Will Toys ‘R’ Us become an American comeback story?

Source: WHP Global
Dec 03, 2021

Toys “R” Us has a new owner and is taking another shot at establishing a presence in the U.S.

WHP Global, the parent company of the retailer, will open a new two-story flagship store in mid-December inside the American Dream megamall in New Jersey.

The 20,000-square-foot store, which will operate for extended hours in the lead-up to Christmas, will stock a larger selection of popular toys and will include interactive features and product demonstrations. Visitors will have the opportunity to meet Geoffrey the Giraffe, go down a two-story slide and stop at the in-store cafe or ice cream parlor. The new store will be located near the mall’s Nickelodeon Universe Theme Park and DreamWorks Water Park.

“American Dream is a one-of-a-kind unrivaled retail center featuring massive entertainment experiences that make it an ideal destination for families. Debuting our first Toys ’R ’Us flagship here is a no-brainer,” Yehuda Shmidman, WHP Global and Toys “R” Us chairman and CEO, said in a statement. “The Toy ‘R’ Us brand is big and growing fast. Today we have over 900 stores and e-commerce sites operating across 25 countries outside the USA, and now our USA expansion plans are in high gear, propelling us into the next chapter of growth for our global brand.”

The Toys “R” Us news follows an announcement in August that the toy retailer was partnering with Macy’s to make toys available for purchase on macys.com. Macy’s has plans in place to set up Toys “R” us departments in 400 of its stores in 2022.

Many believed that Toys “R” Us was gone for good from the U.S. when previous ownership closed the last two stores in operation. WHP acquired a controlling stake in the toy retailer, which generates $2 billion in annual sales, in March. It also owns the Joe’s Jeans retail business and the Anne Klein, Joseph Abboud and Lotto fashion brands.

DISCUSSION QUESTIONS: Will Toys “R” Us achieve success with its American Dream flagship store and its Macy’s partnership? What do you expect WHP to try and do with the retail banner?

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"There is room for a Toys 'R' Us, so long as it is a reimagined version of what previously existed."

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11 Comments on "Will Toys ‘R’ Us become an American comeback story?"

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Neil Saunders

There is room for a Toys “R” Us, so long as it is a reimagined version of what previously existed. The move to a strong mall is sensible as that helps deliver footfall. Creating more of an experience in-store is also vital to draw people in and get them buying – that probably needs to go a bit beyond big slides and ice cream cafes, but those things are a good start. Of course, none of this is a guarantee of success – margins remain thin for toys because of competition and that competition will also likely prevent Toys “R” Us from going back to the size and scale it used to have.

Carol Spieckerman

Mr. Shmidman is a veteran of the licensing business so business model diversification and intellectual property monetization were baked in from the beginning. Toys “R” Us is the jewel in WHP’s crown in that regard. Even so, Toys “R” Us’ U.S. business would not be enough to turn the brand around. Maintaining at least some of its global presence was a prescient move.

Liza Amlani

It is very likely that the American Dream store will be successful. Experiences are driving customers into the malls and physical stores.

As long as Toys “R” Us truly keeps to their new mission of engaging with shoppers on a deeper level and delighting them with experiences and products, there should be nothing stopping the toy giant from making a comeback.

Bob Amster

I have a counter-question. Is a new company with different owners and different staff, that has not operated for more than two years, but with an old and familiar name, the same come company as the original? What is it, really?

Gene Detroyer

It is a hope and a dream. Has a reboot like this ever been successful? Toys “R” Us used to be the go-to place for toys, but today’s toy buyer has discovered other alternatives.

Jeff Sward

The whole category of toys lends itself so beautifully to experiential shopping. I’d be shocked if Toys “R” Us doesn’t make a successful comeback, especially in its own stores. Macy’s also provides a big opportunity for success, but it will all depend on the level of execution. A corner of the store with some toys stacked on shelves won’t cut it. This is a big opportunity for Macy’s to create some incremental foot traffic over the course of the year and especially for holiday shopping. I’d love to see Macy’s knock the cover off the ball here.

Gene Detroyer

Selling experiences is nice, but will experiences replace what Amazon, Walmart, Target, et. al, offer with toys? Maybe Toys “R” Us should charge admission?

1 year 6 months ago

What does Toys “R” Us bring to this new toy equation? Toys “R” Us used to be the place to go for selection, breadth of categories, immediate availability and for exclusives which no other toy channel could match. I could walk in (browse) today and have what I (my kids ) wanted today – that was the value of the brand. What is it today? This will be a tough hill to climb.

Ryan Mathews

It is one thing making a flagship store in a strong destination retail environment work and quite another to successfully relaunch a brand. Sure the American Dream store may succeed, but the toy market has moved on, at least in the U.S. Partnering with one flailing brand isn’t a good strategy if you too are a brand flailing around looking for an identity. I expect WHP will try to push the brand, maybe even open some stores, but my advice would be to be very selective and minimalistic in terms of physical store locations and focus on developing a great online platform rooted in “toys” but gathering together adjacent categories, maybe on an age bracket basis. Oh, and whatever I called that platform, it probably wouldn’t be Toys “R” Us.

Craig Sundstrom

I wish them well — I guess — but honestly what-in-the-He** is going to be accomplished by a flagship..in New Jersey? No offense to the Garden State, but last time I checked, the country had 3M square miles, and a hundred times as many people, and I doubt no more than a tiny sliver of them will make it to this store … or even know about it. Something like Bass Pro Shops — a multitude of truly experiential flagships scattered around the country might have a chance, but even with that there’s the ever present — and growing — danger of EISBO (“Experience” in Store, Buy Online…only not the same company for both).

The Macy’s tie-in might bear more fruit, but I get an uncomfortable feeling of deja vu whenever I hear “toys” and “partner” used together.

Ellia Kassoff

Simple stuff. No, they will fail (again). Some of the same people who were board members and management are still there. It’s just another private equity play, and we know what happened the first time with private equity. I still doubt vendors will even sell to them.

"There is room for a Toys 'R' Us, so long as it is a reimagined version of what previously existed."

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