Rich (All Roads Lead to China) blogs today on retailers like WalMart and the possible tough quarter they may have in store for them. I've seen lots of headlines over the past few days predicting dire things ahead. One point on the toy recalls that is particularly important:

Since few consumers are buying direct from Hasbro, Mattel, etc it is in fact WalMart who is bearing the risk right now that consumers will not show. They own the inventory, and it is their responsibility to clear the shelves…. after all, WalMart cannot return the products just because they failed to sell them…. so, now they have to get people into their centers.

So if there is a backlash by consumers, retailers are going to be the guys holding the bag. Makes sense, but I also have a feeling that the toy recalls have made more of an impact with Washington and Beijing, and the nervous business community, than they have with consumers.

I think U.S. consumers this year are going to be spending a lot less on everything, including toys. Everyone seems to be expecting a poor holiday season for retailers, so I wonder what will ultimately be blamed for the low numbers, if that actually happens. Yes, one culprit will be the toy recalls. The other will be the sub-prime crisis and the financial hit that a lot of consumers have taken to their personal wealth. I tend to think the latter is the more important.

I'm also not sure how easy it will be to separate these two factors, particularly since such a large percentage of toys sold in the U.S. are manufactured in China. I have no way to prove this, but I just feel that consumers are going to be worrying a lot about their own finances this holiday season and won't be looking all over town for that toy with "Made in USA" sticker.