Christmas in July

by David Norman | 16 Jun 2021

Industry Commentary, Op-Ed

I'm sitting in my xxth meeting with toy industry people talking about cost increases driven both by cost of goods and logistics. Most if not all suppliers have notified their retailers that prices are either increased or going to increase. At the same time, my company has over 100 containers filled with product, and we are struggling to find containerships to transport them despite agreements we have made in advance to mitigate this problem. We aren't alone in having this problem as every manufacturer I know seems to be in the same boat (or lack thereof ba dum tss). All of this is going to lead to inflation and product shortages at least by the fourth quarter. So my advice to consumers is to buy toys for Christmas now. Product is pretty readily available now and will likely be much more expensive and hard to find during the Holiday season.

So the bigger question is what happens to those of us in the toy industry this holiday season? There will definitely be product shortages and higher prices. I believe many toy manufacturers will feel the squeeze this season as we are paying more in operation expenses and are not being able to fully pass on the price increases to retailers. The price increases passed to retailers for toys and other products will be in turn passed to consumers and this will cause significant inflation. At some point this inflation will decrease consumer demand. Over a period of 6-12 months our logistics problems will reduce and we will be more or less back to normal with some ripple effects. Will this happen 6 months or 12 months -- that is the big question and I wish I had a crystal ball to figure it out.

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