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Should Toys“R”Us Be Toying With Flagships Again?
Six years after filing for bankruptcy, Toys“R”Us plans to open as many as 24 flagship stores in “prime locations” in the U.S. starting next year, along with shops in airports and cruise ships.
Once the world’s biggest toy store chain with over 1,400 stores at its peak in the ‘90s, Toys“R”Us filed for bankruptcy in 2017 and closed all U.S. stores in 2018.
WHP Global, which acquired controlling interest in Toys“R”Us in 2021, said the new effort is part of the chain’s “Air, Land and Sea” expansion strategy. Since acquiring the business, WHP Global in the U.S. opened one standalone, two-level store measuring 20,000 square feet in December 2021 at the American Dream mall in New Jersey, featuring a two-story slide and an ice cream parlor.
In 2022, 452 in-store Toys“R”Us shops measuring between 1,000 and 10,000 square feet opened inside Macy’s locations.
The flagship stores to open in 2024 will resemble the American Dream mall location and be situated to complement the Macy’s in-store shops. They’ll be operated by Go! Retail Group, which operates toy and game stores in malls across the U.S. under Go! Toys & Games and other banners, to take advantage of its existing logistics infrastructure.
Tapping into a strong recovery in air travel, the first airport store is scheduled to open in November at the Dallas Fort Worth International Airport and will be operated by travel retailer Duty Free Americas. Stores on cruise ships will sell toys and exclusive cruise-themed merchandise, “ensuring that the magic of Toys”R”Us is accessible to consumers wherever their adventures take them.”
In a statement, Yehuda Shmidman, chairman and CEO of WHP Global, said that since acquiring Toys”R”Us, it has increased its global retail footprint by more than 50%, with openings in the U.S., U.K., India, Dubai, and Mexico. He said, “We now have over 1,400 stores and e-commerce sites across 31 countries, and as we head into 2024, we are excited to bring Toys”R”Us to consumers everywhere, whether you’re visiting one of our stores at Macy’s, at our flagships, in an airport, or onboard a cruise ship.”
Toys“R”Us will continue to be challenged on prices against competitors like Amazon, Target, and Walmart. The three often use toys as loss leaders over the holiday selling season.
Lars Perner, an assistant professor of clinical marketing at the University of Southern California Marshall School of Business, believes Toys“R”Us could initially benefit from nostalgia.
“I think it could work as a kind of a novelty in the short-run,” he told the New York Times. “I’d be hard-pressed to see this being successful in the long run.”
Discussion Questions
What do you think of Toys“R”Us bringing back flagships to complement its Macy’s shops as well as its push into airports and cruise ships? Will Toys“R”Us find success by bringing back its old playbook, or does it have to reimagine the in-store experience?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Kenneth Leung
Retail and Customer Experience Expert
The stores in airports and cruise ships could do well. People traveling for leisure are often in the mood to buy gifts, toys and games – especially if they have, or know, young children. However, the range will need to be very carefully curated so that it is aligned with what people traveling are interested in and are capable of carrying. It is a departure from a standard Toys R Us format. Select expansion of flagship stores also holds potential if done in good locations.
I applaud the idea of placing Toys R Us back onto the retail landscape. Of course, the format requires an entirely new playbook to meet the demands of today’s shoppers or its return may be short-lived.
The novelty of the “Air, Land, and Sea” approach is intriguing. As @Neil Saunders suggests, the curation of the assortment and the in-store experience are pivotal. Additionally, item pricing may be a key determinant whether shoppers will support the return on an ongoing basis.
Establishing a brand presence through selective flagships is usually a good idea. The doubt I have in this entire program though is the Macy’s store within store in that Toy’s itself is a store, not a toy brand. So for example, if Toy’s sells a Mattel toy, in a Macy’s store how much margin is there to go around for everyone? Airport and other convenience locations with year-round demand does make a lot of sense.
Toys “R” Us’ air, land, and sea plan is far more ambitious than I expected, particularly on the brick-and-mortar front. Prior to taking the helm at WHP, Yehuda Shmidman was steeped in intellectual property monetization and licensing, not retail. Toys “R” Us is clearly the jewel in the WHP crown and the company is wisely taking a go-big-or-go-home stance with it. Location is one thing, but for the multi-pronged plan to work, Toys “R” Us will need to clearly differentiate from competitors through brand and product exclusives and by reigniting its private brand portfolio. Clicks-to-bricks convenience will be table stakes and the retail-tainment Toys “R” Us flagship stores were known for in the past will hopefully be taken to a new level through the latest digital wizardry. It’s a very tall and expensive order yet WHP seems ready to fill it.
I’d rather say it as Toys”R”Us should be reinventing the flagship. It doesn’t have to be a behemoth on the magnitude of FAO Schwartz in the middle of Manhattan. It does have to recognize the multichannel, immersive, and interactive nature of shopping these days. I keep expressing it as Explore + Experiment + Execution = Experience³. Kids don’t experience toys by looking at boxes on shelves. They want to touch, feel, and play with them! It’s “fitting room” thinking for kids, and their parents, shopping for toys. Don’t just make that possible, make it a reason to grab the car keys!
I believe Toys”R”Us will succeed. They have taken, to date, a measured, tested, and incremental approach to their brand growth. Their Macy’s strategy has clearly worked, and their outsourced logistics gives them a dependable cost structure that they can leverage as they grow.
The shopping experiences in their new locations—land, sea, or air—will need to be irresistible. I think TRU needs to make every type of store special in its own way. Shoppers will need to see the TRU sign anywhere and immediately think “impulse toy buy.” Otherwise, the competition with Amazon and other online giants will be too much in the long run.
One more thing, as detective Columbo would say: A flagship store is a unique location, like the Macy’s on Herald Square in Manhattan. There are no such things as multiple “flagship stores” in retail. Perhaps the real test of TRU’s comeback success will be if their flagship store will be in the American Dream mall or in some more heavily trafficked tourist destination. Wherever it is, I hope they still have ice cream.
The Mall of America, as the national traffic leader with its Nickelodeon amusement park and new Barbie Store inside, would make a lot of sense – but already has an exceptional regional toy store there, Legacy Toys, and will be getting an outpost of the Las Vegas collectors’ paradise, Kappa Toys, in that organization’s push to go national. WHP and Go! Retail need to get on the stick to capture other valuable real estate – lest they become irrelevant before even launching.
The Air, Land and Sea strategy is interesting, and I do think key locations in select airports could do well. Think of how many parents are traveling with their kids and time spent in a Toys R Us store while waiting for a flight or a delayed flight would be a slice of heaven. The flagship store concept could do well if it’s designed more like a destination such as the Dream Mall location.
Am I the only one who has a problem with this recent development of buying the name of a familiar store then using it with entirely different management, buyers, etc? These are really Go Toy stores. The toy market is extremely seasonal and making it compelling will be a challenge.
The Toys “R” Us strategy seems smart. However, they will need to be very strategic in the locations and the size of stores to ensure they are profitable. They will also need to be careful not to overextend the expansion of stores. Toys are a tough retail market and with a plethora of online options, generating enough revenue to support physical stores can be challenging.
I have a problem with the use of the word “flagship”, particularly “24 flagship stores” because that’s not how it works.
Still, I would love to see Toys ‘R Us stores again, real TRU’s, not the aisles of vanilla fixtures found in most Macy’s stores.
Last week I visited FAO Schwarz in NYC and it was wonderful and nostalgic at the same time. I FaceTimed my grandkids so they could see it too. And pick out something for Nana to bring home. The amazement on their little faces, even over a phone, was priceless. That store, a true flagship, is nothing like the FAO convenience shops at airports.
The former is what Toys ‘R Us needs to capture. Magic. Awe. Not endless gondolas with a Geoffrey statue sprinkled in. I wish them luck because every kid should have the opportunity to experience a really great toy store.
I share your annoyance, Georganne: I won’t refuse macy*s having a few of them – how else is Marshall Field’s legacy to continue? – but chains that label their basic store format a “flagship”, somtimes to the extent that they’e all flagships, is surely abusing the term..
We’re on the same page. I automatically thought of Macy’s, too!
What does the ToyRUs brand stand for? As a kid it was walking into a grocery store sized store filled with every toy imaginable. Yes, it’s the dream come true for a little kid. Opening small stores in malls or even at Macy’s is not much different than if Target rebranded its toy department as Toys R Us. Maybe this will be successful but it’s not the ToysRUs I remember and fell in love with as a kid.
That’s the deal- you cannot open a 50K sq ft store of toys and expect it to be profitable especially now.
I think smaller select , curated assortment stores are appropriate in airports, resorts, in collaborations with other stores are the way to go.
I hope they find the right combination of stores and assortment to make them profitable.
It will be fascinating to see how the WHP Global-led Toys”R” Us reimagines its operating model and go-to-market strategies in the age of digital commerce, livestreaming, social commerce, and experiential retail.
The final years of the former version of Toys R Us were predominantly brick-and-mortar operations that experienced inventory management and supply chain challenges, were inefficient, had significant operating costs, and lost touch with their core and emerging customer base. Additionally, their lack of a substantial eCommerce presence contributed to the once-dominant toy retailer losing its market share to Target, Walmart, Amazon, and others.
As we all know, the aggressive expansion of retail locations is a cautionary tale as old as time. We have seen countless retailers overexpand, and some are no longer existing. Let’s hope this comeback is done strategically, focusing on executing an outstanding customer experience with high-quality products, competitively priced, and great in-store and digital experiences.
Signed,
All the Toys R Us Kids
PS. We all love a good comeback story.
Toys R Us is a nostalgia brand and the airport and cruise ship locations makes sense. Nostalgia can definitely drive business (take a look at internet going insane over NSYNC reunion). If they can create the remagic of the original flagships and tie in the right merchandising, it can work.
Imagine what would happen to the internet if Toys R Us get the tie in to NSYNC merchandise and Taylor Swift is photographed buying one in one of the new Toys R Us flagship stores
If I had a dime for every TRU story I saw here on RW…(I’d probsbly have about the same money as their actual sales.) They failed because there was really no – or at least insufficient – demand for what they offered; I suspect there is even less now. Enough!
The land flagship portion will require some differentiation to work profitably. But the air and sea concepts look like winners. It solves something for customers in creating a convenience, in reducing hassle, stops, steps. Adding a toy to your bag or gifting to a kid while traveling at the airport or in a cruise terminal is a no brainer. You’ve immediately just saved gas, drive time and stress.
Why not? The Toys R Us name is a recognized brand that still has value. If the new management has found the right business model and flagship stores make sense (in the right markets), then go for it. Retail has changed since Toys R Us filed for bankruptcy. They have picked themselves up, dusted them selves off, and now it’s time for them to get back in the big leagues.
The operations in airports & on cruise ships make good sense. Not a lot of dedicated capital & access to terrific target markets. Shops inside Macy’s make sense for similar reasons. I’m not so sanguine about the return of flagship stores. That model has been eclipsed by the world of online retailing.