Macy’s new toy stores could be a winning game over the holidays

Macy’s over the past year has found that adding Toys R Us products to its website has brought in new customers. Now, he’s betting the addition of Toys R Us stores to his department stores will attract new in-person shoppers.

If Toys R Us and Macy’s succeed in executing this plan, it could give Macy’s a major holiday boost, not only in toy sales, but in attracting parents and grandparents – who will make additional purchases. not related to toys – in stores.

To do that, however, the new owners of Toys R Us will need to show they understand the hard holiday lessons that the original Toys R Us executives learned before the retailer went bankrupt and liquidated all of its U.S. toy stores. .

The new Toys R Us brand owner and Macy’s announced a partnership last year that added Toys R Us products to the macys.com website and revealed plans to locate Toys R Us stores in Macy’s stores. nationwide in 2022.

The partners said last week they had started rolling out the toy stores at Macy’s stores. They plan to have a Toys R Us store in every Macy’s store by October 15.

Toy stores will range in size from 1,000 square feet to 10,000 square feet of flagship releases in 11 high-volume Macy’s stores. These flagship locations will include Macy’s Herald Square store in New York, Lenox Square in Atlanta, Dadeland in Miami and Ala Moana in Hawaii. Toy stores will be designed with the flexibility to add additional shelving space during peak holiday weeks.

WHP Global, a New York-based brand acquisition, investment and management firm, acquired a majority stake in the company that held the rights to the Toys R Us brand in early 2021. Since then, WHP Global sells toys under the Toys R Us brand on Macy’s website and opened a physical flagship store at the American Dream power mall in East Rutherford, NJ

Yehuda Shmidman, President and CEO of WHP Global, is a self-proclaimed “Toys R Us” kid who believes the iconic brand has a future with new generations of kids and parents.

Macy’s and WHP plan to hold nine days of in-store events, featuring activities and toy giveaways, from October 15-23 to celebrate the stores’ launch.

Since Macy’s began offering Toys R Us products on its website, it has reported encouraging numbers. In Q4 2021, 25% of customers who purchased Toys R Us products were new to the Macy’s brand, and 93% of Toys R Us online customers cross-purchased from other Macy’s categories, according to the results. of the fourth quarter. presentation.

In the first quarter of 2022, 87% of Toys R Us customers cross-purchased from other categories, Macy’s reported.

But in-store stores are a trickier merchandising and marketing challenge than online sales.

Here are the hard vacation lessons the original Toys R Us learned when it competed against Walmart
WMT
Target
TGT
and Amazon
AMZN
for toy sales, and some of the challenges Macy’s toy stores will face:

  • It’s nearly impossible to compete with Walmart, Target, and Amazon on price or assortment.
  • Running out of stock on popular toys is a toy retailer’s worst nightmare before Christmas.
  • In-store toy shoppers tend to be last-minute shoppers, which means stores should be prepared to make the bulk of their holiday sales in the last hectic week before Christmas.

Toys R Us executives complained, decades before the retailer filed for bankruptcy, that Walmart and Target used toys as loss leaders during the holidays to lure parents, who would also buy lots of other things when they go. would walk into the store looking for the best price on a Barbie Dreamhouse. Amazon has increased price competition by making it easier to find toys online.

And with limited space in Macy’s stores, Toys R Us will only be able to carry an organized assortment of toys, which means choosing the right toys to put on the shelves will be crucial.

One of the former Toys R Us’ key weapons in the holiday toy wars was that its size and long history in the toy business gave it the clout with manufacturers to ensure it got deliveries. hot toys whose competition was exhausted. . The new Toys R Us doesn’t yet have the same scale or status, so it’ll have to find the right mix of holiday bestsellers and perennial favorites it knows it can have in stock come Christmas season. holidays.

The strength of stores will depend on their ability to attract parents, grandparents and children who wish to browse a well-selected assortment of toys, rather than purchase a specific toy. Stores will need to be prominently featured in Macy’s stores, and be well staffed and maintained.

WHP and Macy’s are also betting on the power of Toys R Us stars to lure people into stores. Stores will have a life-size statue of Geoffrey perched on a bench for photos and selfies.