Industry Outlook

Seizing Opportunities, and Tackling Challenges

By Steve Pasierb, President of The Toy Association

The United States toy market is demonstrating signs of recovery since the U.S. operations for Toys “R” Us (TRU) surprised the community by quickly shifting from bankruptcy to liquidation. Mid-year toy sales grew an impressive 7 percent—and the loss of TRU played a role according to The NPD Group, which attributed positive sales in part to an emotional response to TRU’s closing and a heightened awareness about toys in general. Strong super category performance and licensing strength further buoyed the first-half results. In all, welcome news considering the challenges toy companies have faced, including an evolving retail landscape, multichannel shopping, and shifting consumer preferences.

With the holidays just around the corner, I’m feeling optimistic. We know from this past New York Toy Fair and earlier in previews in Dallas that talented professionals who design and manufacture toys have great products ready for holiday 2018. On the retail side, majors and mid-mass have been mobilizing to win share that’s up for grabs. Meanwhile, parents and gift-givers are finding more and more reasons to shop their local toy stores, where they’re able to find thoughtfully curated selections and attentive service from passionate owners and staff. The holidays are also certain to continue the growth trajectory of e-commerce. Rest assured, American families and kids will always find and buy toys.

Right now, retail buyers from around the globe are at The Toy Association’s Fall Toy Preview (October 2–4) in Dallas, TX. The energy and creativity at the show bodes well for 2019. In many cases, buyer input is helping to shape the toys of tomorrow. Dallas also serves the role of placing orders for Q4 sales. Fall Toy Preview continues to be a crucial marketplace for small- and mid-sized toy companies, who count on the show to meet with as many buyers as possible in a condensed amount of time. In past years, myriad unique concepts made their first appearance in Dallas before going on to become the following year’s most sought-after playthings.

There is much to be encouraged about as this tumultuous year progresses into our most important season, but it’s no time for complacency as new challenges face the toy community. From Danish regulators looking at banning squishy toys to nations using regulations as a barrier to trade, The Toy Association is actively engaged in—and tackling—a host of issues here at home and around the world on behalf of everyone in the community, member or not. Here is an update on our top priorities, among many:

IP Protection and Counterfeit Toys

Concerns about IP infringement and potential risks to toy safety via hundreds of online platforms are real and mounting. We’ve been working with U.S. Customs and Border Protection (CBP), the Consumer Product Safety Commission (CPSC), the Senate Finance Committee staff, and representatives from leading e-commerce platforms, such as Alibaba and Amazon, to raise member concerns and explore solutions, with the shared goal of ensuring that only safe, compliant toys are getting into the hands of children.

In the coming months, we anticipate working more closely with government agencies to help them better identify counterfeit and violative products entering the country. We have offered to create a guide that will help agents spot non-compliant toys and will include top IP violation trends across different toy product categories. In our open and productive conversations with e-commerce platforms, we have stressed the importance of verifying the safety and legitimacy of products offered for sale online. With the help of a range of members, we’ve also authored a white paper intended to detail our industry’s concerns and fuel solutions, not just among the majors who have been listening, but among all e-commerce marketplaces from the smallest to the newest. We have also encouraged the CPSC to create a working group of interested stakeholders. These efforts are continuous, and we will update the toy community on our progress. We advise interested manufacturing members to join The Toy Association’s standing IP Protection Committee.

Trade and Tariffs

As the U.S.-China trade dispute  continues to escalate, and trade tensions with other nations deepen, we’re aggressively fighting the threat of tariffs on toys and other toy-related Chinese imports. As of this writing, the White House’s first and second round of tariffs (at 25 percent), covering $50 billion total in Chinese imports, is in effect. The United States Trade Representative also proposed a third list of $200 billion in Chinese goods for tariffs at a rate of 10 or 25 percent, and there has been talk of yet another $267 billion Chinese imports to be subject to tariffs (or more). If this $267 billion list is proposed, likely all imports from China would be covered.

While we have worked tirelessly to make certain toys are so far not included in these lists, some toy-related products and materials of significance to the toy industry are. We continue to seek impact stories from members and to advocate on behalf of the industry both on our own and as advisory members of the Americans for Free Trade Coalition. The possibility of tariffs represents a threat to the entire U.S. toy industry and we will not relent in your defense.

Helping Members Protect and Promote Their Businesses

This isn’t the first time the toy industry has faced challenges, yet our members continue to prove their agility and resilience in challenging times. From global market expansion and finding new distribution channels, to inventive new properties and partnerships, we see companies leveraging inventiveness and opportunities every day—and thriving.

The Toy Association is also doing its part to provide members with the support, tools, and resources they need so they can focus on growing their businesses. We’re helping companies navigate an age of internet-connected toys and multichannel shopping, executing our world class trade and consumer events, advancing impactful global legislative and regulatory advocacy at every level of government, and leading conversations about the benefits of STEM/STEAM learning through play.

Here at Home and Around The World

Over the past year, The Toy Association’s work has required extensive travel around the globe while we advocated for industry interests in more than 40 countries with a host of regulators, legislatures, government bodies, and organizations such as the World Trade Organization and its Technical Barriers to Trade Committee.

Our team recently presented on toy safety and compliance (along with the CPSC, the European Commission, and the Australian Competition and Consumer Commission) at educational seminars attended by more than 650 representatives from Chinese and Vietnamese manufacturers. We are demonstrating a commitment to increased communication and coordination between our Association, Toy Industries of Europe, and the new Southeast Asia Toy Association, while we directly collaborated on key issues with toy associations in Japan, Canada, India, and several other nations.

These are uncertain times—geopolitically and in the business of toys. The future of product discovery and shopping are evolving, we’re faced with challenges from activist NGO groups, and solutions to counterfeiting/IP protection are needed. Every one of these issues, and the many I’ve not mentioned, proves future demands will be diverse. The trials and tasks are many. And, fortunately, fresh new opportunities will arise. It remains an honor and privilege for our team to help build your business, protect your rights, and advocate for your needs.

For more information about how the Toy Association is working for its members, click here.