‘A new experience that plays off the nostalgia’: How Toys ‘R’ Us could rebuild

A rebuilt Toys “R” Us would have to graft an old name on to a completely new model that favors smaller, boutique, experience-based stores. It’s a shift that’s challenging for big-box brands that once focused on large-format stores with a breadth of inventory. With the rise of online shopping and marketplaces, physical retail spaces are additive to that journey. That’s why it’s so difficult for once-dead brands to come back, and to be successful, the company would have to launch an online-offline approach with refreshed, experiential stores.

“They need to create a new experience that plays off the nostalgia of the brand,” said Susan Cantor, CEO of branding agency Red Peak. “You have to go to a much more specialized place with a more curated selection; [and] you need to go to places where there are other cool brands.”

Cantor said Toys “R” Us could take some lessons from FAO Schwarz, a 150-year-old toy store which closed its doors in 2015. It since reopened a store at Rockefeller Center late last year and is growing its store footprint at airports, a new setting for the brand.

The company is also up against competing retailers that seized on the new white space in the market. Since Toys “R” Us closed, major retailers including Walmart and Target have been growing their product offerings in the toy category. Over the 2018 holiday season Target expanded its in-store toy selection, with 250,000 square-feet in 500 stores for toys and brand-exclusive merchandise. Meanwhile, Walmart has since rebranded its toy store to “America’s Best Toy Shop,” which includes an expanded selection, Walmart-exclusive brands, and marketing through YouTube influencers.

According to the NPD Group, U.S. consumers bought $21.7 billion in toys last year, down 2 percent from the previous year. Toys “R” Us can still carve out a place for itself, provided it rethinks store layouts, improves in-store experiences for customers and considers new revenue models, said digital marketing consultant Judge Graham. Its plans to expand its private-label offerings, as reported in October, would underpin these efforts.

“How they bring it back is through a unique product line, a reason for kids to experience the stores, and smaller footprints,” he said. “It would be really cool if they had some innovation around recurring revenue models like Stitch Fix.”

A way to keep customers in stores could be events tied to movie releases and exclusive product lines resulting from that, he added. Meanwhile, the e-commerce site could mirror the experience in-store through detailed product guides and comparison tools.

To be effective, however, any effort to innovate on store experience must be complemented by competitive pricing, said Neil Saunders, managing director of GlobalData Retail. In a context where customers do price comparisons effortlessly online, a few dollars can make a big difference.

Others question whether brand recognition alone coupled with a new store and e-commerce foundation is enough to rebuild a tired retail model in a competitive category. Sucharita Kodali, retail analyst at Forrester and a former Toys “R” Us employee, is skeptical of its prospects.

“The only reason you would want to resurrect it is to suck what remains of its brand equity dry,” she said. “Circuit City tried a relaunch and it was pretty inconsequential. I suspect this would be similar.”