Tariffs, other unknowns keep the toy industry on edge

Bouncing back from the Toys R Us crash and fire last year, toy sales in the United States have increased slightly this year. But a host of challenges, driven by tariff threats, continue to disrupt executive suites.

Sales in the first six months of the year fell 9% from the same period in 2018, when thrifty parents stocked up toy chests with bargain-priced products from the Toys R store closures. Us, reports market research firm The NPD Group. But third-quarter sales edged up 3% to $ 3.69 billion.

NPD is forecasting modest but steady growth for the still-critical fourth quarter when an unusually truncated shopping season – Thanksgiving is five days later this year than last year – is expected to give besieged physical stores a boost.

“The sales trends for the first half of 2019 have been skewed due to comparisons with the first half of 2018, when Toys R Us liquidation sales helped increase the growth of the toy industry,” said Juli Lennett, vice president and industry advisor, toys, to the Port Washington, NY-based NPD. “Although sales fell 9 percent in the first half of this year, gains in the second half will offset almost all of those losses.”

“If I had to make a prediction, Target, Walmart and Amazon [are] is going to have a fantastic year, while Penneys, Macy’s and Kohl’s will struggle, “said Richard Gottlieb, longtime industry observer, of Global Toy Experts in New York.

The fourth quarter is the most important in the industry, but the outlook after that is the most volatile in years.

“Reading tea leaves is difficult,” Gottlieb said.

The No. 1 concern is the continuation of the Sino-US trade war. Despite ardent lobbying from the New York-based Toy Association and toy companies large and small, the Trump administration remains on the verge of imposing a 15% tariff on December 15 on toys made in China.

Currently, there are no tariffs on Chinese toys.

“[T]he proposed tariffs on imports of toys from China will devastate the toy industry and undoubtedly lead to higher consumer prices, ”wrote Toy Association President and CEO Steve Pasierb , to U.S. Trade Representative Robert Lighthizer, in June.

Other key issues cited by Gottlieb include industry players still grappling with the Toys R Us shutdown, an increase in counterfeit products, and accelerating growth in online sales.

The decades-long shift from physical to online stores continued this year, spurred on by millennials – the young adults who now sell toys for their own children – for whom convenience is essential. as crucial as the low price.

“It’s a generation that can’t stand wasting time. They don’t like going to the stores to find out something is out of stock,” Gottlieb said. Plastics news.

At the macro level, the possible effects of impeachment and Brexit are far from clear.

In Hong Kong, continued unrest could stifle attendance at next month’s Toys & Games Show, one of the world’s largest toy fairs. The show’s sponsor, the Hong Kong Trade Development Council, announced “improved transportation and customer support services” for suspicious buyers.

Technically, the latest updates to ASTM-F963, the voluntary standards for toy safety, are expected to be voted on by members in early 2020. These changes will cover phthalates – an additive that makes plastics more soft – and toys that expand when placed in water, said West Conshohocken, Pa., ASTM spokesperson Nathan Osburn.

ASTM-F963 was last updated in 2017.

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