MINNEAPOLIS (WCCO) – After toughing out the first holiday season in more than 60 years without retail giant, Toys-R-Us, the $28-billion U.S. toy industry is looking to bounce back.
“This is the annual business conference of the American toy industries,” said Steve Pasierb.
Pasierb is the Toy Association’s president and CEO. The group is holding its annual business meeting in Minneapolis, where the 1,100 members are comparing their fears not all fun. It’s because a deepening trade war is about to hit the industry as it gears up for the coming holiday shopping season.
“A 25% increase in prices, a tariff or a tax on those toys will put 300 of them potentially out of business,” Pasierb said.
He is referring to worries that smaller toy companies could be hit the hardest. 95% of all toy makers are not the giants like Hasbro, Mattel and Lego, but rather small businesses.
If consumers put fewer toys under the tree, companies like Wicked Cool Toys, maker of the hugely popular Pokémon toys could feel the hit.
“The companies who are going to be paying are small businesses like me, our retail partners and definitely the American consumer,” explained Michael Rinzler.
Planning for the upcoming holiday toy season started last fall. Everything from product lines to pricing is already set. Then along came the uncertainty of a 25% tariff tacked onto each item manufactured in China.
“How do I plan for my cash flow, how do I plan for my inventory, it just throws everything up in the air?” asks Jay Foreman, CEO of Basic Fun Toys.
In this game of uncertainty, there are no winners.
“We’ve done the math and the numbers do not look good, we’re in a very price sensitive product,” explained Pasierb.