Is it time to panic yet? I’m still saying no, although I am crossing every part of my body that is crossable when I say that. Unfortunately, it does seem that the November numbers have followed the pattern set in October – the UK toy market is not hitting last year’s figures, and that seems to be pretty much the case across the board, with a few notable exceptions.
I wrote a Blog this time last year when I said it was important for marketing people and retailers not to beat themselves up over what was – or more importantly, what wasn’t – happening in the market. At the time, I got a lot of feedback about those comments: from marketeers who were stressing out that they hadn’t got their strategy right, to managing directors who could sense the disappointment pervading their teams and knew it wasn’t their fault.
Once again, I believe that many of the retail challenges are at a macro-economic level, and not specific to individual markets – so scapegoating and the blame game will hopefully not get out of hand, when the issues are largely the result of factors outside of everyone’s control. Apart from food and drink and other essentials, discretionary spending remains fragile. The election sadly hasn’t done much to change the cautious consumer mindset or make them feel any more affluent – and the increases in tax and energy prices certainly aren’t helping many peoples’ bank balances.
However, all is not lost. This weekend will see Black Friday events finally come to a head, after what seems like an eternity – and people will have just been paid. Then many will be paid again in three weeks’ time (let’s put aside how long it will be until January payday for another time…). I still believe December will be big – although whether it will be big enough to make up for October and November is another matter entirely.
I also received a lot of positive feedback to last week’s Blog, and in particular the comments on price cutting – one person sent me a message within minutes of it going live, saying: “Today’s Blog should be framed. Every retailer needs to read it, and then read it again.” I am not sure we can make it mandatory, but I do feel that someone has to say these things out loud… and it may as well be me. Another person highlighted the frustration that many suppliers are feeling: “We get so excited about launching new brands, just to see them butchered at launch.”
Unfortunately, there has been more butchering this week – although I had a very interesting conversation with Circana’s Melissa Symonds at a meeting with the Nuremberg Toy Fair organisers a few days ago. Looking at their data, Melissa is struggling to see a correlation between the depth of discounting and the rate of increases in sales. According to the numbers, a 50% reduction generally drives no greater sales uplift than a 10% reduction – the fact that some sort of deal is being offered does move the dial, but apparently much larger reductions don’t necessarily move the dial that much further. Food for thought as we enter what could be a brutal couple of weeks from a discounting perspective…
Read the rest here.