Toy Supply May Be Lower This Holiday Season

Retailers, Toy Makers Race to Stock Up

Walmart (WMT), Target (TGT), and other retailers are racing to stock up on toys as strong demand and shipping delays threaten to leave store shelves emptier this holiday season. The inability to get toys to retailers ahead of the holidays because of logistics snafus also threatens profits for Mattel (MAT), Funko (FNKO), and other toymakers.

As it stands, the holidays are a big contributor to the toy industry’s $33 billion in annual sales. Spending during the 2021 holiday season is expected to be strong given pent-up demand after lockdowns last Christmas season. In the first seven months of this year, US imports of dolls, games, and toys doubled compared to 2019, hitting $1.88 billion per month. This marks a record for the industry.

Companies Get Creative With Logistics

To ensure toys reach store shelves in time for the holidays, toymakers are getting creative. Toy companies including Funko and MGA are routing shipments to less congested seaports, using cargo planes, and asking some retailers to figure out their own shipping.

Meanwhile, Walmart and Target have contracted their own ships and Macy’s (M) began placing orders for toys three months earlier than it typically would. The department store operator just announced a deal to open up Toys “R” Us sections in over 400 stores next year. Macy’s has already started selling some toys through this partnership.

Stock Is Okay For Now

Flying in products is costly for the toy manufacturers and retailers, but it can save precious time leading up to the holidays. Delays for cargo ships are lasting anywhere from days to months. However, toymakers are also facing difficulties with transporting products by air. For the first seven months of this year, shipments into the US via cargo planes were more than double what they were during the same period in 2019.

For now, stores are fully stocked with toys, but retailers will have a difficult time keeping that up as the holidays approach. Shipping disruptions due to COVID-19 outbreaks and overbooked cargo ships could prompt more delays in the coming weeks. If these trends keep up, some retailers could be in for a blue Christmas.

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