Steve Pasierb, President and CEO of The Toy Association, shares insights on Toy Fair 2023, the challenges currently facing the industry, and predictions for the months ahead in this extended edition of The Toy Book’s 2023 State of the Industry Q&A roundtable. Want more insight from the all-stars of the toy industry? Click here to explore this year’s lineup!
The Toy Book: This is the big year in which Toy Fair shifts to September. How is the event shaping up when compared to previous years and how different will it be?
Steve Pasierb: 2022 saw a strong and confident finish with Toy Fair enthusiasm translating to 94% of 2023 exhibit space already sold — much earlier than any past pattern and with seven more months still to go until the show. New commitments like Spielwarenmesse World of Toys further fueled international interest. Now, the pace is normalizing as remaining inventory trends toward up-and-coming companies with smaller booths typically booked in the last months prior to opening.
Toy Fair, at its newly designated time of year, syncs with the dominant August/September dealmaking period and promises to provide even more engaging and meaningful opportunities to the toy, play, and entertainment industries than ever before. While the tradition of a Q1 Toy Fair has existed on the global calendar, for many out of habit, not outcomes, toys are top of mind in the fall, and this timeframe also offers newly focused and energized potential for the global media to discover hot and notable in-year playthings — at just the perfect time for readers, viewers, and consumers to make their holiday choices; while simultaneously providing toymakers and retailers the chance to finalize spring lines and, of course, privately preview the next holiday’s offerings.
TB: What are the biggest challenges facing the toy industry and how is the Association addressing them?
SP: Always keeping the developmental benefits of play in front of parents and caring adults while offering great products they’ll want to bring into their homes! We are encouraging members to focus on supply chain diversification while our commitment remains on providing research, education, and connections to help them find new resources whether here at home, nearshoring in Mexico, or elsewhere.
The constant drumbeat of inflation, the potential for a recession, and an uncertain geopolitical outlook infuse great uncertainty into business planning, yet companies cannot lay low or take a conservative mindset; rather, they must chase growth while the Association works to clear a path free from undue regulatory burdens and trade barriers. We’re seeing renewed interest in legislative and regulatory bodies to place new demands on companies with the result adding little to nothing to increase already high product safety and without clear consumer benefits. In the environmental and extended producer responsibility space, there will be activity across a host of states and cities while we continue to reduce packaging and address post-consumer products.
TB: What are The Toy Association’s key initiatives for the year ahead?
SP: Legislatures will shift focus from the pandemic to passing new laws and requirements and we anticipate the Association’s global government and regulatory affairs work will face significantly more risks to the toy community and take on more challenges to the rights of businesses than in many years. From local and state governments to federal agencies and a new Congress, our domestic agenda is extensive. We’ll be on Capitol Hill and in statehouses across the nation. We are also engaged in a range of global concerns including those in Canada, the European Union, Chile, the Gulf States of UAE and Saudi Arabia, India, Indonesia, Israel, and several other nations important to the future of the industry.
The Association’s multiyear push against counterfeits continues. While heartened by the passage of our priority legislation the INFORM Consumers Act signed into law by President Biden as part of the Omnibus bill, the sheer volume of bad actors selling dangerous, violative products in the e-commerce space remains. Continuing to pursue passage of the SHOP SAFE Act, which was excluded from the Omnibus, remains a priority. As families, and especially children, consume greater volumes of digital and social media, we will be doing more to help people of all ages develop the vital skills of media literacy. In total, our strategic blueprint contains 28 priority actions and more than 150 specific tasks on timelines, all designed to protect and promote the business of toys and play and in direct response to member needs.
TB: What are your overall predictions for the state of the toy industry and toy retail this year?
SP: Companies that continue to innovate and capture consumer attention by providing engaging, innovative products and play experiences will prevail. Retailers that offer products relevant to their consumers and geographic area together with truly appealing shopping experiences will outperform. Holiday 2022 was challenging for all, especially the weak fall run-up, and while a late sell-through surge cleared a lot of inventory, strong weeks 51 and 52 are not enough to reverse an annual decline with inventory left to clear.
Fortunately, on a three-year basis despite multiple headwinds including a shipping crisis, average annual growth is still up around 9%. The past three years have brought great fortune to some companies while others have suffered mightily, furthering their 2023 challenge. Great disparity remains especially among smaller toymakers.
2023 for everyone will demand grit, risk-taking, and fresh thinking. With still higher-than-average inflation and the potential of a mild recession, consumers will continue to be under pressure, scrutinizing every discretionary purchase.
A version of this Q&A was originally published in the 2023 edition of The BIG Toy Book. Click here to read the full issue! Want to receive The Toy Book in print? Click here for subscription options!
