President’s Letter: ’22 Accomplishments Set the Stage to Prevail Over Challenges in 2023
January 10, 2023 | The year that was marked by record inflation and a rocky final road through holiday sales, also saw multiple threats prevented and real progress made by The Toy Association in protecting and promoting our members while advancing the future of the business of toys. Today I’ll share my annual commentary on the Association year that was, and then next week an assessment of both the holiday season and a big year to come.
Global Government and Regulatory Affairs
Perhaps one of my most heartening moments of the past year was listening to two senior executives for the U.S. government trade administration say that not a week goes by that they don’t turn to The Toy Association team, calling with questions and for insight. Beyond that extraordinary thought, once again we detailed a range of trade barriers affecting member toy sales in international markets as part of the 2022 National Trade Estimate (NTE) report. These included new and ongoing concerns in 15 countries and regions on 23 priority topics. This is vitally important guidance to our government, allowing for coordination and prioritization of advocacy efforts.
In 2022, The Toy Association advocated expansively including on the following partial list of regulatory issues: Australia – international standards and coin cell batteries; Armenia – toy standards; France – reuse of packaging, extended producer responsibility (EPR), environmental labeling, mineral oil; India – EPR regulations, Toys (Quality Control) Order, packaging, plastic waste management; UK – toys and cosmetic regulations, UK Conformity Assessed Marking; European Union – Scientific Committee on Health, Environmental and Emerging Risks (SCHEER) opinion on safety of titanium dioxide (TiO2) and the presence of cobalt in toys, EPR in member states, environmental labeling; Chile – battery chargers; various toy regulations; Spain – EPR; Mexico – toy standard, formaldehyde in processed wood; United Arab Emirates – toy drones; Saudi Arabia — consistent implementation of its Saber conformity assessment program, Restriction of Hazardous Substances Directive, packaging; Canada – toy regulation, EPR, packaging, various provincial issues; and Indonesia – trade barriers.
Standards & Technical Affairs
Toy Association staff collaborated on proposed revisions to ASTM F963, in preparation for balloting by ASTM in early 2023 and publication thereafter. Proposed revisions include: acoustics, battery accessibility, expanding materials, heavy metals, projectiles, and alignment with CPSIA on tracking labels and phthalates, while work will continue in 2023 on new and potential emerging issue topics. Association staff will brief our members on the updates once the ballot process is complete.
Our team is also participating in the Downstream Users Coalition (DUC), related to the EPA’s proposed Toxic Substances Control Act (TSCA) revisions, specifically the inclusion of PFAS and changes to the Fees Rule.
We expanded involvement & engagement in the ISO TC 181 technical committee for ISO 8124, which complements our work in ASTM and includes F963 as one of the core components for the development of international standards. Toy Association staff now hold convenor positions for WG 1 Mechanical & Physical Properties, WG 7 Age Determination Guidelines, AG 1 Interpretations, and WG 10 Microbiological Safety. Our staff serve as ISO TC 181 liaison to the European CEN TC 52 Toy Safety Standard Committee. We participated in the new revision of ISO 8124-1 Mechanical and Physical Requirements and led activity to ensure that additional proposed clarifying changes to Part 1 of the standard resulting from interpretation requests are properly considered and follow the required revision/update process. Recent activity includes the approval of a DIS (draft) for ISO 8124-12 Microbiology, as well as positive changes made to ISO 8124-3 Migration of Elements, including the elimination of dewaxing anomalies relating to the inclusion of Boron.
Greater online marketplace transparency remains our top priority, with the team advocating strongly for the passage of the INFORM Consumers Act to help combat the growth of counterfeit and infringing products sold through online marketplaces. The legislation was passed by Congress as part of the omnibus spending bill and requires online marketplaces to disclose certain verified information regarding high-volume third-party sellers of consumer products. In addition to providing increased transparency for online consumers, the INFORM Consumers Act will allow law enforcement to better identify sellers suspected of trafficking stolen and counterfeit goods. Consumers will also be provided information regarding whether a given seller is a manufacturer, retailer, importer, or reseller of consumer products. With a greater volume of available information on online sellers provided under this scheme, informed consumers can better avoid purchasing goods from unscrupulous and criminal actors in the ecommerce space. The measure was signed by President Biden in December and becomes effective in June 2023. We remain focused on the passage of the SHOP SAFE Act which was not part of the omnibus.
We continued to push for improved battery safety across all household products within reach of children. The Toy Association worked closely with the Committee Chair and Ranking Member, Senator Richard Blumenthal (D-CT) and Senator Marsha Blackburn (R-TN), to advocate for the passage of S.3278, known as Reese’s Law. The legislation furthers battery safety for children while reaffirming the toy battery standard as the gold standard of safety for children across household products. The bill received overwhelming bipartisan support and was passed by Congress and signed by President Biden in August. A copy of Reese’s Law signed by President Biden was presented to the Association by Senator Blumenthal as thanks for our activist role.
It was insufficient to simply rest as the shipping crisis waned, rather our focus was on preventing the next catastrophe. The Toy Association worked with partners across a range of consumer products and retail to successfully advocate for the passage of the Ocean Shipping Reform Act (OSRA). OSRA includes measures to tackle the long-term systemic issues impacting the supply chain and ports that have been problematic for Association members. The legislation was passed by Congress and signed by President Biden in June. The Federal Maritime Commission (FMC) is engaged in several rulemakings necessary to implement OSRA however the law, and its requirements, related to demurrage and detention charges, became effective June 16, 2022. The Toy Association will keep members apprised of developments related to the rulemaking.
Across the United States
The Toy Association identified and monitored over 1,400 pieces of legislation potentially impacting the toy industry. The state team worked to defeat or amend measures related to priority issues including:
- Chemical Regulation: Close to one hundred priority chemical regulation bills were introduced across twenty-two states. No new legislation specific to children’s products passed. The Association successfully amended a California measure regulating PFAS in textiles to remove an onerous provision that would have required manufacturers of textile products to publish certificates of compliance for each product on the manufacturer’s website.
- Privacy: More than 400 privacy-related bills were introduced this year. We worked to ensure broad consumer privacy measures in Connecticut and Utah referenced COPPA and did not include a private right of action. Additionally, we secured amendments that members requested to key definitions in California’s Design Code Bill and other priority changes to increase industry input to the advisory committee and ensure privacy impact assessments are held confidential.
- Environmental Issues: 30 states considered measures for new packaging and/or product Extended Producer Responsibility. The Association worked with coalition partners to improve the packaging EPR measures that passed in Colorado and California. The state team also secured key amendments to the California “Responsible Battery Recycling Act of 2022” to ensure the battery manufacturer, not the product manufacturer, is responsible for the fees and participation in a stewardship program.
2022 also saw The Toy Association face the reality that we must invest heavily in filing a suit in federal court against the State of Oregon regarding the “Phase Three” Rule of the state’s Toxic-Free Kids Act. The removal or replacement of the provision, “Phase Three” of the act, would require the removal and substitution of any deemed “chemicals of concern” in children’s product that manufacturers have been reporting to the state. The ongoing suit alleges that the State does not have the authority to require such regulations and that the provision directly conflicts with the federal Consumer Product Safety and Hazardous Substances Act, which expressly preempts Oregon from implementing such requirements.
Dallas, New York, and Trade Events
While we had stated that 2019 was our final Dallas show, the pandemic had other plans. Clear pent-up interest in being in-person and experiencing products in-hand by both retailers and toy companies led the question to us: “Why not in Dallas?” So, off to the Dallas Market Center we went and the toy community together with 318 exhibitors made the show a complete success! Top 25 toy retailers in attendance included: Amazon, Target, Walmart, Sam’s Club, Dollar General, Ross Stores, Dollar Tree, GameStop, Barnes & Noble, Family Dollar, Macy’s, Marshalls, Michaels, and BJ’s Wholesale Club. Five hundred buyers attended, representing more than 71,000 locations of selling power—not including the massive reach of online giants Amazon, eBay, Mercado Libre, and Rakuten. Retail attendance was up 21.1% versus 2019 plus an additional 149 distributors, importers, and wholesalers (up 17.3%) made Dallas rock!
If the U.S. Trade Representative staff gave me arguably the most heartening moment of 2022, the cancellation and unravelling of an expanded Toy Fair 2022 was by far the most heartbreaking. Yet unravel we did and with the direction of our Board of Directors, we successfully contracted new fall dates at the Javits Center for Toy Fair in 2023 and 2024. The team also completed the Toy Fair Reimagination project, which included a full brand audit, new logo and tagline development, the creation of a new style guide and seven messaging planks, new website, major revisions to the show floor, and expanded and new approaches to on-site education.
The team happily opened renewal exhibit sales in early August 2022 and general exhibit sales in October with 93 percent of all exhibit space quickly being booked. Stunning for an event that was still a year in the future! We began exhibit assignments in late October. New facets for the reimagined show include the Visual Merchandising Initiative, designed to answer the clear needs of retailers and media in attendance to see product openly displayed; the Reimagination Design Awards, saluting those companies that deliver outstanding attendee experiences; Toy Fair University expanding and bringing together all content delivered by Toy Fair; and the Exhibitor Academy for all exhibitors designed to help them get ready to achieve success during the reimagined show.
If your calendar is not marked for New York from September 30 to October 3, do it now!
The Play Date
We conceived a new media-focused event designed to provide exposure opportunities to toy companies in Q1 and confirmed March 8, 2023, at the etc.venue 360 Madison Avenue in New York City. More on this event in my post next week focused on 2023.
Marketing & Strategic Communications
The prominent role and authority of The Toy Association’s voice was further leveraged by our trends team as they continued to promote member products in national and major market media as well as educate the public about toy trends. In 2022, the team promoted more than 100 unique play products from close to 100 companies for a total of 4,840,015,728 quality media impressions.
The Genius of Play continues to reach adults with a child in their life with new play resources, such as the Summer and STEAM Playbooks and new expert advice articles; a growing network of Play Ambassadors; exposure for member products with social media giveaways and influencer campaigns; and partnerships with organizations such as the National Afterschool Association, National Girls Collaborative Project, Women in Toys, Licensing & Entertainment, FAO Schwarz, and others.
While our communications team was out “promoting” they also played an important role in “protecting” the industry. Our second annual “Toy Safety Awareness Month” took place in November 2022. Media coverage continues to drastically decline for the NGO lists that contain multiple falsehoods about the safety of toys and our industry’s enduring commitment to safety. The Toy Association has been pushing back aggressively on the misinformation contained within the reports over the past several years—and those efforts have clearly paid off as we continue to see the credibility of such ‘dangerous’ toy lists diminish. We are also diligent about continuing the toy safety conversation year-round, not just during the holiday season.
Educating and Equipping Our Membership
2022 saw 77 new member companies join The Toy Association bringing our representation to 780 companies. The international membership category also grew as more companies with a global presence sought guidance on issues affecting their business outside North America. A total of 54 companies are now participating, up from 30 the previous year.
The Toy Association Credit Program held two virtual credit meetings with content including a Review of Accounts, discussions on current challenges of today’s credit and collection environment and making informed credit decisions, Amazon best practices, and a Roundtable for Finance and Operations Executives. Both meetings welcomed 250 financial professional attendees.
Webinars continue to deliver valuable content to thousands of people in our member companies. We went beyond monthly with 16 major content webinars held in 2022. These webinars aligned with current challenges and needs of members, including managing compliance brand protection at Amazon; reports on the Port of LA and Port Houston; toy industry predictions from experts; trends in kids’ screen time and outdoor play and how they use their attention; holiday shopping trends in the current environment; a study of diversity and dolls presented by Paramount; and more. Net promoter surveys to measure member satisfaction averaged a score of +68, which is considered excellent in terms of satisfaction on a scale of -100 to +100.
Your Association and a range of our partners continued to deliver insightful and actionable research and reports. Highlights included:
- The NPD Group’s Global Toy Trend Annual 2021 & YTD June 2022
- The NPD Group’s Consumer Attitudes of the Toy Industry
- The American Kid Consumer 2021/2022, presented by Kidz Global
- Multiple TrendHunter reports on NFTs & Metaverse Expansion, Carbon Recapture, Social and Online Influence, Live Commerce, Gen Z Lifestyle, and STEM/STEAM
- The Economic Impact of the Toy Industry (model updated in 2022)
- Toy Sourcing: The Next 10 Years, Changes, Challenges and Opportunity! By Steve Reece, Kids Brand Insights and Toy Team Asia
Helping Every Child Experience the Extraordinary Benefits of Play
The Toy Foundation had an incredibly impactful 2022 – fulfilling its mission as the uniting force for the collective philanthropy of our industry and the benefit of all children in need.
The Foundation started the year by stewarding a relief campaign for Ukrainian children and families. Toy industry icon, Alan Hassenfeld, asked The Toy Foundation to execute the campaign and kicked it off with a million-dollar lead gift. The toy community stepped up with an incredibly generous $4 million in additional financial and product donations. In an unthinkably difficult time, this campaign delivered comfort, joy, and the extraordinary physical, emotional, and educational benefits of play to more than two million Ukrainian children and their families.
A new strategic plan was also launched in 2022. The plan refocuses the Foundation’s work to better serve the philanthropic and business interests of members. The plan’s priorities include:
- Making Toy Bank the industry’s turn-key CSR and surplus inventory management solution
- Making Play Grants that broaden the industry’s capacity to support play therapy and children’s hospitals
- Making Diversity, Equity, and Inclusion (DEI) a priority in our work and attracting talented, diverse college students to careers in the toy industry
- Making TOTY “the” social and networking event of the year for our industry
2022 donations to Toy Bank exceeded $11 million; the Foundation made nearly $500 thousand in cash play grants for children’s hospitals in 18 economically disadvantaged communities; the DEI student program was launched in Dallas; and the TOTY celebration in Dallas showcased the positive impact of collaboration.
The Canadian Toy Association
The Toy Association continues to be honored to serve as sustaining partner to the Canadian Toy Association (CTA). The leadership, committees and volunteers behind CTA continue to deliver fantastic outcomes both for the industry and community. Most recently, through the Toys for the North program, Canadian manufacturers donated toys valued at more than $470,000, a 170% increase over 2021, an 840% increase in toys collected since 2019, and a record-breaking amount of toys collected in a single season. These toys were delivered to children in need in the most remote communities of Canada.
In conjunction with the CTA Annual General Meeting, a special panel of industry experts from Toys”R”Us Canada, The NPD Group Canada, and Indigo Kids discussed the “State of the Industry” including lessons learned from doing business during the pandemic, how to reopen and rebuild, and what the future will hold. More than 300 people registered for the event.
The CTA inducted four new members into their Hall of Fame in honor and recognition of their significant impact on the toy industry. The four new inductees were Monika Merz, former president of Toys“R”Us Asia Pacific, and Spin Master co-founders Ronnen Harary, Anton Rabie, and Ben Varadi. They were honored at a gala event on November 17 in Toronto. It also featured a new “Rising Star” category, awarded to five emerging leaders in the toy industry.
Responsible Management of Your Trade Association
Strong governance by our Board of Directors, regular senior staff interaction with the Board Executive Committee, and the ongoing contributions of hundreds of industry professionals who volunteer for our many committees all combine to ensure The Toy Association is acting in the best interests of the toy and play community while managing a sustainable organization for the future. This discipline also includes controlling the Association’s overall financial condition through expense management, revenue sources, liquidity, and investments through successfully achieving positive results in extensive annual audits.
Onward to Opportunities and Challenges of 2023
A holiday season with mixed results across the industry and an overall decline for the period, meets a year where media chants of recession ring in ears of consumers already pressured by inflation. This certainly raises the stakes for everyone. Where do bookings for Toy Fair 2023 stand at the moment? What about all of those regulatory and legislative threats? Who is looking to diversify their manufacturing locations? Why should there be confidence in a year with potentially more headwinds? When will merchandise inventory be at levels necessary to calm the nerves of retailers? I’ll offer some certainties as to our priorities and actions while also breaking out my crystal ball of optimism for the aggressive and resilient in 2023.
Here's to your continued good health and prosperity in the year ahead.
President & CEO
The Toy Association