Posts Tagged 'Toys “R” Us'

End of the line for Toys “R” Us?

Big retail news of the day (as discussed at RetailWire) is the announcement that Toys “R” Us is throwing in the towel. Here’s my post-mortem:

It’s unlikely that Toys “R” Us is going to stay afloat, and this is a big deal for those who follow the recent history of retailing. They were among the first “category killer” stores with broad assortments of a single category in a big-box format. There have been others (Linens ‘N Things, Sports Authority, etc.) but this one stands out. If you see reporting on “the Amazon effect,” it’s more complicated than that.:

It’s tough to survive in a highly seasonal business like toys given the growth of e-commerce and the dominance of discounters in the same category. And there has been a generational change, where many of today’s kids are interacting with technology (smartphone apps, streaming video games) instead of the toys of a short time ago.

And one more lesson learned: A mountain of private-equity debt doesn’t help. On this point, an added thought from a more recent RetailWire discussion:

TRU was partly the victim of private-equity debt burdens, but also made its own mistakes. This is an example of a big box store with too much square footage — in a seasonal business facing robust competition from discounters and Amazon — failing to adapt.

There is probably enough brand equity remaining to salvage the business, provided that Storch and team rethink the model. (And get rid of that debt load.) Maybe an online-only play is the place to start, instead of trying to recapture the past.


Can JCP be a player in toys?

JCPenney recently announced an expansion of its toy business, in time for holiday 2017 selling. RetailWire panelists weighed in on the topic, and here’s my take:

Toys are a double-edged sword for softlines retailers like Penney and Kohl’s who want to strengthen their children’s offerings. It’s hard to avoid carrying toys, but it’s also hard to compete against the dominant space of the discounters and big-box stores. (Not to mention the low margins.) Customers have come to expect the best selection and prices from market leaders like Amazon, Walmart and Target.

The broader risk to JCP is that it becomes a “bunch of stuff” with the addition of new categories (from appliances to toys, from bikes to electronics). Just because the store has square footage to burn doesn’t mean that overassortment is a winning long-term play.

American Girl and Lands’ End: Did they make the right call?

American Girl recently announced its expansion into Toys “R” Us stores, while Lands’ End plans to sell its product on Amazon. These are two very different kinds of products — and distribution decisions. My comments (from RetailWire) suggest that I agree with one of the decisions but not the other….because more distribution is not always better.

First, regarding American Girl:

Yes, Toys “R” Us is the biggest big-box toy chain by far (not counting the huge sales at Walmart and Target) so it’s a tempting decision for American Girl. But I think it cheapens a premium brand, and there may have been other ways to drive broader distribution (and more sales). For example, wouldn’t a traditional department store like Macy’s be a suitable home for American Girl shop concepts?

Next, about Lands’ End:

By 2017, Amazon may outpace Walmart as the biggest seller of apparel in the U.S. It’s hard to argue with its legitimacy and power if you’re a label trying to rebuild your volume base, not just your brand equity. Remember, Lands’ End was tarnished by its years-long association with Sears (including its shops within Sears store), so it’s not nowhere to go but up.

Toys “R” Us: The big box store is still ailing

Here’s a recent post from RetailWire about Toys “R” Us, following the release of its (disappointing) holiday sales. The question is whether this is symptomatic of big box stores generally, or issues unique to TRU. Here’s my point of view:

The struggles at Toys “R” Us point out that the big box store concept is not out of the woods yet. (Best Buy’s improving numbers are the exception to the rule.) Many of the “transformational” steps being taken at TRU strike me as “Retail 101”: Managing pricing, costs, inventory and the in-store experience are all fundamental to any successful retailer.

If Toys “R” Us gets these basics right, it is still facing some significant headwinds. The competition isn’t getting any easier, from Amazon to Target, who made toys the centerpiece of its holiday campaign this year. Meanwhile, sales continue to migrate to e-commerce and omnichannel retailers while TRU deals with too many brick-and-mortar locations.

Crystal ball, anybody?

It’s fun to peer into the future of retail, as in today’s RetailWire discussion about the look of the industry in 2020. I focus on the trend away from big box stores that seems to be the topic of the moment:

I don’t agree with the premise that combination food/discount stores are doomed (both Target and Walmart are both committed to the food and consumables businesses), but the giant footprint under one roof may be another story. On the other hand, the “category killer” big box store (toys, electronics, office equipment) is definitely struggling with the effects of technology on its business.

Think about Best Buy, Staples and Toys R’ Us as examples: Both Amazon and the discounters provide plenty of price and assortment competition. More importantly, many of these stores are still devoting space to products (CD’s, DVD’s, printers and paper) that are quickly losing steam with consumers. It pays for stores like Best Buy to keep rolling out small-footprint stores focused on a single category like mobile.

Barnes & Noble expands its kids’ assortments

From a recent RetailWire discussion about Barnes & Noble, and its plan to expand educational toy assortments into space formerly occupied by CD’s and DVD’s:

I agree with most panelists on this issue…there is a natural synergy between children’s books and educational toys. While the discounters and big box stores like Toys ‘R Us focus on “name brand” and licensed toys and games, the educational market seems fragmented and underserved. It also provides a reason for parents and kids (and gift-givers) to visit B&N on a more frequent basis, even though books for kids aren’t migrating to e-versions as fast as general-interest books. One more benefit: A good redeployment of some of the unproductive space that B&N has devoted to CD’s and DVD’s over the years as this industry moves quickly to digital delivery.

Toys ‘R’ Us meets “Cash for Cribs”

Toy’s ‘R’ Us is taking a cue from the successful “Cash for Clunkers” program, by providing a “trade-in” allowance for a new car seat when you return an old or damaged model to their stores. My opinion:

This initiative is definitely a good idea for a few reasons: First, it reminds shoppers that Toys ‘R’ Us is the “category killer” in this business, regardless of the competition from discounters like Walmart. Second, the program provides a legitimate public service (and good PR) by getting older and potentially defective car seats out of the market. Third, and most importantly, it should drive sales of high-ticket goods at a critical time.