The festive season is here and with it the global demand for toys, but this year the supply chain could be the ‘Grinch’ of Christmas and the worst enemy of children awaiting their gifts. Will there be enough toys to go around? The world’s biggest manufacturers assure us there will, as they prepare to meet demand, but they say that price tags could be higher, while retailers say that, while there will not be a shortage, there will be limited editions of some products.
During the year and amid the pandemic, ports overrun with containers that cannot be unloaded quickly due to a lack of personnel, the elevated cost of freight, the closure of factories in Asia due to Covid-19 contagion, power outages and the lack of key supplies such as plastic have raised fears that toys, which are among the products most in demand among families at this time of year, will not arrive in time for Christmas.
In addition, inflation has hit the pockets of households across Latin America, and who will see an increase in the cost of the year-end celebrations.
Manufacturers Redouble Efforts to Deliver, But Also Increase Prices
Mattel, the second-largest toy manufacturer in the U.S. after Hasbro Inc., and famous for its Barbie and Fisher Price products, has assured that it has overcome the supply bottlenecks and is making efforts to have a strong Christmas season, with an up-to-date product offering.
In recent months the company has had to accelerate its acquisition of raw materials, contract capacity and maritime transportation costs months in advance and ensure its access to ports and additional shipping routes.
Ynon Kreiz, executive director of Mattel, told Bloomberg in an interview on November 5 that he believes the company “is in a very good position to make our best effort to satisfy demand”. Although he admitted that “it’s possible we won’t be able to meet every need”.
“We’re not immune,” Kreiz said.
Also read: ‘We Ran Out of Santas’ as Labor Shortage Hits Holiday Cheer
Mattel supplies 470,000 stores around the world with popular toys such as Barbie, Hot Wheels, Monster Truck, and American Girl, among others, and its products will be among the most sought after on the shelves after being requested in letters to Santa. Unlike in other years, Mattel revealed in October that, although demand has risen, the increase in freight costs has reduced its income and obligated it to make price adjustments.
LEGO Group, famous for its plastic bricks with which children and adults can build whatever they fancy, told Bloomberg Línea that it has a global network of factories and distribution centers located close to its main markets, which gives it, unlike other manufacturers, the “necessary flexibility to satisfy the changing demands of consumers and reduce our need to ship products across long distances”.
In this sense, it would appear that LEGO has its supply covered. “We are currently not experiencing any global supply interruptions of our products and raw materials, and we are able to satisfy demand for our portfolio”, a company spokesperson said.
However, because the supply crisis is such, as are the constraints that Covid-19 may impose, LEGO said it remains vigilant to “minimize in a timely manner any disruptions” that may arise in its production, capacity and distribution..
Meanwhile, Hasbro Inc., which produces Monopoly, Play-Doh and Baby Alive, confirmed in its most recently quarterly report that supply chain interruptions have delayed $100 million of orders. The company also had to ensure contracts with new ports and ships to transport its products, according to its CEO the company’s financial results report.
Rising costs and logistical difficulties led Hasbro to increase its prices during the last quarter.
Sony, for its part, has also experienced problems due to microchip shortages and disruptions in the logistics chain. Its flagship product, the PlayStation 5 console, has been difficult to buy since its launch in November 2020. Each time platforms such as Amazon or large supermarket chains enable the purchase of the PS5, within minutes they are no longer available.
The brand has sold more than 13 million units worldwide, but the lack of semiconductors has prevented that figure from being higher and has made it difficult to distribute enough units globally. The company has manufactured about one million fewer units than it had planned.
Logistics problems and parts shortages “have gotten worse for Sony”, CFO Hiroki Totoky told investors on a conference call.
Its big rival, Microsoft, has also been unable to guarantee stock of its Xbox Series X.
Demand is booming, but supply of some products is limited
In Colombia, Javier Díaz, president of the National Association of Foreign Trade, explained that problems in the supply chain have hit all sectors and even more so during this season of high demand. Diaz said in a conversation with FM Radio that “a container from China to Colombia for which US$2,500 was paid now costs more than US$20,000. Rates have increased more than tenfold”, and that these costs are reflected in the final prices, which have been increasing.
Diaz also assured that there will be shortages of some products “for the Christmas season, in the whole range of toys, lights, etc. For example, on average, each Colombian is entitled to three candles (and other products) in December, and with the shortage they will get one each, he added, due to the fact that imports that should arrive in Colombia are delayed by up to 75 days..
On the other hand, in Argentina, the Argentine Chamber of the Toy Industry, which groups together 180 manufacturers, explained that this year toys saw a 45% price increase due to the high inflation. However, he said there are still economic options for families..
Domingo Lama, Country Manager of falabella.com Chile, explained that the company had to anticipate logistical difficulties and advance processes from the purchasing area to ensure supply..
Looking ahead to Christmas, Lama assures that the company has millions of products in various categories to offer its customers so that they do not feel that they lack options. “By having more than eight million products from our retailers and marketplace, we generate greater offers, where formats and sellers compete with each other, allowing us to have the best prices for our end customers”.
According to Lama, they have adequate supply to meet demand. “We have the necessary stock to face this last stretch of the year,” he said. He did not comment on whether there was an increase in prices..
The most wanted, and scarcest, toys...
The well-known Christmas movie ‘Jingle All the Way’ could give us a glimpse of what may happen this year to hundreds of people in search of toys. In the film, Arnold Schwarzenegger goes all over his town on Christmas Eve looking for a ‘Turbonman’, the action toy that his son and hundreds of other children want under their tree that year, but which is sold out in every store.
That could happen, for example, with the PlayStation 5 console, the Play-Doh cake oven and the Pow Patrol or Paw Patrol command center.
Amazon published a list of the toys that will be the most ordered this season based on the demand they are having among the more than two million toys the company sells on the platform.
Keep the list in mind so that the movie doesn’t happen to you:
A Threat for Christmastime? Container Shortage Could Overshadow Holidays in LatAm