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Hong Kong: Day 3
January 6, 2008
I would describe the mood of the toy industry here as somewhat somber. If I were to put it in the form of an equation it would look like this: serious + uncertain = somber.
The key to the formula is, I believe, the uncertainty, and the biggest uncertainty I see is this:
The toy industry is driven by two economies. On the supply side our pricing is pushed by an inflationary Chinese economy. On the demand side, we are pulled by a potentially deflationary U.S. economy. Obviously, that is not a great combination. Rising prices against decreasing demand is by no means a formula for success. Right now we are at the mercy of some economic forces we do not control.
What we can control is safety and people I am talking with are telling me that retailers in meetings here are challenging suppliers on safety and asking tough questions. I am told that in the past that a factory could say that retailer X had already tested the product and that was good enough for retailer Y. Now, individual retailers are insisting on doing their own testing.
More later.
Posted by Richard Gottlieb on January 6, 2008 | Comments (0)
