John Baulch The Friday Blog: Wreaking Havoc

As the toy community hunkers down to plough through all the follow up proposals from the London & Nuremberg Toy Fairs, there is still plenty going on in the background which will have major repercussions for toy companies, retailers and consumers.

I touched on some of the current retail turbulence in last week’s Blog, and there are a couple of updates to share. After going into administration, The Original Factory Shop has apparently already made a third of its head office staff redundant, including the toy team. I hope they manage to find new opportunities soon. I also mentioned that Game was reported to be having some difficulties: I have now seen an email from The Frasers Group confirming that it is the four remaining standalone stores which are actually going into administration. The concession stores and websites are said to be operating as usual, and the email confirms that suppliers will continue to be paid. Accounts are in the process of being transferred over to Sports Direct, so if you like to buy your collectibles at the same time as stocking up on sports socks and giant mugs, you’ll be relieved to know it’s business as usual.

The Toy Book has also reported that Toys R Us Canada has entered creditor protection under Canada’s Companies’ Creditors Arrangement Act, a restructuring process broadly similar to Chapter 11 bankruptcy in the US. The move gives the retailer short-term legal protection from creditors while it evaluates strategic options and begins a financial and operational restructuring. Watch this space for further news of what exactly that might entail in practice – at very least, it’s likely to mean a reduction in the number of stores. Let’s hope that the business continues to trade in some capacity.

There have been a couple of other ominous developments which I didn’t mention last week, including Amazon announcing a further 16,000 job losses – by accident! It has been reported that employees found out after they received a calendar invite with an attachment which contained Amazon’s ‘secret plan’ to fire people in the US, Canada, and Costa Rica. Just to make those people feel even better, Amazon said that the layoffs would “strengthen the company.” Good to see Amazon maintaining its people first approach.

I also heard at Toy Fair that JD Williams would be cutting its toy category from this month – a move which will undoubtedly disappoint quite a few toy suppliers, but which offers an opportunity for retail competitors to grab some new customers and incremental business. Every cloud and all that…

Perhaps the biggest toy retail news of the week came from Italy, where it was announced that the Hamleys stores in Milan, Bergamo and Rome had been closed just two years after they were opened in partnership with local toy giant Giochi Preziosi. The announcement was made last weekend and the implementation was swift: within 48 hours, all the stores had closed, with “temporary economic and financial difficulties” cited as the reason. Retail can be brutal at times – so much havoc and it’s only February.

However, alongside these disappointing retail developments, there have been some more positive announcements this week.

Read the rest here.