Multiple former Toys “R” Us executives are working for a new company called Tru Kids that’s planning a comeback for the toy retailer, according to CNBC. Following Toys “R” Us’ bankruptcy in 2018, some of its lenders took control of its brand names and other intellectual property, and Tru Kids now manages those brands.
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Tru Kids’ plans for Toys “R” Us are still developing, and could see it open stand-alone stores, pop-up locations, or partnerships where Toys "R" Us’ private labels and branding appear at other retailers, similar to what Toys "R" Us’ lenders did at Kroger this past holiday season.
The comeback is focused in the US since Toys “R” Us still operates overseas, and Tru Kids is aiming to provide better technology and in-store experiences to try to avoid some of the troubles that led to Toys "R" Us’ bankruptcy.
But Toys “R” Us will be returning to a different landscape with heightened competition since several retailers stepped up to try to take its place over the holidays. Retailers including Amazon, Walmart, and Target bolstered their toy offerings during the holidays in the hopes of capturing the market share left behind by Toys “R” Us.
So, Toys “R” Us will have to rebuild its image and consumer base while competing with powerful retailers that are more engaged in its industry. And because of Toys “R” Us’ liquidation, those retailers now have stronger e-commerce capabilities and larger brick-and-mortar networks, making a successful comeback a difficult task.
If Tru Kids can rebuild Toys “R” Us, there’s a valuable opportunity for it to succeed as a year-round toy retailer.
- The major retailers that have upped their investment in toys aren’t going to keep it up outside of the holiday season. The holidays are the most lucrative time for toy retailers, but Toys “R” Us still racked up nearly $6.5 billion in sales in the first three quarters of 2017, so there’s plenty of value in the industry all year. And competitors that aren’t exclusively toy retailers aren’t committed to having huge inventories of toys year-round, potentially leaving consumers in a lurch. If Toys “R” Us returns as a full-time toy retailer and has a big enough reach, it may be able to reestablish itself outside of the holiday season, when there’s less competition, which could drive holiday success too.
- Toy manufacturers have seen their sales drop despite increased interest from other retailers, potentially making working with a reborn Toys “R” Us attractive. Manufacturers may be hesitant to work with Toys “R” Us after its bankruptcy, but with top players like Hasbro and Mattel seeing their sales drop in the all-important holiday quarter — 13% year-over-year (YoY) and 5% YoY, respectively — they might be more willing to give it a chance. And they may be particularly excited about a year-round retailer, as it would give them more opportunities to make sales, so Tru Kids would be wise to consider making a push beyond the holidays.
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Source: Business Insider