Toys ‘R’ Us to Launch $150 Kids Tablet
Taking exclusivity to another level, Toys "R" Us on Monday announced plans to launch its own proprietary tablet designed for children, the Tabeo.
At $149.99, the 7-inch touchscreen tablet builds on the toy retailer’s plan over the last few years to add exclusive products in efforts to avoid brand-on-brand price competition from Walmart, Amazon and others. The "showrooming" trend is said to be only exacerbating the price pressures. TRU’s website touts over 20 exclusive brands, including Magforce, Journey Girls, Fast Lane, You & Me, Imaginarium and FAO Schwarz.
The Tabeo — the retailer’s first-ever PL consumer electronics device — comes with 50 preinstalled apps selected for children, including both educational titles and popular games such as Angry Birds, Cut the Rope and Temple Run. An additional 7,000 free apps are available to download. A "bumper" offers protection if the device falls out of a child’s hands. Parents can also exercise several options to control internet use. The tablet runs on Google’s Android operating system.
"We are proud that tabeo offers robust and flexible parental controls that can help protect children as they surf the Internet, and we are pleased to offer the Tabeo App Store, which features only kid-safe content carefully curated by the Toys ‘R’ Us team," said Troy Peterson, VP, divisional merchandise manager, Toys "R" Us, U.S, in a statement.
The tablet, manufactured by French tablet maker Archos, goes on sale Oct. 21, and pre-orders are now available online at Toysrus.com.
The move comes as tablets are expected to again be big time sellers this coming holiday season and represents yet another low-priced tablet entry.
The Tabeo is priced significantly lower than the three other similar kids’ tablets on the market, but the manufacturers of Meep, Kurio and LexiBook on Monday quickly adjusted their prices to $149.99. Adult-focused tablets may increasingly reach kids as well. Last week, Amazon cut the price of its Kindle Fire to $159. Other players include Sony, Apple and Samsung. Toys "R" Us will continue to sell many of these brands alongside Tabeo.
"Tabeo represents a pretty good value considering its price and what it comes loaded with, but it will be a challenge to get consumers to want an unknown brand when there are so many other products out there," Needham & Co. analyst Sean McGowan told the Daily News.
Toys "R" Us has seen two years of profit declines and flat sales amid toy discounting and a downturn in the videogame business.
"Toys ‘R’ Us is in a really hard place," M. Eric Johnson, associate dean of the Tuck School of Business at Dartmouth College, told The Wall Street Journal. "The toy business is becoming a tougher game, and the Web is slowly killing off the big box phenomenon."
- Toys "R" Us Introduces Tabeo – A Tablet Specially Designed For Kids With Safety Features Desired By Parents – Toys "R" Us
- New Entry in Tablet Wars: Toys ‘R’ Us – Wall Street Journal
- Toys ‘R’ Us to sell its own kid-friendly tablet, called tabeo, for $149.99 – Daily News
- Toys R Us gets into the tablet computer game – Associated Press
Discussion Questions
Are tablets the right private label category for Toys “R” Us? To what degree are exclusives an antidote to price competition in the toy category?
Like Target having exclusive rights to sell Andy Warhol-themed soup cans, TRU and other retailers need to have exclusive products in order to differentiate their brand from other retailers. A few years ago Target and Walmart took aim at TRU and successfully wooed away many of its customers through price promotions. Exclusive items are one way to fight back.
Other ways are to avoid out-of-stocks on popular toys, have consistently better customer service and have Internet to store options to encourage purchase.
TRU is in a tough situation. It can’t compete on price, doesn’t offer excellent customer service, and its web offerings are nothing to get excited about, so it will compete through exclusive merchandise.
Interesting move. However, in the computer games and media business, Content is King. Kids will respond to a fun-filled game or engaging character, regardless of platform. The trick is partnering with the content providers to turn profits.
It is not clear that this product is a candidate for private label. Most private label offers the same features and the brand name at a lower price. I think that Toys “R” Us is trying to create a new product. It does not seem to be an Android device.
Toys “R” Us does have brand value, so it will depend on whether or not parents see the value versus getting a low-end android device and loading it with apps.
Oh, I love this idea. Private Label tablet computers! I think it’s genius actually. Better yet if TRU would create “limited editions” with licensed characters from movies and cartoons. Or maybe skins for the tablet with those licensed figures.
I think this is how you compete in a post-Walmart world. Be creative.
The move is bold and this late in the game, a bit risky. That said, I love it. B&N has seen success with Nook which helps them capture books sales and Amazon is a clear winner with Kindle and Amazon Prime capturing consumer’s wallets across multiple categories.
So how can Toys “R” Us capture the hearts of kids and wallets of parents? For the kids, they are on the right track. Including key iconic games like Angry Birds and Cut the Rope will influence demand from kids.
For the parents, Toys “R” Us needs to focus on child protection and security. Promoting how their tablet has special features that protect children from inappropriate content on the internet will be a major selling point. Also, a focus on educational apps that can be promoted and possibly endorsed by teachers will be a second selling point for parents.
How does the Toys “R” Us become the tablet of choice for tutors?. Price point will help, but security and exceptional educational apps will be the real key.
Exclusive items are a big opportunity for retailers. As the article mentions, it keeps shopping by price off the table. It also creates a chance to build destination brands that lead to larger baskets.
How brilliant!
How stupid!
I’ll let you know which one in 9-12 months.
Either way, I agree with Paula that creating creative solutions and trying new things is key to remaining relevant and profitable. Kudos to TRU for that.
The Toy Category has provided entry gaming for years. Many successful products have linked to a manufacturer and specific product. The Leap Frog learning and game products are another example. It appears Toy “R” Us has taken a page out of current trends to provide a more flexible product. Further, it is designed for children who drop items frequently and can be rough on toys. TRU has a very loyal following, especially with the grandparent segment. This is likely to be a winner, just from this segment.
With showrooming and the intense competition in the 4-wall space, going vertical is about the only way to ensure any form of price control. Tablets, however, are primarily about content and secondarily about features and aesthetics. This seems like a far stretch to expect a success here, although at $149 a pop, it will definitely help the average ticket (assuming they sell some).
Exclusives are an antidote to price competition, but this one will be dead on arrival. More than enough kid oriented apps are available on mainstream tablets and for a few dollars more you can get a device that the whole family can use. The Tabeo won’t break through in a very crowded and competitive tablet market.
The Toys “R” Us brand carries no electronics credibility. So I’m mixed on this idea.
At least when it comes to electronics, consumers are wary of the great many times that non-electronic company brands have attempted to come out with consumer electronics — at least in a continually emerging category.
That said, I’d be concerned as Toys “R” Us about the name they chose. Why would one come out with a child electronic and name it one letter different from Taboo? Seems likely to subconsciously walk directly into parent fears surrounding home electronics.
I wish them well, though. Because I’ve watched my kids thrive with iPads.
I think this is a great move and also upholds the belief that content is king. They need to make connections with content providers with exclusive relationships that will add fun and customization to the tablet.
Doug Fleener’s comment is right on the money. This is a great introduction for THIS holiday season. It’s unlikely it will look the same NEXT holiday season. Kids are fickle and the technology is even more so. It will be a game of keeping up and I’m not sure TRU has the track record (in this vein) to play.
This coming winter holiday season will have the family chatter at formal get together celebrations replaced with the sound of thumb thumping and instant message requests of “pass the peas please,” and “I think my diaper is full.” Another clear message is the soundness of investment in the electric companies, PayPal and Google.
I totally agree with Paula. This is an excellent plan and coming out during the holidays gives TRU a leg up at the start. It will be interesting to see how TRU will keep the tablet marketable after the holidays, or when the competition starts breathing down their neck.