What Are The Ethics Of Toy Scarcity In A Post-COVID Market?

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By Jonathan Alexandratos

Not long ago, I found myself kick-scootering to my local Target on a cold December morning, questioning many of my life choices along the way. All of this was over a Din Djarin action figure with a removable helmet. Okay, and it was also partly about the Grogu that came with it, hover pram and all. This Star Wars Mandalorian Black Series set was a Target exclusive. My first choice was to preorder it, but it was snatched out of my e-cart not even a minute after pre-orders opened, due to some system of logic that I still don’t understand. Therefore, at 6:30am on December 1st, the toy’s official street date, me, my kick scooter, and whatever was left of my dignity chugged along an empty road to make Target’s 7am opening time.

I was there by 6:50am, first and only in line. By the time the doors opened, a handful of people stood behind me. I saw one fellow collector in the toy aisle moments later. “Not out yet,” he said. “Oh,” I said, “Should we tell the employee?” He already had. Before long, Luis, the ever-helpful, infinitely patient Target redshirt, returned from the fabled “back,” with two figure sets in hand, one for me, and one for my new collector friend. There was one case of these figures in the Land of the Back, one case, which contained six, now four, figure sets. If just a few more collectors were as diligent as we were, these figures would never make it onto the floor. They’d flow from back to hand before lunch, and after that, it would be like they never existed.

Cloth cape courtesy of ActionJoe77 on Ebay. The dirty floor is all mine.

I watched Ebay prices skyrocket as I liberated my tiny Pedro Pascal and tinier Baby Yoda from their plastic and cardboard prison. Life’s too short not to pry that bucket off Mando’s head 6-7 times an hour. Through my bleary eyed social media scrolling, I heard the sudden cries of dozens of collectors, some scoring most of the stock, most scoring none, and, with the promise of a nap fixed on the haze of my mind, I could only eke out one, desperate question: does it really have to be this way?

In a different time, perhaps, the question wouldn’t even present itself, at least not so melodramatically. But here, in December of 2020, I had woken up at the crack of dawn to get to a Target whose aisles I had scoured many times throughout the year looking for scarce items: toilet paper, hand sanitizer, anything that could possibly kill a germ. In March, all of that stuff had been ransacked and rationed. Maybe I should have felt lucky that, after all that, I only needed an action figure. That is a privilege, after all. But I just felt tired. Tired of playing the game. Tired of a year of the chase with very little yield. Tired for all the others who were more tired than me.

I don’t mean to put health essentials on the same footing as action figures. One helps us survive reality; the other helps us enjoy it. But it’s precisely because toys bring so much joy that I’m angry at an industry that keeps us fighting over them. While toy scarcity has always existed, I can’t help but find myself contrasting early ’90s pictures like this:

Look at that towering endcap of Joes in the distance!

To more recent ones like this:

That area that says “Star Wars.” Yeah, that’s where the He-Man figures go. Seriously.

The abundance of a Toys ‘R’ Us can’t be found in retail stores that still have no idea how to cope with the giant’s absence. They can’t get the volume a Toys ‘R’ Us could, but they can manage to get unique product. Retailer exclusives are a sound business strategy. They work. That’s been time-tested.

It’s hard to pin down when the first retailer exclusive toy hit shelves, but it was most likely in the 1920s. Andrew Tolch, toy expert and owner of Andy’s Toys in St. Louis, MO, told me, “Steelcraft Toys, formally known as Murray Ohio Manufacturing from late 1924 onward, made a deal with J.C. Penney stores around 1926 to exclusively brand certain Steelcraft toys under the Penney Exclusive house brand known as ‘Little Jim Playthings’ and at Sears stores under the name ‘Boycraft.’” These would have been little pressed steel cars that one had to visit exclusive stores to purchase. Company records surely detail the profits made from these sales, but one can assume the money made was substantial enough. After all, during the Great Depression, it became commonplace for glassware manufacturers to offer household items with grain and rice products to incentivize the purchase of exclusive cups and saucers now called “Depression glass.” The use of exclusivity as a survival tool during a time of extreme financial hardship is testament to the strategy’s effectiveness.

J.C. Penney Exclusive Steelcraft plane. Photo Credit: cumminski on Ebay

Tolch further said that, post-World War II, Marx Toys essentially “strongarmed” retailers into carrying exclusive goods in the 1950s and ’60s. This occurred during a time when retailers and manufacturers cooperated on fixing prices, a practice tolerated until 1978, when it became defined as collusion, which is illegal, according to Inside Toyland author Christine Williams. Such price fixing would theoretically reduce competition, as a toy that cost $1.99 at Macy’s also had to cost as much at Sears, with discounting severely frowned upon. Despite this, Marx still found retailer exclusives profitable enough to insist on them.

But once the ’80s hit, toy makers had to meet demand for an action figure boom in a market that could only offer a “suggested” retail price. That meant Toys ‘R’ Us could get business just by finding a way to keep their prices lower than anyone else, something that helped them rise to the status of “category killer,” or a store that completely dominates a business sector. From there, we saw a steady rise of retailer exclusives and mail-aways from the 1970s-era Montgomery Ward exclusive Megos to the late ’70s/early ’80s Star Wars mail-aways and Sears exclusives to the G.I. Joes to the infamous Wonder Bread He-Man to the Kool-Aid Barbie to the Pepsi Optimus Prime to the Kay-Bee Exclusive Wolverine that was the same as the regular Wolverine but with a different paint job to…the list goes on and on. You probably have some of your own favorites popping into your head right now. I don’t know if they’re from this era or not, but I’m willing to bet they probably are.

I’m a repaint, bub. Photo Credit: money-exchanged-for-items on Ebay.

And again, this worked. It generated revenue for both the store and the brand, created loyalty, and stoked buzz about new and rare products. To many people, this is the end of the story. The retailer exclusive toys have history on their side, let them reign now. Go to GameStop, Best Buy, Target, Walmart, and Amazon to get a full set of Holiday Edition Stormtroopers. Get your 450th Iron Man in colors only a Walgreens can procure. Go back to the Walmart for the entire lines of He-Man, King Kong, and Transformers Netflix toys. Or better yet, open tabs for all their websites, but don’t be surprised when the toys aren’t there, or if they’re astronomically marked up in ways only the Walmart algorithm can rationalize. Hang out at the brick-and-mortar juggernauts (they might have an exclusive Juggernaut!) at dawn, and, if they don’t have what you want, tough. If you don’t live near a store, also tough. If you’re worried about COVID or need to stay home or are working constantly: tough, tough, and suuuuuper tough. This is the toy business. What do you think this is? Child’s play?

Photo credit: TVLine

Well. Yes, actually. However, whenever I suggest this, I’m told some version of, “Walmart calls the shots.” While perhaps a true observation, it’s not supposed to be that way. No, really, it is legally not supposed to work like that. In 1999, the FCC brought Toys ‘R’ Us “under the antitrust microscope” because they found that Toys ‘R’ Us entered into “vertical agreements” in which “manufacturers promised to restrict distribution of its products to low-priced warehouse club stores, on the condition that other manufacturers would do the same.” This means that Toys ‘R’ Us tried, in this case, to “call the shots” by ensuring they received exclusive and/or majority product from manufacturers while boxing out their competition. The FCC found that this was, unsurprisingly, a violation of antitrust laws. Toys ‘R’ Us appealed. The appeal was denied.

I’m not a manufacturer. I’m not a retailer. I’m a consumer. My advocacy lies with fellow consumers, and I have blindspots when it comes to understanding what is currently happening with retailers and manufacturers. That said, one company cannot, in fact, “call the shots.” It isn’t my job to suggest that one store classifying all He-Man, many G.I. Joe, all King Kong, all Godzilla, all Scoob!, and all Transformers Netflix toys as “exclusives” just so they can be their sole retailers, and then doing the retail equivalent of a shrug emoji when they don’t have what you’re looking for, counts as any form of legal infringement. I write plays and teach English for a living, and you absolutely do not want me as your armchair lawyer. But, to the folks whose wheelhouse this is, I simply raise the question. Is this a retail annoyance, which is an anticipated part of being a shopper, or has a line been crossed?

On the consumer side, 2021 has brought some news that may offer companies a reason to restructure their approach to exclusives. He-Man Origins, the line that was once entirely a Walmart exclusive, recently became available on Amazon, Big Bad Toy Store, Entertainment Earth, Target, and virtually every other mass market toy retailer. Both Walmart and Mattel were asked about their reasons for this change, but did not return requests for comment. On the collector side, though, the move was met with what I might describe as a massive sigh of relief, or even an uproar of joy. That’s not to say this opening up wasn’t aided by profits made from exclusivity, but it does make me think that, maybe, this whole thing was done backwards. If we reverse this process, the mass market release comes first. The retailer exclusives come after. Instead of ordering six figures, retailers order, say, 60. Perhaps Mattel incentivizes this through pricing or other rewards. Then we have the line we’re all so overjoyed to have now, and we’re still out there looking for the exclusives, but there are enough for Collector A to buy 2, Collector B to army build Scareglows, and Collector C to buy their kid one. I don’t think that’s a pollyannaish view of the toy industry.

It isn’t wrong to suggest that the COVID-19 pandemic has caused toy slowdowns. Movies got delayed. Toys were released despite their source media not existing, or were scrapped entirely. This put more pressure on toys not reliant on new media, a demand that could not always be met, especially considering understandable shutdowns in China. According to the Doll, Toy, and Game Global Market Report 2020-30: COVID-19 Impact and Recovery Report, the market as a whole has dipped about 1%, from $102.6 billion to $101.7 billion, almost entirely attributed to the pandemic. However, the industry seems to remain optimistic, predicting a 9% recovery from 2021 to 2023, at which it would arrive at a value of $128.5 billion. That’s obviously no help to those in the toy sector who are negatively affected now, but, if better days are forecasted, perhaps planning for smoother roll-outs now will pay off when this recovery is in full-swing. Serious conversations around retailer exclusives should be part of this planning.

So what should those conversations include? Here are some ideas:

  1. Further dissection of the role of bots in toy scarcity. This past holiday season, Walmart issued a press release stating that their cybersecurity resources were focused on making sure “Grinch bots” didn’t snatch up all of the Playstation 5 consoles before actual consumers could put them in their online carts. That’s great. However, for me, this press release just raised more questions. I wanted to know if Walmart deployed these resources for their hot-ticket but lower-priced exclusives, like their G.I. Joe 3.75-inch collection, or if it was strictly for the pricier assets. If the technology exists to weed out bots, there should be more transparency about how retailers use it for action figure releases.
  2. The effectiveness of purchase limiting. I don’t know whether those “No More Than Two Per Guest” signs actually do anything on the large scale. Maybe they’ll help to keep stock on the shelves, or maybe they’ll convince people to bring their friends to Target. I don’t know, but it should be talked about.
  3. Retailer ordering of product. It’s easy for me to envision a Target manager, feet up on the desk, one ear to the phone, shouting, “Hey Hasbro, yeah, just gimme six of those Mando guys, whatever, who cares? I got a call with a dishware distributor in five who’s gonna hook me up with a 1,000-count pallet. Let’s keep this quick.” That’s probably not how it works, but there are people within these companies who can say for sure, and they should talk about that. The current unemployment rate is 6.7%. There has to be someone in there who needs a job and is good at telling companies which toys will be in high demand with collectors. If companies haven’t hired that person, they should. If they have, they need to improve the communication links between collectors and company decision makers to get ahead of these shortages. As Toy Galaxy’s Dan Larson says, “Distribution is a guessing game.” It shouldn’t be.
  4. Incentives. This is a conversation retailers and manufacturers alike can have. What incentives exist for preordering a case of toys? Right now, at best, they seem to amount to a price break. Manufacturers have the ability to add in extra items, or further exclusives, for case orders. Brick-and-mortar retailers could take in-person, pick-up case orders the way the online folks do via delivery. Subscription boxes could be offered by manufacturers for fans who just want the loot delivered monthly at the click of a button. People want to buy the product. It is a company’s job to figure out how to best facilitate that.
  5. Invest in convention exclusives. Convention exclusives can be very important parts of those ecosystems. As people get vaccinated and emerge back into in-person gatherings later in the year (hopefully!), convention exclusives can be great ways to further draw people to shows large and small. In fact, propping up the smaller shows with exclusives can do wonders for the independent sellers who work them. While these products can be quite rare, they exist in an environment in which scarcity is part of the sell, and even part of the fun, unlike a Target.

Some might critique my approach as “entitled.” Let’s talk about entitlement. If I were to go into a Target and demand everything I want, or even some of what I want, for free, that’s entitlement. If I were to go into a Walmart that had a massive, or even standard, stock of a toy line and throw a tantrum because someone bought the last of a figure they ordered plenty of, that’s entitlement. Asking companies who advertise a toy to actually provide that toy within reason to the public so that the average customer, who is balancing their toy buying with the rest of their life, can have a chance to buy it is not entitlement. That is asking the system to make good on its promise. That is me wanting stores to make it easier for me to give them my money, which, ultimately, serves their interest. That is stating a desire that fun things be offered in as much abundance as possible, to as many as possible, so that this hobby is not gatekept by those with the most time, and the most nearby Walmarts. It is envisioning a world where manufacturers, retailers, mom-and-pop shops, collectors, parents, kids, and kids at heart are all on the same side.

To return to Toy Galaxy’s Dan Larson, in his two-part video series “The Action Figure Industry Is Broken. Can It Be Fixed?” and “The Action Figure Industry Is Still Broken”, Larson enumerates failings of the industry, the retailers, and life in general. He notes, “It isn’t supposed to be this hard.” In other words, we have historical examples where retailer exclusives were commonplace, and certain toys were rare finds, and collectors still felt like there was an attempt at adequately stocking the product. We are currently going through the national trauma that, for some, has been ever-present, one in which what we like, and even what we need, is in short and unpredictable supply. In this landscape, black-and-white decision making gets us nowhere. It isn’t “have every toy ever all the time” versus “cancel all exclusives everywhere.” It’s more like:

Let’s recognize that scarcity is everywhere. Let’s understand that toys are touched by that scarcity, but they are not the most essential items to be scarce. Let’s plan for the light on the horizon in the toy industry, which includes a recovery where full toy shelves, responsible abundance, and undercutting up-sellers, bots, and thieves is a radical act that brings with it some relief on the pressure valve ever tightened by the pandemic. It doesn’t have to be this hard forever.

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