IT’s no secret that US-based toy retailer Toys ‘R’ Us really started feeling the heat from mass-market giants Walmart and Target in Christmas 2003. Both decided to make toy sales a priority and triggered price wars from which original ‘category killer’ TRU has emerged somewhat weakened. But thanks to its new retail concept, the ‘R’ superstore, which combines a full TRU and a Babies ‘R’ Us juvenile store under one giant roof, it seems the toy giant has found a new way to stand its ground.
TRU opened four test ‘R’ locations in late fiscal 2007 and last May announced an impressive revenue gain in Q4 2007. Sales for the period were up 39.3% year over year, from US$224 million in ’07 to US$312 million this year. Chairman and CEO Jerry Storch cited the positive impact of new store openings as being behind the spike, and the four ‘R’ openings certainly contributed significantly to this new business.
TRU currently has nine ‘R’ superstores in operation across the US, and plans are in the works to open a total of 19 by year’s end. The chain is also keeping close tabs on its existing stores, and SVP of trend and innovation Bob Giampietro confirms that TRU is retrofitting hundreds of locations across the US to make space for a much larger juvenile offering.
Giampietro says the concept actually has roots in Canada, where the company’s Canuck team had been experimenting with moving the BRU offering closer to the core toy product via an in-store boutique format. It made sense for the territory because TRU Canada has a smaller business and less real estate than its American counterpart. However, the BRU in-store boutiques did so well that the mothercorp decided to try the model State-side, and thus the ‘R’ superstores were born.
The floorplans have been reconceived from top to bottom. Inside each ‘R’ outlet, a racetrack illustration runs along the floors to help shoppers navigate the dual space. The BRU side has a softer, maternal feel with a classic infant’s palette of warm violet and vanilla, while the impact of trendy and licensed merch is given higher profile on the brightly colored TRU side. Giampietro says that adjacencies have also been planned to encourage customers to cross over and visit both sides of the new stores, which wasn’t part of the original ‘R’ prototype. So the furniture offering on the TRU half, for example, smoothly transitions into the toddler sleep area on the BRU side, which contains bedding and room furniture. Meanwhile, the TRU electronics section flows into the music section and then juvenile music, again driving traffic across the entire superstore. All areas also include clearly branded aisles marked by simple, colorful icons.
The superstores, some of which are as large as 70,000 square feet, naturally provide more real estate to house a fuller product offering, including larger spaces for licensed product. The retailer is currently exploiting the gain with a full and exclusive assortment of Star Wars: The Clone Wars products.
Also coming this fall is the exclusive introduction of Club Penguin products from Disney Consumer Products and partners, based on the popular social networking website. Other new offerings include the expansion of TRU’s proprietary line of eco-friendly merchandise called Good Green Fun, which launched this past April. And for the first time, the retailer will put competitively priced Asus laptops (US$269.99 to US$299.99) on shelves at the end of the month to help grow its share of the youth electronics market.
Giampietro likens the stores to theaters in terms of being able to adapt to partners’ needs. ‘There’s a lot of flexibility around merchandise presentation and around being able to emphasize one thing or another,’ he says, citing ample areas at the front of the store and near end caps that are specifically designed to accommodate large billboard-like signage and graphic elements in order to boost big product pushes and demos – particularly for licensed lines.
He couldn’t comment on traffic results, but Giampietro says the new stores are meeting expectations, and TRU is looking at other major US cities and a handful of international territories as prime expansion opportunities.