Coming Price Deflation (1 Viewer)

[Rutledge]

Ignoring stock markets in free fall for a moment , there are reasons to be optimistic about toy soldier prices! China is aggressively devaluing its yuan amidst meager economic growth, raw materials prices are down worldwide and the US dollar is strengthening. The combination of decreasing labor and materials costs for TS manufacturers, and currency moves that make their exports "more competitive", i.e., cheaper, means that the only pressure on toy soldier pricing is DOWN -- at least for the moment, here in the US.

Production prices are slower to respond than financial markets because of their existing pipelines. Nevertheless I believe toy soldier offerings in the coming months are more likely than not to see price decreases. At minimum TS prices should remain flat.

As the "China miracle" of the past years unwinds there may be well be general deflationary trends in other places too. As with all things, though, the cure for low prices is low prices, just as high prices cure high prices.

 

[nysoldiers]

Logically prices should come down or at least stabilize. Not only are the costs coming down but demand may well decrease as consumers realize their losses in the market and react to the uncertainties going forward.
Unfortunately I believe that the major TS makers will not reduce prices but instead cut production and make more limited editions.
The after market, however, whether through Ebay/shows/auctions or the forums might see some substantial reductions as buyers become scarcer and more selective.

 

[Rutledge]

Logically prices should come down or at least stabilize. Not only are the costs coming down but demand may well decrease as consumers realize their losses in the market and react to the uncertainties going forward.
Unfortunately I believe that the major TS makers will not reduce prices but instead cut production and make more limited editions.
The after market, however, whether through Ebay/shows/auctions or the forums might see some substantial reductions as buyers become scarcer and more selective.

Certainly demand is always a big factor. If buyers ease off that would also put downard pressure on prices across all distribution markets, new and used.

I have no idea how TS makers will react. But if demand is inelastic they may keep the larger profits for themselves. If demand is elastic, I dont know there is a big enough market on the "high end" side to really make limited editions a major foucs.

Ebay resellers very well could suffer lower sales and lower profits. Speculation cuts both ways!

 

[damian]

Well Here's hoping

 

[Combat]

Don't hold your breath. I can't remember prices ever going down in this hobby. At best, they just won't go up anytime soon. Some of the explanations that we got in the past about high fuel costs and other factors leading to higher costs have gone the other direction without prices ever going down. We went through a major recession in which prices in this hobby almost doubled. Not going to happen. More likely that some manufacturers go bust than prices ever go down.

 

[Rutledge]

Don't hold your breath. I can't remember prices ever going down in this hobby. At best, they just won't go up anytime soon. Some of the explanations that we got in the past about high fuel costs and other factors leading to higher costs have gone the other direction without prices ever going down. We went through a major recession in which prices in this hobby almost doubled. Not going to happen. More likely that some manufacturers go bust than prices ever go down.

My understanding is the TS companies are actually TS designers, marketers and packagers; they outsource the making and painting. Please inform me if this information is incorrect.

True that prices rarely go down. In the past TS companies may have passed on lower costs by raising quality, essentially giving more for the same price. Im not sure quality can get all that much better today.

During the recession the US dollar plummeted in relative value, limiting exporters ability to respond to the slowdown with lower prices. Now, with the dollar strengthening as China and others devalue their currencies, and commodity prices sink, there is definitely downward pressure on prices.

Instead of lowering overtly, the TS companies may increase the value of a purchase via special bonuses or some such.

 

[Combat]

My understanding is the TS companies are actually TS designers, marketers and packagers; they outsource the making and painting. Please inform me if this information is incorrect.

True that prices rarely go down. In the past TS companies may have passed on lower costs by raising quality, essentially giving more for the same price. Im not sure quality can get all that much better today.

During the recession the US dollar plummeted in relative value, limiting exporters ability to respond to the slowdown with lower prices. Now, with the dollar strengthening as China and others devalue their currencies, and commodity prices sink, there is definitely downward pressure on prices.

Instead of lowering overtly, the TS companies may increase the value of a purchase via special bonuses or some such.

Great, I will expect the press release at any moment. I always thought price decreases meant the price was going down instead of increasing the value of my purchase while doubling the price. If that's the case then as Cool Hand Luke said "I wish you'd stop being so good to me, Cap'n."

 

[theBaron]

While general rules of economics do apply to any given market, we need to take that market's own characteristics into consideration. I don't expect manufacturers to drop their prices just because of the market collapse in Red China. Those prices are sticky, and a big component of that stickiness is what you all who make up the very limited market for their product are willing to pay. What is your tolerance for price? Do we know of anyone who has stopped buying a particular line, because the prices are too high? I know we all like bargains, but by definition, this is a hobby, and it's discretionary income, and I haven't seen yet a general fall in prices, nor a general abandoning of the market, as prices rose.

I don't think there will be much of an effect on our hobby at all.

Prost!
Brad

 

[nmrocks]

My view is different, I think there is a total glut of product on the market, most everyone has way more than they can even display and there is an ever greater flow of new product coming monthly. I'd be surprised if this economic slowdown does not see some makers disappear and all further cut production.
Ray

 

[Rutledge]

If gas prices, housing prices, stock prices, gold prices and flat screen TV prices can go DOWN, I suspect Toy Soldier prices are not inherently immune from the same.

Falling China stock prices are not the catalyst I had in mind. Rather, falling stock prices reflect the weakening Chinese economy. Manufacturers of TS will feel it just like everyone else. Likely they will want to respond in some way that helps their business. The stronger dollar gives them an opportunity to lower prices is US dollar terms while keeping their sales at the same level or higher -- especially if a price drop spurs more purchases in overseas markets like the US. All things are elastic to some degree, and especially with something so discretionary as TS, better pricing could drive more sales of NEW figures, more so since older figures might not have the same pricing flexibilty.

As I said before, though, I have no idea how the manufacturers will choose to respond. They may elect to pocket the additional proceeds themselves,and of course that is their right.

 

[trooper]

It is fairly obvious that the only TS companies that will be affected are those whose total production is undertaken in China. The Chinese studios who do the work will most likely increase their prices, which leaves the companies with three basic options. (A) Increase their prices (B) reduce production runs or (C) both. To think in terms of a significant drop in prices is, I fear, a pipedream. Those companies which produce in house should be unaffected. Trooper

 

[Rutledge]

It is fairly obvious that the only TS companies that will be affected are those whose total production is undertaken in China. The Chinese studios who do the work will most likely increase their prices, which leaves the companies with three basic options. (A) Increase their prices (B) reduce production runs or (C) both. To think in terms of a significant drop in prices is, I fear, a pipedream. Those companies which produce in house should be unaffected. Trooper

Why would Chinese studios increase prices? Their yuan is collapsing and business overall is sluggish. They need to do something to stimulate demand.

This is no pipedream, its a reasoned analysis. While I may be wrong, my presmise is based on facts and current market trends, not wishful thinking.

 

[trooper]

Why would Chinese studios increase prices? Their yuan is collapsing and business overall is sluggish. They need to do something to stimulate demand.

This is no pipedream, its a reasoned analysis. While I may be wrong, my presmise is based on facts and current market trends, not wishful thinking.

The British or American companies contracting out to China are not likely to increase the quantity of heir orders, why take a gamble with the risk of having loads of uncommitted stock on the shelves? The Chinese studios will not only be looking for work but also trying to make as much as they can from existing customers. Your analysis is indeed well reasoned and I do not dispute your facts, however I think that the TS market is on a different level to that of other commodities. Trooper

 

[Rutledge]

"In a separate report Thursday, the Labor Department said that import prices fell 1.8 percent in August, reflecting falling energy prices. For the past 12 months, import prices are down 11.4 percent, the biggest 12-month decline since September 2009. Lower import prices put additional downward pressure on overall inflation."

While deflation may or may not occur we are definitely in a disinflationary environment.

 

[damian]

"In a separate report Thursday, the Labor Department said that import prices fell 1.8 percent in August, reflecting falling energy prices. For the past 12 months, import prices are down 11.4 percent, the biggest 12-month decline since September 2009. Lower import prices put additional downward pressure on overall inflation."

While deflation may or may not occur we are definitely in a disinflationary environment.

Are you expecting prices to actually go down or just not increase?

 

[Rutledge]

Are you expecting prices to actually go down or just not increase?

I think prices will eventually go down. Better productivity through technology/competing technologies, falling commodity prices, increased competition/supply, decreasing or flat demand due to demographics, global competition, all will conspire to push prices down. Obviously these forces will affect far more than just toy soldiers. And not saying it will be immediate or fast, but believe strongly it will happen. Would you have ever predicted oil prices to go where they have?

We are conditioned to fear/expect inflation. Deflation/disinflation will be with us for a while, and affect everyone, in both good and bad ways.

 

[Rutledge]

The collapsing Chinese stock market, along with worldwide depressed commodity prices, puts increased deflationary price pressure on any number of goods. Possibly including toy soldiers.

 

[hotel3alpha]

Gents,

Toy Soldiers are a super...double secret probation...exclusive...members only...card carrying...niche market. And in niche markets business is a usual my friends. HOWEVER COMMA, I would like to concur with my fellow Texan NMROCKS up in Austin, Texas who believes there is a glut in the market. I agree. There are chingos (spanish for "a lot" and other references) of new sets out there that I can't keep up. Nor do I have the real estate to display them. So, I have been reluctant in purchasing new sets because there are so many.

On the other hand, the manufacturers read this forum too and hear everyone crying, begging, pleading and wishing for new soldiers and vehicles for this period or that period and they oblige. They listen to their constituency and act on the will of the toy soldier purchasing public. So, they produce and produce and we buy and we buy, we demand and demand and I am sure they are trying to keep up. And only in a niche market to we have such close relationships with the people we purchase from because we would not get this attention if we were buying Barbies. You think Mattel gives a whoot or even interacts with the purchasing public on such an intimate scale as we do with our manufacturers? Uh, no.

Man, I've written papers and debated China's military, social and economic wonders and woe's for years. Therefore, in my humble opinion I have always known that their economy will collapse (or severely slow down) because it is has been running white hot in very, very short time. Boom, bust man and in China's case it has been explosion and their economy will suffer (like ours did) when you don't reign in or control a economy that has no apparent end in sight. They can't make up their minds if they want to be capitalist or communists and they are burning the two political philosophies on each end of the candle. It is a dangerous situation that China is in right now and believe you me when I tell you that a lot of business men/women are going to be indicted and shot in the head for this.

So, will Toy Soldier prices be affected to the end user/purchaser? Maybe, but I don't think so because when you are buying, selling or manufacturing in a niche market, prices go up...not down.

Or, as usual I could be wrong,

John from Texas

 

[damian]

The collapsing Chinese stock market, along with worldwide depressed commodity prices, puts increased deflationary price pressure on any number of goods. Possibly including toy soldiers.

I am asking this out of ignorance.
Does deflation mean that prices actually go down or merely that they don't increase?

 

[damian]

I think prices will eventually go down. Better productivity through technology/competing technologies, falling commodity prices, increased competition/supply, decreasing or flat demand due to demographics, global competition, all will conspire to push prices down. Obviously these forces will affect far more than just toy soldiers. And not saying it will be immediate or fast, but believe strongly it will happen. Would you have ever predicted oil prices to go where they have?

We are conditioned to fear/expect inflation. Deflation/disinflation will be with us for a while, and affect everyone, in both good and bad ways.

Sorry that was lazy of me I did not read the thread.
You have answered my question
Thank you