State of independents

The casualty list for independent toy retail has made for long and uncomfortable reading over the last few weeks, with several well-known names falling into receivership. But is it really a sign of some terminal decline or merely an inevitable conclusion for several troubled businesses? Jon Salisbury asks around?
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“It would be naïve of me or anyone else to suggest that independent retailing has been anything except bloody difficult over the last few years,” Toymaster managing director Roger Dyson tells ToyNews when asked if the many business failures in the sector this year signalled its death knell.

Far from it, he says: “In the words of Mark Twain, reports of the death of independent toy retail are greatly exaggerated.”

Toyworld, Arbon & Watts, Tots ‘n’ Toys, Rossi’s, Uncle Tom Cobbley and All – 2007 has not been an auspicious year for the indie toy trade so far. But are the screaming headlines of doom and gloom painting an unrepresentative tale?

Dyson picks up the story: “When I joined Toymaster in 1999, my predecessor as MD, Peter Ovall, pulled no punches when he informed me I would be managing a declining business,” but his prediction seemed to be wrong. “As is so often the case in this business, his forecast was way off and Toymaster grew like topsy over the following four years.”

Dyson knew that a correction would follow, although the level of the correction has exceeded most expectations.

“The continued growth of Argos together with the impact of Tesco and Asda increasing their focus on toys, coupled with the growth of internet trading through heavily promoted and branded internet sites such as Amazon and Firebox, has obviously squeezed the independent retail sector.” he points out.

“Add the growth of Smyths and Byrnes Word of Wonder in Ireland and one had a situation where the growth in toy retail space was far greater than the growth of the toy market, a situation where something has to give.”

Despite this, Toymaster still has over 180 members with about 300 stores and is recruiting new members every year, several of which are start-ups. “The challenge for Toymaster, Youngsters and the industry as a whole is to create a trading environment that allows independent toy retailers to thrive, because that will, in the long-term, be best for us all, even our competitors.”

Tomy managing director Robert Mann thinks that, while we have seen some high profile business failures within the independent sector, there are some successes where companies have diversified, become specialists within a sector or have encouraged unique ways to support their consumers.

“In the latter it is evident that those independents that go that extra mile are preparing the ground work for a successful business which they have achieved not only by selling toys but giving extra value such as Party Bag creation, Christmas Clubs, open days/evenings and themed birthday planning. However, I unfortunately don’t believe these successes will overcome the failures we are seeing so the prognosis for a continuing decline in the sector is correct but thankfully not its death.”

Seth Bishop at Re:Creation doesn’t think the independent trade is doomed, but he does think there will be more casualties in the industry. “Take any local retail business and in order to succeed it needs to have the right combination of sustainable turnover, profitability, a strong point of difference in its locality and a manageable situation as far as competition is concerned,” he says.

“Some of these factors independents have the power to influence, some they don’t. I can think of many independents who do have a unique position in their local community and I believe they have a sustainable future.

“Others who face too much direct competition have the challenge of rising rent and rates and appear uncertain as to what their point of difference is. The future of the independent trade is only exaggerated if nothing changes. If I were an independent retailer I would be thinking very hard about what defines me as a specialist and what drives me to be a destination in my locality.”

Roger Dyson is in no doubt that the toy industry will be best served by having a strong retail presence for 12 months a year as, without the independents there will be an even greater focus on Christmas sales.

“Independents, and I include The Entertainer and Gamleys, are dependent upon selling toys, so we cannot increase or reduce our ‘toy space’ depending upon the season. Not only do we sell toys year round, what we also contribute is an opportunity to launch products, categories and ranges between January and September, not just for the top ten suppliers, but for the whole supplier base.”

Tomy’s Mann has an interesting spin on the current situation when he says: “The independent trade is probably the fastest growing sector of the retail market. The only problem is that they do not have retail fasciae on the High Street, but exist within eBay and other internet sites.”

One toy specialist that has grasped the multi-channel nettle is Early Learning Centre, allowing customers to order online, by phone or having home delivery arranged in-store.

Comments supply chain director, Sue Dorkin: “At Early Learning Centre, we have been working for the past five years to deliver an integrated and flexible solution.

“As our direct offer becomes an ever increasing part of our overall business, we are committed to continually improving the range and delivery of services to enhance our customers end-to-end experience.”

How many independent specialists can say they have been working tirelessly for five years to hone their online services? For too many, it has been an afterthought when traditional sales just aren’t materialising.

Character Options sales director Mike Rowe reckons that the recent closures don’t signal the end of the independent toy retailer and there are several who are making a very good job of it. From his observations over a number of years, it is those retailers who have not moved with the times that are struggling.

“By that I mean that they are still trading from sites whose heyday was 40 years ago. In many towns nowadays there are several new centres and that’s where the ‘action’ is.

“In some respects the town centres have moved away from many retailers leaving them with a severe business downturn. Retailers need to take the plunge and move into these new areas even though rent and rates might be pretty scary in comparison to what they are currently paying.”

The Entertainer store in the Birmingham Bull Ring Centre exemplifies what he is saying.

“It is without doubt one of the finest in the country. Smyths in Ireland have done a terrific job on the Emerald Isle and I can’t wait to see how they fare when they open up later this year in the UK,” although Smyths is still not confirming to ToyNews whether a UK mainland opening is imminent.

“To summarise,” Rowe continues, “I don’t think the independent store will die, but there will undoubtedly be more casualties until just the core of the really top guys are left.”

“I have no doubt that there will always be an independent toy retail sector,” concludes Toymaster’s Roger Dyson. “Its size and its strength will be commensurate with the support it receives from the supplier fraternity.

“I guess that will in itself be dependent upon the importance the key suppliers put on the independent sector.

“That is not to say that the independents future can be left to the suppliers, independents need to work together much more closely. There is probably only room for one buying group and if independents want more support, they must deliver something in return.”

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