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Toys ‘R’ Us mulls small, urban stores as part of turnaround
Visiting Toys “R” Us these days doesn’t encourage anyone, young or old, to be a Toys “R” Us kid. This is something that the company has long recognized. They’ve tried to do something about it before, albeit not with much success. In 2015, the company announced a turnaround plan, intended to transform the store into a playground for kids, that didn’t quite get off the ground. The CEO at that time, Antonio Urcelay, left the company in June of that year. Now, a CEO touted as a turnaround expert has some ideas that seem a little more plugged into current trends.
CEO Dave Brandon has been in his role for 14 months and brings to it a reputation for turning around Domino’s last decade, according to Bloomberg. In the article by the news service, he discussed a few changes he hopes to introduce to turn the store into an experiential destination. He mentioned in-store toy and drone demos, Pokemon trading events and more – with a vision of having enough going on to create an overall atmosphere of excitement that will keep kids running from place to place.
Perhaps most interesting of his prospective plans is a smaller urban store concept a quarter of the size of a standard Toys “R” Us outlet, which Mr. Brandon mentioned in context of the chain having nothing currently available for Millennials living in urban centers.
With a huge collectors’ market for action figures and other intellectual property that appeals to adult fans (many who grew up with Toys “R” Us and many living in urban areas) this would seem to be a natural audience to try to court.
We may already be seeing the new face of Toys “R” Us in the retailer’s partnership with American Girl. In October, American Girl is opening mini-stores inside 97 Toys “R” Us locations, with more to come the following year. Though the partnership could do damage to American Girl’s well-established exclusivity by bringing a portion of the product down-market, it could on the other hand boost Toys “R” Us’s status as a destination, and set the stage for store-within-a-store collaborations with other brands.
Discussion Questions
DISCUSSION QUESTIONS: Can Dave Brandon reinvent Toys “R” Us as an experiential destination, succeeding where other attempts have failed? What would it take for an urban Toys “R” Us concept to succeed?
Poll
BrainTrust
Anne Howe
Principal, Anne Howe Associates
Shawn Harris
Board Advisor, Light Line Delivery
Toys “R” Us is failing because it is not a destination. It is the third choice (online being first and Walmart second) as a purveyor of toys. Trying to make it a destination by having urban retail locations to attract adults is ridiculous.
Dave Brandon’s stripe will come to the front when trying to turn around Toys “R” Us. I don’t mean to be unkind but what he did at Domino’s is a demonstration of futility. Sure, he helped Domino’s rise to a me-too choice but he was not able to solve the real marketing problem that pizza shops face: how to get beyond the $10 pizza. Domino’s still competes here and loses customers unless it battles in the discount game that has become the bane of ALL the pizza chains.
Toys “R” Us is a seasonal player in the best of times. As a retail model they should have changed years ago.
Agree, Tom, I would add though that their attempt to be a destination by opening a big, fancy Times Square NYC store years ago also was a failure because that store was such a disconnect with their other stores, and it didn’t address a basic problem: toys by and large have become a commodity, and one that kids play with for a shorter period of time than they did a generation ago.
The only thing worse than opening a big urban store, it seems to me, would be opening a small urban store that seems like something one could find at any second-tier mall in America … but that has astronomically higher operating costs.
Urban small-footprint stores are long overdue for Millennial parents. I hope Toys “R” Us hasn’t waited too long, since Amazon is well-positioned with these shoppers. For urban stores to succeed, Toys “R” Us will have to provide same-day delivery to on-foot urban dwellers who don’t have room in strollers for large items. Toys “R” Us has to figure out how to offset the cost of urban leases with big-ticket sales.
Just thinking out loud but could Toys “R” Us use an out-posting strategy at Gap Kids, Gymboree or Old Navy?
When I was a kid, a trip to FAO Schwartz was an experience. It was magical. When I took my kids to FAO Schwartz, American Girl or Build-A-Bear, they experienced that same wonder that I did as a kid. A trip to Toys “R” Us is more about big selection and picking out toys. Sure we’ve bought a lot over the years, but the magic of the experience was missing. I’d love to see Toys “R” Us bring some of that magic to their stores. Putting an American Girl store inside the store will bring an experience to the store. The action figure collection intrigues me. The Pokemon trading event can make the store a gathering place. It’s all about the experience.
Agreed, if you want to buy toys today you can go to Target or Amazon or Walmart. Disney has succeeded in creating a store experience (and so does Apple as toys for adults) that makes people want to visit even when they aren’t specifically on a shopping trip. FAO Schwarz knew how to create the wonderful toy experience, Toys “R” Us was the “we have everything toys, come pick what you want” place. That doesn’t work as well given Amazon’s endless aisle and other retail stores picking the popular lines up. Going small is important, but more important is the assortment and presentation of the toys and game playing experience that will ultimately drive the success of small stores.
Toys and experience are made for each other. I remember wandering through FAO Schwarz in New York as an adult and being swept away. Toys “R” Us should try to create brand experiences using pop-up locations within the store. It may be too late but it’s the one opportunity they still have to remain relevant. In addition to creating store-within-a-store brand experiences they should look at what companies like Tegu are doing with respect to merchandising and inventory management technology.
The small store urban concept feels like KB Toys — remember them? It’s not enough to combat Amazon and the numerous other retailers selling toys. I’ve said this before and I’ll say it again, Toys “R” Us needs to hire someone from Disney and completely rethink the toy store experience. Kids should be asking mom/dad to bring them to Toys “R” Us, similar to how they demand to go to Disneyland. It would be hard for Amazon to replicate that.
To get the Millennial parent and the spoiled kids’ mindshare, Toys “R” Us needs to leverage all possible store sizes and continue to carry a broad price range of toys. Also they need to have stations for parents to clean the kids’ hands after they sample toys … Millennials are freaks about germs, etc.
Also, with the big stores, consider classes — like a LEGO workshop class. Five to 10 minute areas where kids can get pro training on new robotic toys that they can build. And an Xbox (or Playstation 4) area for game training. Make the store active and more than an online place to buy toys.
Last, have kids get badges for the mini-shops that they visit and these badge collections can lead to online store discounts (have a UPC on the back of the badge).
While I wish them well — who wants to see the sad spectacle of a giraffe crying continue? — I don’t see much coming of this. Like every other big box store, TRU succeeded for one reason: it sold things cheaper than other places. You can’t just reverse direction and pretend you’re a specialty store.
If I was preparing to lay down big bucks for an action figure, or other (presumed) adult “toy,” I would go to a place where I thought people knew about what they were selling … and TRU would be about the last place I would expect to find that.
Smaller, urban concepts could work as “showroom” and pick up (from online purchases) centers, but from our own testing, the customer has to be much younger to accept that idea, and I’m not sure that TRU’s core customer fits that bill.
In terms of the “experiential destination,” I’ll believe it when I see it. TRU is still very much stack it high and let it fly oriented with the exception of their test store in NJ that makes the occasional 10 x 12 area “experiential.” They have a long way to go and are still pretty much run by operations, not customer expectations.