Beloved retailer Toys “R” Us is planning a return to the U.S. after closing all of its local stores last June. Now, the company will open new locations that feature a slimmed-down format and a new focus on STEAM (science, technology, engineering, art, and mathematics).
Toys ‘R’ Us’ Comeback Plans
Toys “R” Us is returning, but it won’t look or function the way it did in the past. For one thing, Tru Kids (the new owner of the Toys “R” Us brand) is partnering with a tech retailer called b8ta to launch new stores in Houston and Paramus, New Jersey. Because of that relationship, the company’s new retail spaces will feature mini movie theaters, tree houses, and STEAM workshops.
The corporation is also changing how customers will interact with its products. The new Toys “R” Us will feature play areas that let kids get familiar with the latest toys. Moreover, the firm plans to make its new stores more engaging by outfitting them with branded augmented reality games.
The toy brand is returning to the retail sector in a much smaller form. Tru Kids and b8ta’s stores will be opening in malls and will encompass about 6,500 square feet. The original Toys “R” Us locations were massive warehouses that covered 30,000 square feet.
The company explained that all the changes it’s made to the brand are designed to make it competitive in the contemporary retail environment. Tru Kids intends to have its new stores up and running for the 2019 holiday season and hopes to open 10 additional locations next year.
Why the Original Toys “R” Us Closed
In September 2017, Toys “R” Us filed for Chapter 11 bankruptcy following years of unprofitability. In February 2018, the company began liquidating its U.S. stores and officially ceased operations shortly thereafter. However, in January of this year, the brand emerged from bankruptcy with a new parent firm called Tru Kids.
While the toy store franchise’s demise was attributed to the rise of Amazon, its downfall is actually more complicated. While the e-commerce giant’s ascent did hurt the firm’s bottom line, it also faced increased competition from Walmart and Target. The big-box retailers slashed their prices on their toys to appeal to the company’s customer base.
Toys “R” Us also had the misfortune of being purchased by two investment firms in the mid-2000s. As part of its purchase agreement, KKR and Bain Capital saddled the firm with $5.3 billion in asset-secured debt. Because the company spent $400 million a year servicing that debt, it didn’t have any money to modernize its stores to stay competitive.
Tru Kids’ relaunch of the Toys “R” Us brand is very promising. By reopening in malls, the company is positioning itself to service eager shoppers in proven locations. The firm’s decision to reintroduce the brand slowly with a handful of stores is also a wise move. But the revived corporation does face one major obstacle:
According to researchers, the new generation of kids aren’t into playing with toys…