HOW WILL THE TERRIBLE WAR IN UKRAINE AFFECT THE TOY INDUSTRY?

HOW WILL THE TERRIBLE WAR IN UKRAINE AFFECT THE TOY INDUSTRY?

These are highly tumultuous times. Russia’s invasion of Ukraine has shattered the peace Europe has mostly enjoyed since World War 2. A humanitarian disaster is unfolding, Russia has moved from being on the fringes of the international community to becoming an international pariah state in record time. Countries around the world are taking drastic steps to punish Russia for infringing the sovereignty of a democratic European nation and for the horrible wave of destruction and death they have unleashed. To be clear, we also oppose Russia’s actions and wish for peace as soon as possible as well as the safety and security of people in and around Ukraine.

There are many media outlets covering the war, but from the perspective of this Blog, we should consider what impact this terrible war will have on the toy industry, even though that pales into insignificance compared to what is happening to Ukraine and the people of Ukraine.

The toy industry has rallied to do what it can to help, with donations of money and products to Ukrainian people and to UNICEF and other humanitarian organisations. Some companies have gone as far as to stop shipping toys into Russia. Lego has announced that they are stopping shipments of Lego into Russia, despite the company having more than 80 stores in Russia. Playmobil has also stopped shipments into Russia.

Clearly many toy companies will lose some revenue opportunities for 2022 and possibly beyond – Russia represents a significant but not major market on a global scale for toys. While stopping shipments is understandable from both a humanitarian and corporate risk perspective, this could deliver a negative impact on the innocent children of Russia, but not being able to buy your favourite toys is nothing compared to the terror and danger being experienced by innocent Ukrainian children and their families.

Oil prices have soared even higher, hitting highs in excess of $115 per barrel. This will have a further effect on consumer inflation, both in terms of transportation costs & in terms of plastic resin prices. It looks like 2022 is going to see even higher consumer price inflation versus 2021, and at this stage it is hard to see how all the factors driving inflation will disappear heading into 2023. We can therefore expect another round of awkward conversations with retailers about pricing and reasonable pricepoints heading into peak season trading in 2022 and beyond.

These are difficult times for our industry and humanity as a whole. Above all, we would like to reiterate our support for the Ukrainian people, and that the unspeakable horrors of war have returned to Europe. All the challenges of managing toy businesses through the pandemic, the shipping crisis and inflation fade into irrelevance when considering the loss of life currently happening in Ukraine.