KB Toys plans a Christmas comeback

Discussion
Source: LinkedIn
Mar 29, 2018
Matthew Stern

Toys “R” Us is now a part of retail history. But a major competitor from big box retail’s past is planning a return in hopes of filling the void left by Toys “R” Us’s closure.

Elia Kassoff, president of Strategic Marks, the company that currently owns the KB Toys brand, announced on LinkedIn that the company would be accelerating existing plans to relaunch the toy chain’s online and brick-and-mortar presences because of the Toys “R” Us closure announcement. Mr. Kassoff wrote that KB Toys plans to have stores up and running before Christmas.

Strategic Marks’ brick-and-mortar launch is pegged on pop-ups, according to CNN Money. The company is planning 1,000 pop-ups for Black Friday and the holiday shopping season, after which it will decide which locations will remain permanent based on performance and lease availability.

Though competitive with Toys “R” Us for much of its history, the KB Toys brand was, in fact, bought by Toys “R” Us after the KB Toys store chain went officially defunct in 2009. The brand was, as CNBC reported, purchased by Strategic Marks in 2016.

Strategic Marks specializes in reviving old brands. Its website, retrodepartmentstores.com, lists ownership of eight defunct department store brands, including Joseph Magnin, Bullock’s and May Company.

The “About” section of retrodepartmentstores.com states that the plan is to eventually branch out with the brands listed into boutiques, exclusive apparel and, eventually, brick-and-mortar stores. It is not clear at present how far Strategic Marks has pursued plans for bringing these brands it owns back into the physical world.

Mr. Kassoff is also the CEO of Leaf Brands, a classic candy brand he revived in 2011.

Some big box-era retailers have had trouble with their new-millennium reboots.

For example, Circuit City, after years of chatter about impending relaunches since the brand came under new ownership in 2015, announced in January of this year an online and subsequent brick-and-mortar relaunch.

However, the morning after the scheduled February go-live date, news broke that the website had not launched due to an unexpected deluge of traffic. Since then, the website has displayed the same corporate page announcing something coming soon.

DISCUSSION QUESTIONS: What will KB Toys have to do in order to successfully come back? Is the strategy of launching pop-ups during the holiday season a good first step to take?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I like the idea. I guess I’d have to see where the KB stores 'pop-up' and what the digital strategy will be. "
"Heavens, not EVERYONE in the world shops online 100 percent of the time, and there is that impulse buy factor."
"Holiday pop-ups are a good place to start for any toy retailer. Then again, a Times Square holiday pop-up was a big part of the TRU comeback strategy."

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38 Comments on "KB Toys plans a Christmas comeback"


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Bob Phibbs
BrainTrust

It was a dirty, dingy group of stores a decade ago — I don’t get who would clamor for that experience again with piles and piles of toys and no merchandising. Didn’t Toys “R” Us show that doesn’t work?

Ellia Kassoff
Guest

At the tail end, they had too much product but people LOVED the experience of finding a great deal and knowing they could do this in a short period of time in the mall.

Bob Phibbs
BrainTrust

Deals — seriously, in a mall — on toys? KB never had any experience with online retailers and I doubt they could do it now either.

Max Goldberg
BrainTrust

Toys, like electronics, have become a commodity business, one dominated by a handful of brick-and-mortar and online players. Without proprietary and exclusive products, I don’t see how KB Toys can make it during the holiday season.

Ellia Kassoff
Guest

We will have exclusives and collectables just as the original KB Toys. To say they are all a “commodity business” is incorrect. Private Equity and greed killed both KB Toys and Toys “R” Us, not the market. Toys “R” Us made more than $350 million in profit this year but had that $400 million debt payment to make thanks to Bain, Vornado and KKR.

Phil Masiello
BrainTrust

This is going to be a tough road to revive this brand and category. The key is to be able to have the latest and greatest toys available. But even then, those products will be available on Amazon.com, Walmart.com and many other places.

Couple that with the move to more electronic games and they will have their hands full.

I do think it is very smart to build pop-up stores as a revival strategy. This keeps costs down, does not commit the company to long-term leases and allows them to test the waters before committing. This will also be a great help to mall operators who have excess space from store closings.

It will certainly be interesting to watch and I admire the approach.

Ellia Kassoff
Guest

Many of you are forgetting that toys are an impulse item. You can’t turn to your crying kid and tell them you are going to buy the product online and they will get it in a few days. We will have that online option with more inventory for the holidays, and have an amazing selection of product.

Bob Phibbs
BrainTrust

A mom can find a “shut up toy” in the grocery store, drug store and gas station. They have PLENTY of places for impulse items without going to the mall.

Ellia Kassoff
Guest

The difference is we’re working with people in the toy industry who know how to sell toys.

Frank Riso
BrainTrust

KB Toys will need to have a digital strategy in order to be anywhere near successful in a come back. I am not sure they can do that in the limited time before the Christmas season. Their strategy of launching pop-ups during the holiday season may not work either. Walmart and Target now own the toy market and without Toys “R” Us they can only get stronger. KB did not make it against Toys “R” Us so why would they think they can compete with the likes of a Walmart or a Target? KB Toys needs to consider major ads on children’s programs and need to get online fast in order to do any real successful business in this category. KB Toys and Toys “R” Us belong in the history books!

Ellia Kassoff
Guest

Walmart and Target will expand their toy selection but will not become toy stores.

Art Suriano
BrainTrust

KB Toys has an opportunity to be successful and possibly become a major toy store player. One-thousand pop-ups is a brilliant first step and I like that they’ll wait until after the holiday season to see which ones will remain permanent, so they are not committing to too much debt long-term.

KB has to realize that every retailer who sees an opportunity with toys will attempt to go after that business, so they must focus on being different and the new toy brand leader. With the right locations, promotion, toy selection, technology, prices and service, KB has a real shot of gaining significant market share, enough to take them to the next step which would most likely be additional pop-ups followed by full brick-and-mortar locations, whether in malls or free standing.

Let’s hope they have the right leadership and enough dollars to back them up, and if so they just might become the toy store of the future.

Ellia Kassoff
Guest

Someone who gets it!

Neil Saunders
BrainTrust

Sadly, this sounds more like a case of wishful thinking than a commercially viable plan.

KB Toys may get some traction from toy manufacturers and suppliers keen to see another player in the market. Getting customers to shop there is another matter.

What is KB bringing to the party that Toys “R” Us wasn’t, and how are they planning to compete on price/range/convenience/etc. with Amazon, Walmart, Target, and others? I am not sure there are clear answers to those questions.

Ellia Kassoff
Guest

We already have millions of people waiting for KB to come back. These are the people who were the KB kids and will now take their kids into KB to share the experience. We have proven this model over and over with our other projects.

Bob Phibbs
BrainTrust

I doubt anyone is clamoring for the crowded, dirty, discount environment that was KB Toys in underlit and poor locations in malls — much less millions. They didn’t come back to Toys “R” Us no matter how much Toys “R” Us wished, either.

Charles Dimov
BrainTrust

Leveraging an old, defunct brand name is clever. There is a sense of “I know them from somewhere.” But then avoid the errors of the past. Yes pop-ups and a smaller format is a good move. Use these to get a good geographic footprint, AND marry that with a solid e-commerce base (make it an omnichannel offering as a good differentiator). Most importantly, make it a spot that kids want to go to — to play with the toys and have a fun experience. Fail here, and the revival attempt will be futile!

Ellia Kassoff
Guest

Yes! You get it, Charles!

Anne Howe
BrainTrust

I like the idea of pop-up locations, but KB Toys had better be prepared to deliver great merchandising and hire “experience teams” to deliver what shoppers have been looking for in this category. They’re going to need strong relationships with toy brands as well, which they may not have now. A scenario that leaves a lot of unsold inventory in temporary stores is the last thing the major toy brands will tolerate. Maybe it’s best to let sleeping dogs lie.

Ellia Kassoff
Guest

Pop-ups will be used to get quick traction. Our plan is to work with the largest pop-up companies who have the methodology down and can replicate it. After the season, we then decide which locations will become permanent and shift the inventory. We already have every major toy manufacturing group asking to help to ensure our success.

Paula Rosenblum
BrainTrust

I like the idea. There’s not much evidence that Toys “R” Us’s problems came from lack of demand — they came from too much debt. I guess I’d have to see where the KB stores “pop-up” and, as already mentioned, what the digital strategy will be. Christmas season is not a bad time to do pop-ups, but you’d better have good merchandise forecasts in place or it’ll be a disaster.

Ken Lonyai
BrainTrust

Maybe I’m missing something here, but nostalgia retail brands seem like a concept looking for a market. KB has been gone for nine years. While Millenials of childbearing age may have some fond memories of the chain (maybe not), as Toys “R” Us learned, that era of toy shopping is a distant memory and a name or a memory isn’t going to revive it.

KB will have the same challenges everyone else is facing, namely Walmart and Amazon’s domination of the mainstream toy market. More specialized toys are the domain of independents and I doubt there’s too much room to squeeze into that niche either.

Ellia Kassoff
Guest

Our core customers are the kids who grew up with KB and have a strong brand identification with it since there were only two real toy retailers in the U.S. They will bring their kids into the stores to share the experiences they had as a kid and, oh yeah, they have the money now.

We’ve successfully replicated this model with all our other retro products and know our customers better than anyone in the U.S. Private equity and greed screwed Toys “R” Us, not e-commerce or larger competitors. Bain sucked all the money out of both companies (and many, many more).

Meaghan Brophy
BrainTrust

In short: a lot. KB Toys doesn’t have the same name recognition as Toys “R” Us. As Bob pointed out, if anyone does have feelings about KB Toys, there’s a good chance they are negative.

Holiday pop-ups are a good place to start for any toy retailer. But then again, a Times Square holiday pop-up was a big part of the Toys “R” Us comeback strategy. Clearly, that didn’t work out.

Overall, I think there is a great opportunity for independent retailers and startups to move into this space and revitalize the toy industry.

Ellia Kassoff
Guest

Both companies had different experiences, which is why they were able to compete side by side for so long. For one, KB was a mall store, not a destination store so, kids/parents could walk-in and pass the time while other family members shopped. Second, KB was known for value and good deals, even though that was more of the stuff at the front of the store.

Bob Phibbs
BrainTrust

Discounts aren’t a strategy.

Ellia Kassoff
Guest

No, but good value is!

Kim Garretson
BrainTrust
2 months 20 days ago

The location of the pop-ups obviously will be critical to any success this holiday, but equally important will be the quality of the staff. I would be concerned that KB will only be able to hire a poor quality group of seasonal workers this year, who may not have the energy and personality to really engage the customer about their critical gift purchases. They can’t win on price and, even with a good selection, there needs to be a high-energy vibe around the shopping experience.

Ellia Kassoff
Guest

Kim, we have thousands of resumes sent to us from former KB and current/former Toys “R” Us employees with such passion to stay in the toy industry. We won’t have any problems hiring the right people. Over 33,000 will come right from Toys “R” Us! We also plan to have one “toy nerd” per store to help collectors.

Peter Charness
BrainTrust

Heavens, not EVERYONE in the world shops online 100 percent of the time, and there is that impulse buy factor. Toy stores, cleanly done especially with well-tailored assortments will do fine I expect, mostly around Christmas — not in volume all year round. So some permanent stores and a lot of pop-ups makes a lot of sense to me.

Ellia Kassoff
Guest

Thanks Peter, you have your facts straight.

Cathy Hotka
BrainTrust

How can KB Toys provide the kind of experiential excitement that has been missing in the toy biz? Every format — including pop-ups — needs an experience hook.

Ellia Kassoff
Guest

We actually have quite a few planned. Experiences are the ‘name of the game’ in retail now and we have some amazing ones planned. Malls as a whole are not going away but their overall experiences have. This needs to be changed and many are finally getting it. They need to get people in the stores consistently and find multiple ways of doing it.

Craig Sundstrom
Guest

Pray. Hard.

What can I say? I don’t think this idea has any potential (indeed Strategic Mark’s whole concept seems as wrong-headed as it is well-intentioned). Much like the human body, a brand begins to disintegrate the second it’s no longer alive … bringing back after a decade something that was IMHO second-tier even when extant, would be a miracle.

Ricardo Belmar
BrainTrust

One word: experiential. If KB Toys can’t figure out how to drive a true experiential presence in their pop-ups, no amount of digital strategy will make this successful. With the failure of Toys “R” Us, we can conclude there are two segments to the toy category — mass-market discount/volume based, and specialty/independent. The former is purely driven by price with a selection of the latest rending toys. The latter is based on having exclusive items that are not mainstream, but instead are unique AND they deliver an in-store experience that drives nostalgia for parents and fun for kids trying out toys.

An old name (it’s been HOW many years since KB Toys was out of the market?) is not going to be nostalgic enough to drive foot traffic. As Bob Phibbs points out, for many the nostalgic memory is not a pleasant one. In that sense, they might as well be bringing back RadioShack!

Ellia Kassoff
Guest

I think the name WILL bring in tons of foot traffic initially, as moms and dads bring their kids in to share their experiences they has as kids. It’s all about the experience and we will have great ways of delivering that to the customer.

Bob Phibbs
BrainTrust

Kids don’t have a great experience with cheap products. The stores were crowded with merch and dingy. I’ll look forward to seeing how this experiment looks a year from now when we’re being told “the customer changed.”

Ellia Kassoff
Guest
Brick-and-mortar is not dead. Class “A” and “B” malls are doing very well. Were malls overbuilt in areas where they shouldn’t have been? Yes. Consumers still want to see, touch, feel and buy products in stores. The major issue is the experiences have died at the store level and consumers are bored — as seen in the NRF’s talking points. Walmart and Target will expand their toy areas (I already know this), but they will not become a toy retailer. We will be rolling out the stores focusing on the great experiences our core customer had when they were kids and then sharing that experience with their kids now. Pop-ups WILL work since they will give us the ability to test most of the major markets and, at the end of the season, decide which locations will support a year-round store. Yes, we will have a digital strategy! Our company is the leader in the retro space so we have tons of experience rebuilding brands and those experiences attached to them. It’s a huge market… Read more »
wpDiscuz
Braintrust
"I like the idea. I guess I’d have to see where the KB stores 'pop-up' and what the digital strategy will be. "
"Heavens, not EVERYONE in the world shops online 100 percent of the time, and there is that impulse buy factor."
"Holiday pop-ups are a good place to start for any toy retailer. Then again, a Times Square holiday pop-up was a big part of the TRU comeback strategy."

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