Toying with workers
This guide to toy retailers is the latest in our Amazon Alternatives series which aims to help consumers avoid arch tax avoider, Amazon.
In the UK we spend £2.9 billion on toys every year and the latest research from market analysts Mintel shows that 53% of shoppers now buy toys online. As you can imagine this means one thing – the rise of Amazon.
In just four years Amazon has risen from a position of relative obscurity in the toy sector to one which now boasts a 14% share of the market, up from just 5% in 2010, an ominous trend for other retailers and those shoppers boycotting Amazon. Only Argos, which controls around 15% of the market, is still ahead of Amazon.
The rest of the market is dominated by a few players, including the supermarkets, Toys R Us and Mothercare. The share of independent retailers (which includes the Toymaster franchise) has shrunk from 17% to 11% over the last four years, a trend we have seen in many of the sectors we have covered recently as part of our Amazon Alternatives series, including bookshops and record shops.
“If there is one clear winner in the toys market we would point the finger at Amazon, which has become the first choice for many shoppers, helped by the convenience of home shopping, an easy-to-use website, vast choice and competitive prices”,says Jane Westgarth, Senior Market Analyst at Mintel.
Who's on the table?
The table contains some retailers and also some manufacturers that sell products via their websites.
The following brands do not have any physical stores on the high street: Orchard Toys, Babi Pur, Traidcraft, Let's PLay Fair, Playmobil, Ethical Kidz, Galt, Myriad, Paperpod, Ethical Superstore.
Supply chain shame
Amazon's social responsibility reporting is very poor and sadly this is also the case for several other companies covered in this report. Despite strides made a decade ago, efforts to improve working conditions in toy-manufacturing supply chains now seem to have stalled.
As you can see from the score table, 13 of the 26 brands score worst in our supply chain management category. In fact many of the companies fail to publish any information at all regarding their efforts to address workers' rights at supplier companies.
Those who score worst are: Amazon, Argos, Disney, Ethical Superstore, Galt, Hamleys, The Toyshop.com (no information received), Mattel, Toymaster, 3WM – owner of Paperpod (no information), Playmobil (no information), Smyths (no information), and Toys R Us (no information).
Companies that score a middle rating are: Mothercare, Early Learning Centre, Sainsbury's and John Lewis.
Best rating: Of the larger, dedicated toy retailers only Lego score a best mark in this category. Other companies that score best are: Orchard Toys, Babi Pur, Let's Play Fair, Myriad, Traidcraft, Ethical Kidz, Tesco and Asda.
Missed supply chain opportunities
This overall poor performance from the larger toy companies comes despite moves towards better supply chain management that began in 2002. The ICTI CARE programme, which started that year, looked set to improve conditions for factory workers in the sector.
ICTI CARE is a toy industry initiative and part of the International Council of Toy Industries, an organisation which represents toy brands and retailers globally. The programme set up minimum labour standards for workers manufacturing toys and provides a database of preferred suppliers that are independently audited and accredited by ICTI CARE.
However, over the last 12 years, the core work of the organisation has failed to develop as campaigners might have hoped, leaving a weak set of standards with a limited scope.
For example, the base code of the ICTI CARE set of minimum workers' rights standards is only rudimentary by Ethical Consumer standards. It doesn't sufficiently limit the number of working hours in a week, makes no reference to a living wage and does not provide an adequate definition of the age of a child. This all falls well below the International Labour Organization (ILO) base code and even further below the standards in ethical labelling schemes such as Fairtrade.
In addition, the geographical scope of the programme is limited. At the moment it only covers China, Macau, Hong Kong, Taiwan, Thailand, Vietnam, Indonesia and India. And some companies may limit the extent to which they participate. For example, according to Mattel's most recent corporate citizenship report, the company has only signed up to using ICTI CARE for its Chinese suppliers, but the company manufactures 17% of its toys in Southeast Asia and 9% in South and Central America.
Furthermore ICTI CARE's audit programme appears opaque, with limited results appearing on its site. However it also conducts and publishes an annual survey of participating factories. The latest survey makes depressing reading.
It states that “While China’s minimum wage has risen by 18%, wages in toy factories have increased by only 10%, and many factories pay less than the legal minimum required in their province.” However the factories in question remain listed as preferred suppliers. ICTI CARE note that they are “going to further strengthen audit quality to ensure it reflects the true picture and creates pressure for a factory to pay correctly.”
The survey also states that “large toy manufacturers have started to use juveniles and interns... The data indicates that there is a high probability that factories do not respect the special conditions that apply to these groups of workers.”
They also admit that “Given the strong awareness amongst member factories about ICP [ICTI CARE Process] requirements, there is reason to believe that they under-report their hours in order to appear ICP-code compliant.”
In both instances it remains unclear what action ICTI CARE has taken to remedy this and the organisation failed to respond to our emails.
Of the companies in this report, Argos, Mattel, Disney, Hamleys and Toys R Us are all listed on the ICTI CARE programme website as members of the organisation. The extent to which they use the scheme remains unclear and, tellingly, all score worst in our supply chain ranking.
Tax avoidance ratings
Here are the company ratings for tax avoidance in this guide:
Best: Let's Play Fair, Myriad, Paperpod, Orchard Toys, Babi Pur, Traidcraft, Ethical Kidz, Galt, John Lewis, Playmobil, Toymaster, Toyshop.com, Hamleys.
Middle: Lego, Mothercare, Early Learning Centre, Mattel, Smyths.
Worst: Amazon, Argos, Asda, Disney, Ethical Superstore, Sainsbury's, Tesco, Toys R Us.
Toys R Us is owned by KKR, an investment company that also owns Boots the chemists, although Boots is now in the process of being bought by Walgreens, the biggest US drug store chain. Toys R Us scores worst across the board for its policies and KKR has investments in the oil industry.
Smyths Toys, Hamleys and Toyshop.com are three of the larger dedicated toy retailers and all score badly for having no social or environmental policies.
Playmobil, a privately owned toy manufacturer that sells directly to consumers through its website and through mainstream toy retailers, also publishes no social or environmental reports.
Mattel is one of the world's largest toy manufactures which also sells directly to consumers through its website. The company does have some social and environmental reporting. It scores a middle rating for environmental reporting and also scores a middle for its timber sourcing policy, however it had no policy on toxic chemicals. It also has operations in several oppressive regimes.
Mothercare, which owns the Early Learning Centre shops, scores badly in a number of policy ratings including cotton, toxic chemicals and environmental reporting. It does however score a middle rating for timber sourcing.
Multinational corporation Disney hit the headlines in 2012 after investigators found apparel made for Disney in the Tazreen apparel factory in Bangladesh, where 112 workers died in a fire. The company said suppliers had given orders to the factory without their knowledge and authorisation.