“There is going to be a major shortage of toy products this year,” MGA Entertainment CEO Isaac Larian told CNN Business. “The demand is going to be there. What is not going to be there is the product to fill the demand.”
“The container that cost $3,200 last year is now $22,000,” Larian said. “The installation of raw material and labor has gone up exponentially. We’ve seen a 23% increase in cost of product in China without the logistics. That is going to translate to higher prices with retail.”
“We’ve had hundreds of containers on 46 ships sitting in the ocean at the port of LA and Long Beach for the past 30 days,” he said. “There are people to unload it, but there are not enough trucks to pick it up.”
Basic Fun CEO Jay Foreman expressed a similar frustration this week. Foreman’s privately held company owns and distributes Fisher Price toys, Tonka trucks, K’nex and Care Bears among other brands. He said some of his products have been stuck on shipping containers “when those containers can be found.” Other Basic Fun toys, he said, are “stacking up” in factories in China, making it harder for him to keep stores stocked in the coming weeks.
“You’re going to find various times during the holiday season where the store shelves are going to have empty holes in them,” Foreman told CNN Business. “You’re going to see constant outages of the key products that consumers are looking for.”
A problem, big and small
Consumers can expect price increases of 5% to 10%, according to Jim Silver, CEO of trade publication “Toys, Tots, Pets & More.”
“The bigger companies that have more money, more economic clout because they place more orders, definitely have more scope to mitigate [supply chain constraints],” Saunders told CNN Business. “Smaller chains just don’t have that economic power.”
Both Foreman and Larian expressed doubt that even the largest toy makers can keep up with holiday season demand this year due to supply chain limitations.
“Whoever is telling you it’s only the small toy companies’ problem is full of it,” Larian said. “MGA is the fourth-largest toy company. We are not small. The beauty of MGA is we are private, so I can talk to you openly.”
“Families have money to spend, and if the toys are available, they’re going to buy them,” Zahn told CNN Business. “No matter what, kids will still play and parents will do whatever they can to do right by their kids.”
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