Into The Void: A Holiday Season Without Toys R Us
For the first time in decades, holiday toy shoppers will be without Toys R Us, leaving $3 billion of seasonal toy spend up for grabs. Retailers are circling this new opportunity and employing a variety of strategies to capture share, including targeted marketing, discounting, bundling, and entering/expanding the toy category. More broadly, these strategies will continue to shape our understanding of the retail evolution with a focus on the impact of the loss of a defining category killer.
Toys R Us declared bankruptcy in 2017 and closed its 735 U.S. stores this year, impacting 33,000 workers. With more than $11 billion in revenue in its last fiscal year, Toys R Us leaves the $27 billion U.S. toy market is without one of its largest distribution channels. The chain was undone by several factors including aggressive competition from ecommerce players, expansion of big box players into the category (which gave brands new distribution channels), and unsustainable debt. Toys R Us will not be completely absent this holiday season as its iconic mascot, Geoffrey the Giraffe, will appear on branded toy displays in about 600 Kroger stores. The “Geoffrey's Toy Box” displays will feature a curated selection of 35 toys and reflects early moves by creditors to explore a resurrection of the brand.
With Toys R Us sidelined, retailers are defining their own paths to their share of the toy market. Analysis of Toys R Us loyalist purchase patterns after the closure of the chain indicate that Walmart, Dollar Tree, Target, and Gamestop may be some of the early winners.
Jonathan Miller is a consultant with the North Highland Company. He has over five years of experience in providing professional services to organizations and companies in retail, financial services, oil & gas, and the public sector. He is part of Sparks Grove, North Highland’s experience design capability, and is a Certified Customer Experience Professional (CCXP). He has expertise in service design and strategy, customer research, and insights.