Can’t call the year? Don’t sweat it. No one can. tBR Columnist Tim Kilpin Comments

by Tim Kilpin | 11 Aug 2021

The Bloom Report

Q: Can’t call the year? Don’t sweat it. No one can.

If you perused the recent public companies’ headlines, you would have read superlatives straight out of a comic book: Crushed! Spiked! Soared! These were the words click-bait-minded journalists used to describe these companies’ second quarter earnings results. And to be fair, the outcomes were, well, stellar. Any time a company in our normally slow-growth industry puts up +40% quarters, it’s newsworthy. Of course, the fact that these companies were lapping the most tumultuous quarter in modern times (lockdown, anyone?) has to be accounted for – but still, the results were impressive. Historic. Legendary. (Easy to get carried away, isn’t it?).

And, as we face the rest of the year, none of it means anything. Surely, we can assume that consumer demand for iconic, multi-generational brands like Barbie and Play-Doh will continue to grow. Well, we can assume that, but we should probably check those +40% expectations at the door. 

I’ve had the opportunity to talk to a few dozen colleagues from around the industry – business leaders, consultants, researchers, analysts – over the past few weeks about what the months ahead hold for the toy industry. And the only consensus is…that there’s no consensus. Mid-single digit growth? Maybe. Flat? Perhaps. Down single digits? Possibly. Taken abstractly, that range of potential outcomes doesn’t sound crazy. But with U.S. toy retail sales well over $30 billion, that kind of swing represents billions of dollars gained or lost.

Why? Pick your poison. Let’s start with shipping delays and supply chain constraints. You all may be exhausted from dealing with these issues (I know I am), but I can pretty much guarantee you that, for most consumers, the idea that toys may be hard to find this holiday season hasn’t even crossed their minds yet. Walk the early planogram sets at your favorite discounter and tally up the gaps. There will be shortages. And typhoon season in Asia has only just begun!

Or maybe the swings in consumer spending? Are families shelling out more for vacations and experiences? Yep….well, until a new and dangerous variant of Covid-19 began spreading at a faster rate than the earlier strains. Concerts on or off? Masks on or off? Schools open or closed? I feel like I need an hourly headline tracker just to keep up. (Wait. I have one of those. It’s a phone.)

And what used to be the closest thing to a sure bet in our industry – big-budget blockbuster movies backed with beaucoup merchandise – are shakier than ever given the ‘shrug your shoulders and try it’ release approach that most studios have been forced to take. Black Widow? Space Jam? F9? Great-looking products.  Are they flying? 

Meanwhile, Squishmallows explodes, Cocomelon marches on, and a new Roblox game crashes the top tier of hot new products. (Anyone who had PIGGY on their ‘big breakthrough’ bingo card at the start of the year, call me.)

So if you are scratching your head over how to call your forecast, join the club. Our industry has never been particularly predictable. And frankly, I find it charming. (Well, usually.) Every year, something we all were sure would work hits a wall. And something magical and marvelous surprises to the upside. 

Give yourself a break this year. Do your best to call it, watch your inventory, chase where you can, and tell the clown pitching a $35K container to step off. Gotta draw the line somewhere.

Tim Kilpin commentary toy industry the bloom report trends state of industry containers consumer spending

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