It’s barely past Labor Day, but a handful of retailers already are hinting at one item on their holiday wish lists: business from former Toys R Us shoppers.
Toys R Us closed its last U.S. stores in June after filing for bankruptcy protection last fall. Despite its challenges, the chain still had loyal customers. It racked up $7.1 billion in U.S. sales during the year ending in January 2017, the most recent year for which financial results are available.
As the first holiday season without Toys R Us approaches, retailers are fighting for their slice of those sales by devoting more shelf space to toys, hosting events where kids can play with popular items and even opening toy-specific seasonal stores.
As the only national big-box chain devoted entirely to toys, Toys R Us could offer a much wider range of items than other retailers. That made it a popular destination for holiday shoppers, even if those big, toy-centric stores were tough to sustain the rest of the year, said Neil Stern, senior partner at Chicago-based consulting firm McMillanDoolittle.
Other big-box chains offer toys to meet shoppers’ day-to-day needs, “but if you really wanted to get a specific item on a wish list, you wanted that selection,” Stern said.
Dean Yeropoli said he’ll miss having a Toys R Us just a mile from home in Akron, Ohio. Every year, he and his wife would bring their sons to the store about a month before Christmas to pick out the toys Santa would put under the tree Christmas morning, said Yeropoli, watching his sons play Friday morning at Maggie Daley Park while visiting Chicago.
“The closest thing we have now is Target or Walmart, but it’s three aisles,” Yeropoli said.
Those retailers and others say they’re trying to narrow that gap.
Walmart said its stores will carry 30 percent more new toys compared with last year and some stores will have 25 percent more aisle space devoted to toys, not just during the holidays but throughout the year.
“We’ve always felt we’ve been a destination for toys,” spokeswoman Meggan Kring said. “We feel good about what we’re offering in terms of brands and prices, and now we’re doubling down.”
Walmart expanded its list of top holiday toys from 25 to 40, and included input from 25 influencers — kids and families who have developed big followings on social media. That’s in addition to the hundreds of kids the chain has invited to test toys each of the past few years. The retailer also is hosting events where kids can test new toys in stores, such as a National Play Day event at 1,500 stores on Saturday.
Among Walmart’s top picks are toys from classic brands like Lego and Barbie, new items from makers of some of last year’s hits like Hatchimals and L.O.L. Surprise, and a line of 11 toys from Ryan’s World, named for a first-grader whose YouTube channel, Ryan ToysReview, has more than 16 million subscribers.
Target on Tuesday announced plans to stock more than 2,500 new toys this year, nearly twice as many as last year. The chain also is adding a new online gift catalog and toy-themed store events, the first of which also is scheduled for Saturday. Kids who are fans of Our Generation dolls can pick a free plush dog toy to “adopt.”
J.C. Penney, which missed out on the strong sales that led department store rivals like Macy’s, Kohl’s and Nordstrom to raise financial expectations for the year after the most recent quarter, said it is adding 40 percent more toys and games to stores for the holidays.
The department store chain added toy shops to all stores before last year’s back-to-school season. Then-CEO Marvin Ellison told investors in November the toy shops are part of the retailer’s plan to get customers to spend more at J.C. Penney by expanding the range of products it carries. While the toy shops are open year-round, the retailer is making an extra push during the holidays, with a dedicated toy catalog and list of its picks for the season’s top toys.
Although the decision to open the toy shops came before Toys R Us’ bankruptcy, James Starke, J.C. Penney’s senior vice president and head of merchandising, said the chain has continued to add products to its toy shops and capture market share since its competitor closed its stores.
Kohl’s, meanwhile, added Lego and FAO Schwarz products to its stores this month. The brands will give “a real boost to our toy business,” CEO Michelle Gass said during a call with investors last month.
Even Party City is getting in on the competition, with plans to open about 50 Toy City pop-up stores, some in former Toys R Us stores. Most will open this month alongside Party City’s temporary Halloween stores and remain in business through the holidays in what the chain considers a pilot program.
Illinois will have two of the pilot Toy City stores, one in Chicago’s Archer Heights neighborhood and another in Springfield.
“Toys R Us closing their doors created a new market opportunity, one where we can leverage our existing pop-up store capabilities and expand our toy offerings in a very strategic way,” Party City Retail President Ryan Vero said in an email.
Industry experts said Walmart, Target and Amazon — already major toy destinations — will likely win the biggest share of Toys R Us’ sales.
Toys R Us was the fourth most popular destination among toy shoppers surveyed by Coresight Research, according to a March report.
Amazon led the list, attracting customers like Mark Kinsley, of Chicago. It’s the easiest way to get toys for his 2-year-old son, said Kinsley, who said he might miss Toys R Us but “just from nostalgia.”
Walmart and Target also attracted a larger share of toy shoppers than Toys R Us in Coresight’s survey. More than 60 percent of Toys R Us shoppers also browsed for toys at each of those three retailers, according to Coresight. Fewer than 30 percent said they browsed dollar stores or department stores.
Walmart’s large stores will make it easier for the retailer to add the big selection that drew shoppers to Toys R Us, said Matthew Hudak, senior analyst at Euromonitor International.
Target, meanwhile, has a wide range of baby products that could help it win over former Babies R Us customers, McMillanDoolittle’s Stern said.
J.C. Penney also is making a bid for new baby business with baby shops launched in 500 stores last month.
Other retailers, including discounters, will likely pick up at least a slice of Toys R Us’ sales, though department stores like J.C. Penney and Kohl’s could have a tougher time than mass merchandisers customers already think of as go-to destinations for toys.
“It’s asking consumers to change their perception of the retailer,” Hudak said. “They need to make sure parents feel like the trip is worth their time.”
J.C. Penney’s Starke said it’s already seeing signs customers are interested in buying toys. During a 100-store test in spring 2017, toy customers spent more per transaction and visited more often than those who didn’t buy toys. The category has performed extremely well, he said in an email.
But even retailers promising to stock a wider range of toys this season won’t match the shelf space a Toys R Us could offer.
That could give retailers more leverage to demand toymakers create exclusive versions of hit toys shoppers can’t find at competing stores, Hudak said. Shoppers might also notice louder packaging as brands try to ensure products stand out among competitors squeezed on the same shelf.
“A lot of toymakers depended to a degree on Toys R Us, and they’re going to have to be content with smaller bargaining power,” he said.
Twitter @laurenzumbach
