Focus on Experience Leads Toys “R” Us Revival

Toys “R” Us is bringing back its physical locations. This after announcing back in 2018 they would close all 800 of their physical locations. Some might see this as a poor financial decision. Toys “R” Us’ physical locations were closed for very specific reasons. They were losing money via a dying format. They were driven to bankruptcy, then forced out of existence. This time around, however, consumers might just give them another chance.

Why They Shut Their Doors

Online shopping is often portrayed as the scapegoat that did Toys “R” Us in. But in reality, their crippling debt and ballooning inventory levels along with the rise of big box competitors and other maladies drove the brand into the ground well before the world of online commerce took off. In an ancillary fashion, their uncanny ability to suck the joy out of the toy shopping experience played a part in their undoing as well.

Where They Really Went Wrong

Toy shopping is hard enough on parents. Even more so if their kids are with them. The Toys “R” Us in-store experience didn’t help matters. The combination of limitless SKUs teamed with limited staffing left parents fending for themselves from the moment they walked through the door. Each location specialized in overwhelming the senses of the child, while also lacking the empathy necessary to make the process easier on parents.

Despite their distaste for the Toys “R” Us format, both Generation X and Millennials still lamented the retail chain’s demise. They were a generation that grew up on the idea of a trip to the toy store. Something that wasn’t an everyday occurrence. It was this once in a while factor that made the occasion so special.

Their kids can take a trip to an online toy store at a moment’s notice. Even the weekly big box retailer visit can provide a certain semblance of that experience. But to Gen Xer’s, it’s not the same. The rise of ecommerce has robbed today’s kids of the tangible aspects; going to a toy store, seeing a toy in-person and playing with it prior to purchase. It’s the experience that’s lost – which is why Toys “R” Us sees potential in bringing it back.

The Toy Store Reimagined

The proposed reimagining (under parent company TRU Kids Brands) will begin with a new, more personalized format. There will be physical locations, but the phrase brick and mortar won’t apply. It’s too cold a term. Their new approach is designed to be engaging, but less overwhelming than typical retail interactions. Providing a play-focused experience via a few select toys, instead of forcing consumers to navigate a never-ending maze of packaged SKUs.

Starting Small

This new incarnation will only be available in two locations initially – Houston and Paramus. It’s a partnership with San Francisco-based retailer b8ta – a developer of experience-focused retail environments – so they won’t be going it alone. Empower Director of Account Services Kellan Smith believes B8ta’s involvement means these locations will likely “include high-impact visual and digital content meant to engage consumers in their path to purchase.” These new stores will range between 6,000 and 10,000 square feet – miniscule compared to the size of their previous locations. More physical stores are expected next year (as many as 10 have been reported) in higher traffic markets if these flagships prove successful.

They also recently announced the Toys “R” Us Adventure – described as “an interactive playland that goes beyond the store.” It’s a pop-up concept (dreamed up with the help of candy-themed pop-up Candytopia). It will be available initially in Chicago and Atlanta from mid-October to January, before moving along to other cities. The goal will be 100% immersion for attendees old and young alike. The only problem is exclusivity. They have a “come one, come all” mentality in promoting these pop-ups, but their admittance fee – $28 per adult, $20 per child – makes it tough for most families to partake. Throw in parking and it will cost the average two child family over $100 just to get through the door. For most, that would be a tough bill to foot – especially around the holidays.

According to Empower’s Associate Director of Word of Mouth Marketing, these new endeavors are all about creating an experience. “They’re meeting consumers 1:1 on their turf at a critical time in a nostalgic way – encouraging social sharing and increasing their footprint at the same time,” Katie Ross explains. “Experiential marketing may focus on moments in time, but it can leave a lasting impact on brand health overall. It will be interesting to see if they can pull it off in an impactful way.”

Eventual Goals

As with most retailers, one can assume Toys “R” Us is using their new sites as data gathering sources. In order to provide a uniquely customized experience, they need to know their customers. Data is the easiest path towards gaining an understanding. At this point, the collection process is likely limited to precursory information. Learning what consumers in specific locations are interested in (product focus by geography) to aid future store planning decisions. If a retailer is only going to carry select SKUs with an emphasis on interaction, then those products need to fit the interests of the target geography.

Is There Interest?

Most toy manufacturers are extremely interested in this new direction for Toys “R” Us. The new format obviously has a few curious enough to participate. The question is whether this experience-led format can rival the current ecommerce/big box approach focused on efficiency. Will it be enough to entice consumers to make the effort to visit a location specifically to purchase a toy? Odds are most consumers will continue to make toy purchases part of a multi-item, big box trip or keep it a transaction handled online. The fact that Target just announced a new partnership with Disney to create Disney themed stores in specific locations could be an additional hurdle. But there will be that section of the population that jumps at the chance to take a trip down memory lane by visiting an actual, free standing toy store – this time with their kids in tow.

As It relates to media, toy manufacturers may look to eventually advertise with the new Toys “R” Us format. The retailer could capitalize on the same path laid out by other retail giants that have jumped into the ecommerce space. By harnessing their copious amounts of user data, manufacturers could have the opportunity to target ads to their most prized segments near the point of purchase.

This, of course, would require a site-based investment from Toys “R” Us alongside ponying up for data collection. But after that, they could be up and running in a relatively short period of time. At the very least, they could follow the path Target is laying down by selling their audience data. Advertisers can then use the data via whatever programmatic platform they choose. They’d simply sell data to interested parties and not have to invest as heavily in tech overhauls.

What’s Next?

There is growth potential here. It’s a disruptive format that needs to be monitored. The thought that Toys “R” Us could come back from the dead was something that seemed laughable only a short time ago. The notion of resurrection by bringing back brick and mortar locations likely drew an even larger laugh. But they’re doing it, and they’re going against the grain in the process. The upcoming holiday season – and the two planned test markets – will be telling as to whether this format can survive. Beyond that, it’s going to be interesting to see if they can take this new approach beyond basic survival. The real question: can they be profitable again?

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