Retailers up their game after Toys R Us closures
Target, Walmart, Party City among stores eager to toy with holiday shoppers this year When Toys R Us closed its doors, customers mourned the loss of a beloved brand that conjured memories of their own childhood.
Retailers, on the other hand, saw an opportunity.
Rather than cede more ground to online behemoth Amazon, companies such as Target, Walmart and Party City ramped up their offerings. Now, before the pivotal holiday season arrives, they’re going even further by focusing on making their stores a dynamic shopping experience. That means creating play areas for kids, offering demos of new toys and staging events such as scavenger hunts in the stores.
Retailers are trying to grab a piece of the nearly $3 billion left on the table by Toys R Us, or 12 percent of the U.S. toy market, according to NPD Group Inc., a market research group.
Last month, Party City opened 50 Toy City popup shops that feature 6 by 8foot Lego dinosaurs and other interactive displays. Walmart says 30 percent of its holiday toy assortment will be new. It will also offer 40 percent more toys on Walmart.com from a year ago. In November and December, the company’s toy area will be rebranded as “America’s Best Toy Shop.”
Starting in late October, Target will devote extra space at 500 stores located near former Toys R Us stores for bigger toys such as electric cars, playhouses and musical instruments as well as adding nearly 200 more products. Also, 100 Target stores will see new layouts and fixtures in the toy area. And the company is expanding the number of kids events it hosts. Most recently, it had a Lego Minecraft event that featured a scavenger hunt.
At least one foreign toy retailer is looking into the U.S. market after the demise of Toys R Us. Mexicobased Distroller World, an experiencebased retailer with more than 60 stores in Mexico and Latin America, plans to open its third store in the U.S. in October. And it will be approaching U.S. department stores to open shops to replicate its model in Mexico, says CEO Daryn Fillis. At the center of the experience: Parents and children create their own adventure to adopt an alien baby delivered in a space capsule.
“It’s all about the demonstrations, the handson experience,” said Jim Silver, editor in chief of TTPM, a toy review site. “When you get your hands on a toy and you can touch and feel, it does lead to greater sales. And those are the experiences that shoppers enjoy.”
Meanwhile, Amazon is reportedly planning a toy catalog to be distributed at its Whole Foods stores. The company declined to comment on the catalog, but analysts say Amazon could grow its market share in toys from 15 percent to 20 percent this year.
Toy sellers had been long taking advantage of Toys R Us woes, but it stepped up its efforts when the chain filed Chapter 11 in the fall of 2017 and accelerated the pace when the chain announced it was liquidating its operations in March. As of early this year, Toys R Us had more than 800 U.S. stores. It closed the last 200 stores at the end of June.
With reports of the retailer’s demise, there was an outpouring of nostalgia from shoppers, and some analysts credit that empathy for helping to drive an uptick in toy sales for the first half of the year. U.S. toy sales from January through June increased 7 percent to $7.9 billion, according to NPD. Last year, toy sales increased 1 percent to $20.7 billion from 2016.
“I am convinced that the strong toy industry growth so far this year has been at least partially supported by the empathy that people felt toward losing a store like Toys R Us,” said Juli Lennett, NPD’s senior vice president and industry adviser for toys. “I think it brought about an emotional response that resulted in parents buying more toys overall.”
Even FAO Schwarz is taking advantage of the nostalgia. The iconic toy store is set to reopen in November in New York after shuttering three years ago. The store will be staffed with theatrical performers and will feature new play areas, such as a minigrocery store where kids can buy pretend food made of wood. In another section, a mechanic who will help kids build radiocontrolled race cars. Also, FAO Schwarz is bringing back the oversized piano made famous in the Tom Hanks movie “Big.”
Alexander, 5, explores a Jurassic World Jurassic Rex at a Walmart Toy Shop event in New York in August. Walmart says 30 percent of its holiday toy assortment will be new. It will also offer 40 percent more toys on Walmart.com from a year ago. In November and December, the company’s toy area will be rebranded as “America’s Best Toy Shop.” Retailers across the country are trying to grab a piece of the nearly $3 billion left on the table by the departure of Toys R Us.