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Which Retailer Has The Best Chance To Fill The Void Left By Toys ‘R’ Us?

Toys ‘R’ Us
recently announced it will be liquidating all of its stores just six months
after filing for bankruptcy. Following the announcement, KB Toys returned from six feet under, announcing its plans to make
a comeback in the wake of the demise of Toys ‘R’ Us. 

With Toys ‘R’ Us accounting
for approximately 12% of U.S. toy sales in 2017
, according
to NPD Group, there will definitely be a fight for its market share going
ahead.

The RTP edit team
discusses if any other retailer actually can fill the market gap Toys ‘R’ Us
leaves behind, or whether KB Toys can successfully make a comeback. Additionally,
the team ponders if toy-only retailers stand a chance against Amazon, Walmart and Target when
it comes to toy sales and offerings.

Debbie Hauss,
Editor-in-Chief:
As sad as it
may be that Toys ‘R’ Us is gone, this was inevitable. The deadly combination of
being a stale brand with way too much real estate and debt put the nail in the
coffin for the 60+-year-old retailer. Unfortunately, there will be some
suffering among local communities that have housed the 1,700+ stores and
employed 64,000 people worldwide (735 stores and 31,000
employees in the U.S.). But I think a crowdfunding campaign will be too little,
too late for this sinking ship. Regarding KB Toys, I will be very surprised if this brand (which I
had forgotten about completely until it was mentioned again recently) will be
able to fill the Toys ‘R’ Us shoes. The bigger question is: Why would it want
to? We might see an early uptick in sales and revenue for KB Toys, because
there’s now a gaping hole in distribution channels for a lot of the toy
manufacturers, but we will likely see a severe drop after that unless KB Toys
figures out how to make toy stores fun again.

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Adam Blair, Executive
Editor:
 The nostalgic in me is sad that that the story is over
for Toys ‘R’ Us, but the
retailer’s demise does raise a valid question: Is there a place for a toy “superstore”
in today’s retail landscape? My gut instinct is that the answer is “no.” As
Laura Davis-Taylor, Co-Founder of HighStreet Collective noted, Toys ‘R’ Us was caught in the middle between the low
price/low experience and high price/high experience ends of the shopping
spectrum. That middle ground — between highly experiential retailers like Build-A-Bear and Lego and
the mass marketing masters at Amazon, Target and Walmart
— is looking increasingly like a no-man’s-land. Additionally, Toys ‘R’ Us was a
product of a time when TV advertising could help whip up a frenzy for the “must-have”
holiday toy, as well as reinforcing the chain’s kid appeal (never underestimate
the power of a whiny child). Today’s fragmented retail (and media) landscape
means Humpty Dumpty will not be put back together again.

Klaudia Tirico,
Features Editor:
When I heard the news about KB Toys attempting a
comeback in the wake of the Toys ‘R’ Us shut down, I was skeptical. It’s hard
to say whether or not there is still a place for toy-only retailers these days.
Of course, as a “Toys ‘R’ Us kid” who grew up begging her parents to
take her to the toy store on weekends, I know how awesome it is for kids to
have this type of experience — but times have changed. Between Amazon,
Target and Walmart, KB Toys will really have to pull out all the stops to differentiate
itself from these retailers. With new technologies such as VR, AR and chatbots,
plus capabilities around personalization and experiential retail, it’s surely
not impossible. The Entertainer, an independent toy retailer in the
UK, for example, has found success by leveraging real-time marketing and personalization to
engage customers. The retailer even has deployed chatbots to help customers
find the ideal toy. But only time and trial-and-error will tell whether
these types of offerings will bring toy stores in the U.S. back to life. 

Glenn Taylor, Senior
Editor:
While 12% may not be a leading share, it’s still a major
opportunity for every party involved. The obvious future here is that on
pricing and convenience alone, Amazon and Walmart are going to gobble up a
portion of that share. Even GameStop will get a piece of the pie as it
continues to remodel its physical stores. However, I think the big story is that
this is prime time for niche toy stores to gain a bit of market share as well.
Even if it only adds up to a 1% to 2% combined increase for SMBs and
smaller chains, that’s a healthy bonus for those that have never quite had the
advertising/marketing power of Toys ‘R’ Us. Additionally, with differentiation
being the newest name of the game, I envision that some parents will want to
give their young kids a toy shopping experience, and will seek stores that
stand out. It’s really going to depend on the creativity of those involved,
whether that’s expressed through product curation, event planning or simply
building a fun store.

Bryan Wassel,
Associate Editor:
It seems
unlikely another mid-range retailer like KB Toys will be able to fill the gap
left by Toys ‘R’ Us, but there may be room for smaller, more focused chains
catering to specific demographics or regions. No newcomer will be able to
compete with behemoths like Amazon or Walmart on price or selection, but
retailers willing to brand themselves around a limited selection of specific items,
like board games or educational toys, could have a future. These retailers
could position themselves as a local, curated option
similar to independent supermarkets
, catering to high-end shoppers and parents looking for a
truly unique gift. They also would reduce the overwhelming number of decisions
available at large toy stores — and hopefully the stress of a small child
bouncing between dozens of different options.

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