huge changes that are impacting consumer behaviour and the retail channel across the world, but they will also be keeping a very close eye on Toys R Us. If the chain fails to survive in anything like its current format, the additional turnover up for grabs could offer a valuable lifeline to thousands of other retail operations.
In many respects, 2017 was a watershed year for the global toy market, but 2018 may yet be even more tumultuous.
The New York International Toy Fair 2018 took place from 17-20 February at the Jacob K Javits Convention Center.
John Baulch is the Publisher of Toy World, the UK's leading toys and games trade publication.
His review of the previous three events in the 2018 Toy Show Season can be accessed by clicking the links below:
Toy Fair Season 2018 Kicks Off in Style at the Hong Kong Toy Expo, 29 January 2018
Licensed Toys Flounder in the UK Market, but Innovation Saves the Day, 6 February 2018
Retail Attendees Soar at German Toy Show While Distributors Dwindle, 20 February 2018