It’s reassuring to know that at least one of the buying groups is in good health.
While it coped with the loss of its two biggest members in recent years and weathered what managing director Roger Dyson described as its ‘doomsday scenario’, Toymaster still felt the need to call its first ever suppliers meeting and reassure the trade that it is still fighting fit.
And it is. Despite the doom and gloom surrounding the independent sector and, indeed, retail in general. The cash position has improved and it is on good terms with its bank, with good working capital and a solid bad debt reserve. Any profit it makes is poured into that debt reserve and used to the benefit of members.
Dyson eloquently explained to a room full of suppliers that Toymaster was all about its members.
He told the meeting: “Toymaster’s mission is to help our members trade more profitably and we do that by providing excellent service to our suppliers. From the number of people we have here it is clear that you do care about the independent sector.”
The group took a huge hit when its two biggest members, Greens and Toymaster Kingdom went down, but guarantees against those businesses and its bad debt reserve helped it ride out the storm.
“The whole balance sheet is essentially our bad debt reserve. There are no dividends, some money spent on brand enhancement. But we don’t want to show profit that hasn’t been allocated to something else. When we take a loss we take it out of the bad debt reserve.”
For Toymaster, the loss of those two independent chains was as bad as it gets and it did a fantastic job of keeping its credit insurers and banks onside while it chased the debts. Ironically, it could be that the way in which it handled such a double-whammy and still came out of it OK, will stand it in good stead at a time when financial institutions are extremely nervous about the High Street.
“We kept the banks and credit insurers onside and worked closely with KPMG. We try to be as transparent as we possibly can and we managed it with the help of suppliers and members.
“The difficulty wasn’t caused by not being able to get the money back, it’s the time it takes to get the money back. With the exception of Greens, we’ve always paid on time, we have retention of title on stock so if a member gets into trouble we can sell the stock.”
And of course, he points out one crucial difference between Toymaster and Youngsters. Toymaster doesn’t own any stores.
“Everything is bought for the members. There’s no stock risk.”
And Dyson is optimistic that the independent sector still has plenty to offer suppliers despite the dominance of major accounts.
“Independents offer year-round toy sales and an extended range. It’s a fallacy that most independents hold around 5,000 SKUs. 40,000 would probably be nearer. We also offer niche opportunities and we don’t do own label product. We’ve no intention of doing that, we are about selling suppliers’ branded products.”
This year’s show, which Dyson calls “the best advertisement I’ve ever seen for Toymaster”, promises to be one of the most important Toymaster shows for some time. Not only is it the 25th such event, but it is also the first time it has been opened to non-members.
And by the time the show opens there will have a been an influx of new members jumping ship from Youngsters, which presents its own challenges for the group.
“The biggest challenge for us is the influx of new members. We’re quite able to handle new members but there is a procedure and we will have to take a few shortcuts with that. We never normally have people join unless we have visited their store.”
So, although the vetting procedure will be quickened up a little, there will be no place for those stores with a poor payment record or those which are considered a credit risk.
And Dyson is again quick to point out that Youngsters’ demise was nothing to do with the quality of its stores but the £3m of stock in its warehouse.
“Stock in warehouses is a disaster for everybody,” he says.
Toy retail’s biggest shake-up for some time will mean a larger Toymaster group with bigger clout and that can only be a good thing for the independent sector.
“Toymaster will prevail to the benefit of Toymaster and the independent sector and the suppliers,” concludes Dyson.
And perhaps the most encouraging aspect of it all is the amount of suppliers that turned up to the meeting. Who said the independent sector was on its way out?