The coronavirus continues to impact industries with a strong presence in China, from auto parts to technology. And the toy industry is no less vulnerable to the virus and its deleterious effects on global supply chains.

For now, the US toy industry, which is hosting its 117th North American International Toy Fair in New York through Feb. 25, is hoping the fallout from the virus, officially known as COVID-19, won’t hit. no toy deliveries later in the year during the all-important holiday season.

But the virus comes at a difficult time for the toy sector, with sales in 2019 up 4%, according to research firm NPD Group, and the bankruptcy of Toys R Us is still reverberating through the industry.

“We are still recovering from the loss of Toys R Us, your dedicated big-box store, and the store that relied on inventors and the small products that one day became big products,” Steve Pasierb, president of Toy Industry Association, told Yahoo Finance during an interview at Toy Fair 2020. “It’s a gap in the industry that we’re still trying to fill.”

And production slowdowns due to the virus could only worsen the current situation in the industry.

Adding to the pain

According to Pasierb, the coronavirus outbreak and its associated factory closures, such as those at MGA Entertainment, which produces LOL Surprise and Little Tikes, could begin to hit summer toy shipments. But the biggest fear is that the outbreak is forcing manufacturers to scale to a degree that is hampering holiday toy sales.

“The most important thing, obviously, is holiday deliveries, but our focus right now is really on workers and factory owners who are a core part of our business,” Pasierb said.

“We really don’t know where things are going to end. Some of the factories have reopened, but are concerned about their upstream supply chain. Others are still closed and are expected to reopen in March. So we are in a period of 30 to 60 days where we really have to see what happens. »

Beyond the immediate coronavirus fears, the toy industry is still grappling with the loss of Toys R Us, which filed for bankruptcy in 2017, before closing its stores in 2018. Last year, Tru Kids Brands, which bought the Toys R Us intellectual property after the bankruptcy filing, said it was reviving the brand with a small number of stores and an online business.

Target (TGT), Pasierb said, captured some of the market share left behind by the company and partnered with Tru Kids Brands in October to share its online sales capabilities with Toy R’s relaunched website. Us, Walmart (WMT), meanwhile, is still the largest toy retailer in the United States.

play helps toys

It’s not all catastrophic for the industry, however. In fact, video games, once seen as a major threat to toys, have become a source of growth for many companies.

“What’s interesting is that the video game industry and online games have generated a lot of toys, from action figures to stuffed animals to game add-ons,” he said.

“And so what seemed like a threat at first actually turned out to be a boon. And what we’re hearing from this generation of kids is that they’re finding time to be digital and finding time to play like kids have always played.

As for what will be the hottest toy of 2020, Pasierb says he won’t know until December when toy sales start to pick up steam ahead of the holidays. And the industry, Pasierb explained, needs this type of toy because it helps drive sales of other toys.

“That’s one of the things we missed [in 2019],” he said. “There wasn’t this topical toy driving people online, driving them to Walmart and Target. So we need innovation, we need invention, we need that people take risks, and this hasn’t been an environment where people are willing to take risks.Creativity, invention, has been at the heart of this industry for over 100 years.

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