Reaction on Toys ‘R’ Us muted

Walmart Inc. does not appear to be concerned that the return of Toys “R” Us to the US market will reduce its toy sales. Analysts agree.

Macy’s Inc. announced last week that Toys “R” Us will open stores in more than 400 Macy’s department stores next year. Buyers can already purchase Toys “R” Us products online at Macy’s website, the department store chain said in an Aug. 19 press release.

Toys “R” Us filed for Chapter 11 reorganization in 2017 and closed its US stores in liquidation in 2018. The iconic toy retailer still operates stores in Canada and a few other countries, and its e-commerce business serves more than 25 countries, Macy’s said. Globally, Toys “R” Us generates more than $ 2 billion in sales, the company said.

“Our partnership with Macy’s marks the much anticipated return of Toys ‘R’ Us to the United States and is changing the retail landscape by combining two beloved retail brands for consumers across the country from one. totally innovative way, ”said Yehuda Shmidman, senior managing director of Toys“ R ”Us parent company WHP Global.

But Walmart said in a statement that it was not making any changes related to Toys “R” Us’s return to the US market.

“Walmart is America’s best toy store, and we’re preparing for the next holiday season just like any other,” Walmart spokesperson Leigh Stidham said. “We are delighted to surprise and delight our customers with the hottest toys of the season at our daily low prices and look forward to sharing more soon.”

The US toy industry market is worth $ 32.6 billion, according to The NPD Group / Consumer Tracking Service. And retail analysts say Toys “R” Us at Macy’s is unlikely to capture Walmart’s share in that market.

Steve Dennis, president and founder of SageBerry Consulting LLC, said it’s possible Toys “R” Us at Macy’s could impact Walmart, “but it’s hard to see that that’s going to be a big deal.”

“Walmart has a lot more locations, a lot more traffic” in store and online, and maybe a stronger offering – “although I guess that remains to be seen,” Dennis said.

Keith Anderson, senior vice president of strategy and insight for ecommerce analytics firm Profitero, put it even more bluntly.

“When it comes to a resurrected Toys ‘R’ Us impacting Walmart sales, I think the answer is an emphatic no,” Anderson said. “Awareness and interest in Toys” R “Us is very low, and it takes a long time to rebuild awareness, interest and trust.”

And for Sucharita Kodali, vice president and senior analyst at Forrester Research who worked at Toys “R” Us years ago, “to say that Toys” R “Us has had or will have a” resurgence “is a joke.”

“It was barely delivering anything significant in its last days and the various attempts such as small format stores and the like are not really what to talk about,” Kodali said. “Why Macy’s Would Even Need Toys’ R” Us is confusing, unless there’s a group of investors buying inventory and it’s an in-store store that doesn’t requires nothing from Macy’s other than handing over the space. “

“There is no commodity that Macy’s cannot source from the toy industry on its own,” Kodali said.

A very successful business for 70 years, Toys “R” Us began to expand in the United States as Amazon dominated online shopping and Walmart and Target Corp. have stepped up their e-commerce business, industry analysts said at the time. Toys “R” Us was not positioned to compete in this arena, they said.

And Toys “R” Us said in its liquidation filing that Walmart, Target and Amazon put the nail in the coffin by slashing toy prices during the 2017 Christmas shopping season. Toys “R” Us couldn’t match. those prices, the company said on the record.

The once very profitable business found itself in heavy debt.

Overall, however, Kodali said the toy industry has been struggling for years.

“Kids are spending more time on digital devices and using streaming media more than ever before,” she said. With the exception of a few brands like Lego, Kodali said, the toy space is a tough space.

“Toys” R “Us has never successfully reinvented itself” to serve the interests of today’s children, Kodali said.

When Toys “R” Us closed its stores in the United States, Walmart, along with Target, Amazon, Party City and other retailers, quickly expanded their toy assortments and marketing, according to the The Toy Association Inc. .

Dennis said he had not seen any data quantifying the impact of the Toys “R” Us shutdown, but “obviously all of this stuff had to go somewhere.”

“Given the great commitment of Walmart, Target and Amazon in these categories, they must have gained relative shares” in the toy market, said Dennis.

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