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Sears, Borders move to fill toy gap at US retail

With rumors circulating that Walmart, the largest toy retailer in the US, is trimming back on shelf space devoted to kids playthings and crafts, two significant retail players have stepped up to the plate. Mid-tier department store chain Sears and bookstore giant Borders are both opting to expand their presence in toy retailing and claim a piece of the US$21.6-billion domestic market.
September 4, 2009

With rumors circulating that Walmart, the largest toy retailer in the US, is trimming back on shelf space devoted to kids playthings and crafts, two significant retail players have stepped up to the plate. Mid-tier department store chain Sears and bookstore giant Borders are both opting to expand their presence in toy retailing and claim a piece of the US$21.6-billion domestic market.

‘It seems like there are fewer places to get them now, so it is a perfect time for us to come back to toys,’ says Julia Fitzgerald, chief marketing officer for seasonal & toys at Sears Holdings Corporation. ‘We have had a toy department in our seasonal area for the last quarter of the year, but now consumers are telling us they want it year ’round.’

Last month, Hoffman Estates, Illinois-based Sears opened 20 Toy Shops at its outlets in major US centers like Chicago, New York, L.A. and San Francisco that will offer 1,000 different SKUs in approximately 1,500-square-feet of retail space. Additionally, 5,000 SKUs will be available through interactive kiosks placed at the entrance of each area. The shops are strategically located adjacent to the retailer’s kids apparel section and will feature well-known brands such as Fisher-Price, LeapFrog and Hasbro as well as in-house brands like My First Craftsmen, My First Kenmore and Just Kidz. ‘It’s the real thing, we’re back,’ adds Fitzgerald, referencing the company’s history of carrying toys 12 months a year. ‘We are bringing the old toy store feel into the future.’

Fitzgerald says that the company has plans to rollout Toy Shops in more of its 900 locations, depending on how the trial locations perform. ‘So far, the response has been great,’ she says. ‘People are excited to see toys back.’

Ann Arbor, Michigan-based Borders is also enlarging its toy offerings throughout its more than 1,000 Borders and Waldenbooks locations across the US. ‘We felt we could fill a niche in the marketplace by offering an expanded selection of high-quality educational toys and games that speak to our book customers,’ says Melanie Rhodes, buyer for infant, toddler, preschool, plush, activities, toys and games for the company.

‘We offer a full-on specialty shopping experience with key brands and products that are educational and fun in addition to providing a great selection of books.’ As such, the new areas, which vary in size from store to store, will house brands such as Melissa & Doug, Creativity for Kids, Lego, Playmobil, and Scientific Explorer among others. As part of the expansion, the company is also hiring a number of ‘kid specialists’ to offer guidance to customers. The areas are, for the most part, adjacent to sections of the store dedicated to books for kids eight to 12.

So far, Rhodes says the response from the industry has been positive and the possibilities for product exclusives in the new space are being examined. ‘[People] are generally excited about our expanded offerings,’ she says. ‘Many within the industry are enthusiastic to explore opportunities with us as we grow our toys and game business.’

BMO Capital Markets analyst Gerrick Johnson, who covers the toy industry, says he’s not shocked that more retailers are looking at toys. ‘Retailers are trying to find a better way to use the excess space,’ he says, adding that the Borders move is probably a direct reaction to its competitor Barnes & Noble stocking up on more games and toys over the last several months.

Additionally, Johnson points out that the amount of new retail space Sears is dedicating to toys is by no means a bonanza. ‘The total square footage equates to one Toys ‘R’ Us store,’ he says. ‘That is not going to be a huge deal…I haven’t heard any champagne corks popping over that. Some say they aren’t growing the pie and it’s a zero sum game.’ However, he concedes that if Sears were to rollout the Toy Store concept to all of its locations that would constitute plenty of new shelf space for the industry.

About The Author
Gary Rusak is a freelance writer based in Toronto. He has covered the kids entertainment industry for the last decade with a special interest in licensing, retail and consumer products. You can reach him at garyrusak@gmail.com

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