Is Toys ‘R’ Us just playing around or will Americans buy its new concept store?

Discussion
Photo: TRU Kids Brand
Jul 19, 2019
George Anderson

There are some that will tell you that the greed of private equity investors killed Toys “R” Us long before the chain chose to liquidate its business last year. Now, like a Phoenix (a mini one, at least) rising from the ashes, Toys “R” Us is back with a new concept that appears to be all about play — a customer experience that the previous version of the retailer also said it was attempting to achieve, but never really did.

Yesterday, TRU Kids Brands, the parent company of Toys “R” Us, announced plans to open two new stores in time for the 2019 Christmas shopping season. The stores located in busy malls — one in Houston, TX and the other in Paramus, NJ — will be much smaller (6,500-square-feet) than those operated under the banner in its previous iteration. Future stores, as previously reported, are expected to be closer to 10,000-square-feet.

Stores will be highly interactive, inviting kids and parents to test products before making purchases and offering new events and activities every day. Brand stations throughout will enable kids to learn through play using STEAM (Science, Technology, Engineering, the Arts and Mathematics). An open play space in the store will include Geoffrey the Giraffe, the Toys “R” Us mascot. 

The new store format has been developed in a joint venture with b8ta, a retail-as-a-service startup founded in 2015 with the goal of giving consumers access to try new products before making a purchase. Macy’s, which took a minor stake in the company last year, has used b8ta’s software platform to scale The Market @ Macy’s in-store pop-up concept.

“As a kid, my memory of Toys ‘R’ Us was running up and down the aisles kicking balls and playing with the coolest toys,” said Phillip Raub, co-founder and president of b8ta and interim co-CEO of the Toys “R” Us joint venture, in a statement. “As the retail landscape changes, so do consumer shopping habits. But what hasn’t changed is that kids want to touch everything and simply play.”

Richard Barry, CEO of Tru Kids and interim co-CEO of the joint venture, believes that the Toys “R” Us name is still held with affection by large numbers of American consumers. 

“We have an incredible opportunity to entirely reimagine the Toys ‘R’ Us brand in the U.S. and are thrilled to partner with b8ta and key toy vendors to create a new, highly-engaging retail experience designed for kids, families and to better fit within today’s retail environment,” Mr. Barry said.

A TRU Kids spokesperson told RetailWire that the company is in active talks with brand partners and that details would be forthcoming. Brands working with the joint venture will pay for space and services in the new stores and “in exchange they keep 100 percent of the in-store sales of the product.”

DISCUSSION QUESTIONS: Do you expect the joint venture of TRU Kids and b8ta to “create a new, highly-engaging retail experience designed for kids, families and to better fit within today’s retail environment?” What do you think of the business model whereby manufacturers pay for space and services and keep 100 percent of sales made in stores?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is a great test that Walmart, Target and all department stores should watch closely."
"The brand is affectionately regarded and therefore has a great chance for success here."
"This is the modern day version of a flea market, which are found all over the country at fairgrounds. If they do it right it should do well."

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14 Comments on "Is Toys ‘R’ Us just playing around or will Americans buy its new concept store?"


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Mark Ryski
BrainTrust

It’s an interesting approach, and I give the venture even-up odds for creating a cool retail experience. However, the big question will be: can it scale profitably? In this regard, I’m not sure. Business models like the one described require lots of coordination with manufacturers. Keeping the environment fresh and interesting is hard to execute consistently. I admire the effort and the approach, but it’s all very small and nascent.

Dave Bruno
BrainTrust

While I am uncertain about the business model, I am certain that the types of experiences planned for the new Toys “R” Us stores are exactly what they should have done five years ago. How many of us here on RetailWire pleaded with Toys “R” Us to engage shoppers with opportunities to play and experience the toys inside the store? I sincerely hope it works and, in the meantime, I will watch the new business model closely.

Tony Orlando
BrainTrust

This is the modern day version of a flea market, which are found all over the country at fairgrounds. If they do it right it should do well, and the manufacturers can showcase new, vintage, and the inevitable closeout toys as well. I’d treat it as a pop-up event and increase the number of places going into the Christmas season.

Harley Feldman
BrainTrust

The new experience at Toys “R” Us will be stimulating and should engage children and their parents beyond the experience in the old style stores. This will result in short term sales as the experience should translate into a fun experience trying out new games. The real question is, will it translate into a long term relationship between the shoppers and the Toys “R” Us brand?

The “keep 100 percent of sales” model cannot work. How does Toys “R” Us make any money if 100 percent of sales goes out the door? I could understand Toys “R” Us returning a percentage of the sales to the manufacturer, but 100 percent makes no sense. The good part of the business model is having the manufacturer hold the product cost risk until a sale occurs.

Lee Peterson
BrainTrust

We shall see, but I’ve always thought that a “showroom” store would be best for toys, including within today’s big box stores. You know, Bonobos (play with, then scan and ship-to-home purchases), only with toys. Instead of stacked boxes, you use the space they take to let customers play with/touch/inspect the product (and so, obviously, could their kids) and then walk out without said cumbersome box, which would be waiting for them at home.

b8ta gets that so, at the very least, this is a great test that Walmart, Target and all department stores should watch closely.

Art Suriano
BrainTrust

I think there are a lot of good ideas here and only time will tell what will be successful and what will not. There will no doubt be some modifications and changes as the company moves forward. However, Toys “R” Us has the advantage of excellent name recognition. I am one who feels the private equity deal destroyed the old Toys “R” Us because it prevented the company from having the necessary cash to invest in their stores as times were changing. Instead, stores became tired, old, and dull not to mention the inventory of higher-priced products. Hopefully without excessive debt, the leaders of the new company will be able to build and grow a successful company. They certainly have more things in their favor than against them, so I expect this to be a success and hopefully years from now we’ll be looking at a chain of new Toys “R” Us stores.

Jeff Sward
BrainTrust

With b8ta in the driver’s seat, I have a high level of confidence that the model will resonate with customers. My mantra is “Explore + Experiment = Experience” and that is exactly what this sounds like. The holiday performance of the prototypes will help them sort out the math and the logistics.

Ken Wyker
Guest

My initial reaction to this was concern about the business model with the manufacturers getting 100 percent of the sales. I wanted Toys “R” Us to share in the manufacturers’ success, so they would have an incentive to advertise and promote the concept to drive traffic to the store.

But then I realized that that’s the whole point … part of the challenge of a store of this type is showrooming while the sale occurs elsewhere. Now I understand why they don’t want to be tied to sales from the physical store!

To resurrect the Toys “R” Us brand as a destination to check out toys and yet have the success of the model not tied to retail sales seems brilliant.

Lee Kent
BrainTrust

The brand is affectionately regarded and therefore has a great chance for success here. I think kids and parents alike will love this concept that offers a great experience as well as helps determine what kinds of things attract their kids. There is a learning aspect in there too. I am not sure how the model works with b8ta so I cant speak to that but to me this is a win-win-win. For my 2 cents.

Scott Norris
Guest

Let’s be clear, the manufacturers are not getting “100 percent of the sales” – there will be fees: a per-transaction fee, slotting fees, and store overhead fees. How will those charges compare to a Hasbro or Mattel just deciding to put up their own showroom and have total control of the experience (as Disney and Lego do in these kinds of malls)? Without new Toys “R” Us taking inventory risk, they won’t be motivated to train staff and promote to get traffic in the door – as they’re pitching it, the manufacturers take all the risk but they still get paid regardless of how well they bring feet into the space.

David Dorf
BrainTrust

I think it’s too late — kids don’t know the brand anymore. The concept might work in a few flagships, but it doesn’t sound scalable.

Cynthia Holcomb
BrainTrust

From the consumer side, the Toys “R” Us brand is about isles and isles of toys for kids. Not adults. Kids don’t care nor are they aware of the business criteria adults impose on a toy store. A “store” filled with toys needs no branded explanation to a youngster. Walmart, Target, and others usually have only one or two aisles for toys.

Exciting — an innovative joint venture of TRU Kids and b8ta. A destination in the making if those in charge create a dynamic, organized experience, not a “free for all” for both kids and adults.

Craig Sundstrom
Guest

Sears or TRU? TRU or Sears? Which dying retailer story will we finally stop hearing about first. (Just when we thought liquidation had answered the question….)

Normally, I wish people well in their endeavors, however quixotic they may be. In this case though, until someone can make to me a convincing case that TRU is actually missed, I have to regard this revival attempt as a strange case of OCD rather than a viable concept.

Christopher P. Ramey
BrainTrust

Children just want to have fun. They seize moments; only what’s in front in front of them at that time really matters.

Putting toys in the hands of the ultimate influencers makes each item an impulse purchase. No child every suggested a killer toy should be bought on a different day.

I see a big win.

wpDiscuz
Braintrust
"This is a great test that Walmart, Target and all department stores should watch closely."
"The brand is affectionately regarded and therefore has a great chance for success here."
"This is the modern day version of a flea market, which are found all over the country at fairgrounds. If they do it right it should do well."

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