The toy industry shrank for the second year in a row. Sales nationally were down over 2% compared to 2007, which was down from 2006. The new Consumer Product Safety Improvement Act (CPSIA) has the whole industry in turmoil trying to figure out how to prove their already safe toys are still safe. Half of the factories in China that make toys have closed, causing toymakers to scramble to find capacity. The housing market, the credit market, the auto market are all in crisis. The media is calling this the worst economy since the Great Depression.

Yet the mood at the International Toy Fair just held in NYC was quietly confident. All of the retailers with whom I spoke had a decent 4th quarter and strong January. There were even a few newbies at Toy Fair with plans to open up new toy stores in this economy. Their friends must think they are nuts!

So what’s happening in Toyland that seems to make these businesses immune to the doom and gloom around us?

To a person, it was the knowledge that they control their own destiny. None of these businesses has conceded any control to the whims of Wall Street, to the lords of the layoffs, to the gods of government bailouts. They don’t bemoan the banks, throw missives at Mother Nature, or hunker down in a corner waiting for everything to blow over.

Every retailer with whom I spoke talked about how they were working hard to market their business, improve their efficiencies, and thrill their customers. Every retailer spoke about finding the best products, offering the most convenient services, getting the most out of every opportunity.

Yes, each and every toy store owner I saw at Toy Fair was optimistic that 2009 would be profitable – even more profitable than ’08, ’07 or ’06.

Maybe the optimism comes from selling toys for a living. Maybe it’s because the stores that didn’t feel optimistic didn’t go to Toy Fair.

Or maybe, just maybe, it’s because the stores who control what they can control and don’t worry about what they cannot, always seem to do better, regardless of the economy.

Are you one of those stores?

-Phil