Toys “R” Us Takes Express Route for Christmas

Discussion
Sep 10, 2010
George Anderson

By George Anderson

Toys "R" Us must have been really pleased with
the performance of the 90 Express pop-up stores it opened for last year’s Christmas
holiday season because it plans to open 600 this year. The toy chain operates
587 full-size permanent locations.

"By doubling the number of Toys "R" Us locations nationwide,
now more than ever we will be available when and where customers want to shop
with us this holiday season," said Jerry Storch, chairman and CEO, Toys "R"
Us, Inc., in a press release.

Mr. Storch told The Wall Street Journal, "The
numbers show we were able to add additional sales, rather than cannibalizing
sales from our free-standing stores."

The Express stores, which Toys "R" Us
began opening in June and will continue through November, are located in malls
around the country. Roughly half of the planned Express locations, which average
around 4,000 square-feet, are currently open.

The company will look to keep
some of the pop-ups permanent based on performance and favorable lease terms.
Eight stores from last year’s group of pop-up locations became permanent.

Discussion Questions: What is your reaction to Toys "R" Us Express
store strategy? Will we see many other retailers opening pop-up locations
for the Christmas selling season this year? How does this play into the current
state of mall vacancies?

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18 Comments on "Toys “R” Us Takes Express Route for Christmas"


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Paul R. Schottmiller
Guest
Paul R. Schottmiller
10 years 8 months ago

This is a location/convenience strategy and definitely a positive one for Toys “R” Us given the current state of toy retailing combined with retail vacancies. However, how well it does and if it is sustainable will be just as much a function of their ability to compete on selection, availability, and price against most notably Walmart and Amazon.

Ryan Mathews
Guest
10 years 8 months ago

No question “Pop Up” retailing works if all the stars — offering, timing, consumer economics, etc. — are in alignment. I don’t think there’s any way to argue against that. That said, like any other merchandising/promotion device, it is dangerously easy to get carried away with it.

Susan Rider
Guest
Susan Rider
10 years 8 months ago

Makes a lot of sense, and it’s thinking “out of the box” literally! This is a perfect solution for seasonal retailers. Halloween Express has certainly proven it a success. Why spend your capital on brick and mortar, insurance, maintenance, etc, twelve months a year when eighty percent of your business is done in 3 months?

Carol Spieckerman
Guest
10 years 8 months ago

When I learned of TRU’s pop-ups-on-steroids plan, I was truly excited. Finally, a retailer that will leverage pop-ups for real presence and profits, not just self-promotion. Traditional TRU stores are destination shops; by hitting the malls, TRU will be poised to grab walk-by traffic while creating a big of buzz in the process.

Finally, mall locations will place TRU in context with electronics, gadget and gaming retailers that have scooted into the toy space.

I love it.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 8 months ago

Seasonal pop-up stores are becoming increasingly popular with retailers of all verticals. They reflect the targeted, customer-focused nature of 21st century retail–give the customer what they want, when they want it. As long as high vacancy rates in retail real estate make them affordable, they will continue to grow.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 8 months ago

I think this is an obvious way to leverage opportunities in the retail real estate market, and create much greater presence. Still, going from 90 stores to 600 strikes me as quite an undertaking.

As always, the devil’s in the details. What kind of strain will this place on the organization? Where do you get the manpower to ‘pop-up’ these stores. Where do all these store managers appear from? What impact will this have on the existing store base. Is there enough executive capacity to manage all these balls in the air proficiently as opposed to merely adequately.

I’m sure that TRU has studied all of this and has answers for it all, but the true measure will be in the actual execution.

Paula Rosenblum
Guest
10 years 8 months ago

I agree with Carol. I love it.

Takes distressed space that likely once housed KB Toys, and makes for convenient stop-off shopping. And a “try before you buy” space.

Great idea.

Bob Phibbs
Guest
10 years 8 months ago

At the risk of being the lone voice here, this is a huge assault on local toy retailers who are in the community 24/7. TRU is cherry-picking the right time of year no doubt and is rewarded for vacancies in a mall. Not sure why any toy stores would ever take a chance on a mall location again.

Marci Yunes
Guest
Marci Yunes
10 years 8 months ago

Great move! TRU should generate a lot of impulse purchases with the pop-up locations.

Doug Stephens
Guest
Doug Stephens
10 years 8 months ago

On the one hand, you have the lead story of a retailer capitalizing on high mall vacancy to create seasonal business opportunity. But my feeling is that behind the headline, you have a brand questioning the necessity of its current big-box model. Does the world really need 50,000 square foot toy stores anymore? Pop ups today…standard store model tomorrow???

Gene Detroyer
Guest
10 years 8 months ago

The biggest business problem with most retailing is that the retailer has to wait until November to start turning a profit. This is a double challenge in the toy business.

TRU has found a way to grow and shrink square footage and overhead to match the seasonality of the business. How many other retailers would like to do that?

Add to that the alternative versus the box locations and you have incremental business. Include in-store, online access and TRU can offer everything they offer in the big stores.

This is a good idea and a perfect match for TRU.

Camille P. Schuster, PhD.
Guest
10 years 8 months ago

If you can provide more retail locations when and where consumers want to shop, this is a great strategy.

Jonathan Marek
Guest
10 years 8 months ago

I agree with the consensus–great idea.

The important part, which Jerry Storch alludes to, is really understanding the cannibalization of these locations. There’s a lot of pressure in any store count growth situation to minimize the internal perception of cannibalization. Leaders must be ruthless in focusing on the facts (and must have the analytics to get the answer right).

Mel Kleiman
Guest
10 years 8 months ago

Good for the customer, good for the retailer, and good for the landlord. Here you are looking at a new, more efficient and effective model.

Lee Peterson
Guest
10 years 8 months ago

This model is fantastic, even ideal…for the retailer. Paying rent only when you’re in peak season is every retailers dream. But you have to wonder about the precedence. Can developers–and subsequently malls/strip centers–survive if they’ve only got tenants every now and then? Will customers go to malls if they’re not really sure who’s open? Will they be barren in January, July and October?

Aside from those unanswered questions, it sure seems like the way of the future: picture, from a consumer perspective, a gathering of retailers in May-June that sold specialty items for summer…same thing for Back-to-School. Win – win.

Hats off to TRU for really committing to the idea. They didn’t tippy toe into it. Not sure, but if there’s anything that seems like an answer to slowing down the onslaught of online sales, it’s this “perfect” retail scenario: the right product at the right time in the right place.

Anne Bieler
Guest
Anne Bieler
10 years 8 months ago

I agree that this makes great sense for TRU. With a limited selling season, many impulse purchases, busy shoppers who don’t take time for the big-box journey, pop-up stores are just a good idea. Know client top choices, make it easy, and low overhead should help TRU have another good season.

Ed Rosenbaum
Guest
10 years 8 months ago

Toys “R” Us is taking the bull by the horns and doing something positive to change two distressed areas, the toy industry and mall real estate. I agree with most of the comments posted. And I am thrilled that it is Toys “R” Us taking the lead to say to Target and Wal-Mart that they want their piece of the pie back.

Toys “R” Us was close to being a memory a couple years back. Now they have become a factor in the toy industry. One that mall real estate is happy to have and willing to negotiate space for. Hooray for them. Everyone including parents shopping for the children are going to be winners this season.

Michael Baker
Guest
Michael Baker
10 years 8 months ago

I’m not sure why Toys “R” Us doesn’t only do pop-ups and nothing else. Many of the stores have got to be unprofitable.

The pop-ups give it an opportunity to sell at a time of the year when everyone is buying toys. Why not close down the rest and leave it to WMT?

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