Toys ‘R’ Us Inc. has announced it will set up 350 temporary stores and toy boutiques during the holiday season. Many will be located in shuttered space in shopping centers and malls. The tactic is an acknowledged effort to take market share from rivals. Gerald R. Storch, CEO, said his company wanted to, “seize the day,” and increase holiday market share, even as toy sales remain mired in a recessionary slump. There is a race among such competitors as Sears and others to capture some of the toy spending that went to the now defunct KB Toys chain during the past holiday season.
As previously reported, Sears has added a permanent 1,500 square foot toy departments to 20 of its Sears stores nationwide. Sears spokesman, Tom Aiello, acknowledged, “This is to give parents a place to shop for toys in the mall, since the closing of KB left a void.” Toys ‘R’ Us said 80 of the stores will be free standing mall outlets, open roughly from late October through mid January. The remainder will be toy shops within its own Babies ‘R’ Us stores, which would also disappear in January.
The move significantly increases the profile of Toys ‘R’ Us, which has 847 year round stores in the U.S. The company declined to say how much the “pop up” effort will cost. Creating pop ups on a large scale in the current economic environment runs the risk of adding costs that might not be recouped. However, KB operated in many of the malls where Toys ‘R’ Us plans its temporary holiday stores, which not only should decrease risk, but also provide the retailer with advantageous rent rates.
Storch called the Holiday Express concept, “opportunistic,” and, “in keeping,” with the company’s recent string of acquisitions. Earlier this year it purchased a number of troubled concerns, including FAO Schwarz Inc., eToys and Baby Universe. Last month it acquired the KB Toys brand name, which it does not plan to use for its pop ups. The Holiday Express pop ups, according to Storch, “Will feature some of the hotter selling toys on the market, and they will be small enough (4,000 square feet in malls and 2,500 square feet at Babies “R” Us) for shoppers to easily find what they’re looking for.”
Toys ‘R’Us is currently in a race with Target Corp. for the second spot in U.S. toy stores, behind Walmart. Toys ‘R’ Us plans to hire an additional 1,000 employees for the new mall outlets, but has not divulged how much staff will be added in the temporary units at Babies ‘R’ Us stores.
Overall toy sales fell five percent over holiday 2008, compared with the previous holiday season. This drop dispelled the longstanding belief that, during recession, parents would spend on their children, even if it meant sacrificing gifts for themselves. Total sales at Toys ‘R’ Us declined 3.4 percent for the 2008 holiday selling season. In its bankruptcy filing, KB blamed dismal sales last holiday season for its troubles.