Tariffs quietly reshaping how holiday toys reach stores
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Big retailers are quietly reshaping supply chains ahead of the holiday season, offloading more of the cost and risk of importing goods onto suppliers.
Why it matters: The behind-the-scenes move won't hit shoppers' wallets immediately, but could mean tighter supplies of holiday gifts and toys.
Driving the news: Toy giant Mattel Tuesday said retailers are moving from a "direct import" model to "domestic shipping."
- Under direct import, retailers place big orders months in advance and use their own logistics operations to bring goods to the U.S., with the goal of boosting margins.
- With domestic shipping, suppliers like Mattel handle the importing and warehousing, while retailers make smaller, closer-to-need orders.
Toy maker Hasbro noted the same trend among U.S. retailers in July, saying it expected to see delayed ordering into the fourth quarter as sales ramp into the holidays.
- Jakks Pacific similarly said that "sudden increases in the cost" of bringing product into the U.S. had prompted most U.S. customers to reevaluate their orders in the first half of the year.
The big picture: Tariffs and trade turbulence are changing the math and fueling the shift for retailers, especially for discretionary goods like toys.
- Mattel CFO Paul Ruh told investors Tuesday that U.S. retailers have made the move to give themselves "more time and flexibility to commit to orders."
- Ruh called 2025 "an anomaly," but analysts say the pattern may persist as companies brace for continued trade uncertainty.
Catch up quick: Retailers and toy makers have been warning that tariffs could snarl imports from China — where most toys are made — and lead to empty shelves.
- In April, President Trump acknowledged a possible toy shortage, quipping that "maybe the children will have two dolls instead of 30."
Threat level: Mattel says retailers are waiting longer and ordering in smaller, more frequent batches — giving themselves flexibility but leaving Mattel holding more inventory.
- UBS analysts said in a Wednesday note that the change increases Mattel's exposure heading into the holiday season, as retailers place orders later to avoid getting stuck with excess stock.
- Mattel can handle the shift because of its scale, Ruh said, but it's "different for other players in the industry who are more geared to direct import."
By the numbers: Mattel's inventory was up about 12% this fall, while retailers' stock levels were lower — showing who's carrying the load.
On the other side, some retailers are framing the shift as a strategic edge.
- Dollar General CEO Todd Vasos said on the company's Aug. 28 earnings call that it could "mitigate the vast majority of tariff impact, driven primarily by our relatively low direct-import exposure," calling that flexibility a strength.
- Tractor Supply executives said in September they created a "tariff task force" to manage sourcing and keep shelves stocked — noting that cost increases are showing up mostly in "direct-import type items," not everyday consumables.
- Target, Walmart and Costco have said they're spreading production across more countries and leaning on suppliers to blunt tariff costs and keep prices low.
What's next: Retailers' trade tactics may outlast the current holiday cycle.
- GlobalData managing director Neil Saunders told Axios the shift is "most certainly linked to tariffs and trade uncertainty," giving retailers more flexibility while shifting "the onus on suppliers to take on the complexity of dealing with customs and all the associated paperwork."
- He expects the pattern to persist "for as long as tariffs remain in place."
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