Editor’s Note: Several comments in this article were excerpted from a recent RetailWire discussion, where the BrainTrust panel of retail experts shared strategic insights on the Toys “R” Us Christmas Savers Club Launch.
As retailers prepare their battle plans for the critical holiday shopping season, one retailer has been given high marks for freshening up an age old retail concept in order to optimize its 4th quarter sales. The company recently announced Christmas Savers Club from Toys "R" Us is designed to help families prepare and save on holiday shopping.
Combining the basic principles of layaway, with the convenience of gift cards and rewards for spending levels, the program allowing shoppers to begin setting aside money with the added benefit of earning a bonus for saving early, has been recognized as an innovative way for the retailer to avoid price wars.
“The launch is a good move, and it’s probably backed up by significant involvement with suppliers and advertising and the timing of promotions and replenishments,” said Richard Hastings, Macro & Consumer Strategist, Global Hunter Securities. “This helps with price stability later this year, something they learned was a big problem during the crisis.”
Customers who opt-in for the Christmas Savers Club between now and October 16 will receive a 3% bonus based on the total funds they save, according to a Toys “R” Us press release. Customers can save up to $2,500 per card, offering the opportunity for aggressive savers to earn up to $75, in addition to the money already loaded onto their cards. To maximize the amount of time to save for holiday purchases, the bonus will be added to shoppers’ cards on October 31 for the kickoff of the holiday shopping season. The program takes an innovative approach — synergizing the tried and true layaway concept and the more modern gift card and rewards program elements.
Toys “R” Us SVP of Marketing & e-Commerce Greg Ahearn said the program is aimed at helping shoppers budget and plan their holiday spending well in advance, as the company knows its store is a common destination during that time of year. "We know that a trip to Toys "R" Us is part of every parent’s holiday shopping ritual, so saving early for the gifts they will likely buy is smart,” Ahearn said in a press release. “Plus, the added bonus they receive can cover the cost of additional presents."
One analyst gives Toys “R” Us credit for reviving an old concept. “Christmas Clubs pretty much went out of vogue in the mid 70's as credit became ubiquitous,” said Jim Dion, Founder & President, Dionco, Inc. “I think that with it tightening up and things like lay-away coming back that it is a great idea. A 'club' savings is kind of a reverse lay-away program and many customers will like it and use it. Smart of them to revive the concept.”
Although Toys “R” Us is touting its budget-friendly program to shoppers looking to save, one analyst said the offerings might fall short on bringing the less budget-conscious shoppers in. “Programs like this appeal to shoppers with more restricted budgets, and to shoppers who have clear ideas about their holiday buying, as early as October when the promos usually begin,” Hastings said. “The amount of the bonus, 3% which is connected to a max of $2500 or a bonus max of $75 is not enough to draw in shoppers with stronger budgets and more spending power.”
The selling point of this program, Dion said, could help Toys “R” Us strategically. “The key to the overall plan is to make a connection between loyal shoppers, budget-minded shoppers, and the inventory that these shoppers want,” he said. “It helps Toys “R” Us make commitments for buying and provides more detailed information for inventory planning.”bill hanifin
RetailWire’s BrainTrust panel weighed in on the launch in a recent RetailWire article and discussion post. The general consensus is that the program is poised for success. “By using the Christmas Club, Toys “R” Us is able to capture the customer regardless of what product is hot or pricing pressure,” said Doug Fleener, President and Managing Partner, Dynamic Experiences Group. “If anything, it also creates some great press and differentiates in the market.
I don't see it as a huge percentage of their business but I don't think it has to be, to be successful.”
Another analyst is banking on the program to result in incremental sales. “By having a savings account established, the purchase decision will be heavily influenced towards Toys and should result in incremental sales that might otherwise go to competitors, said Bill Hanifin, Managing Director, Hanifin Loyalty LLC. “Those sales should offset the 3% give-away and create positive ROI for this promotion.”