By Deb Gabor, Sol Marketing
In a surprising move, Toys “R” Us pulled out of its bankruptcy auction and announced it’s taking steps toward reinventing itself, banking on the value of its intellectual property and the strength and credibility of its brand. Determined to keep the beloved brand out of the retail graveyard, Toys “R” Us’ controlling lenders announced they’re reimagining it as a “branding company” which will license some of its products globally and explore opportunities to create new retail models with partners.
The company previously planned to auction off the Toys “R” Us and Babies “R” Us brand names along with the popular Geoffrey the Giraffe character. Perhaps seen as a better economic option for its creditors than shuffling them off to the highest bidder, the move to hold onto those items and reinvent itself as a branding company signals to the world the Toys “R” Us brand, even without its brick and mortar retail stores, is still worth more than the sum of its parts.
Toys “R” Us’ exit left an estimated $11 billion hole in the toy industry and hundreds of toy makers and consumers hanging without a major brick-and-mortar chain dedicated entirely to toys. Although Amazon currently dominates the sale of toys online — online sales are forecasted to steadily increase over the next few years — 43 percent of shoppers report they still prefer shopping for toys in physical stores. While consumers can buy toys and games in Walmart, Target, and smaller specialty retailers, the idea of a toy industry without Toys “R” Us just isn’t as big. And it’s definitely not as fun.
While mass retailers like Walmart and Target can sell toys at scale, they just don’t have the knowledge, experience, and risk profile to introduce the world to the “next big thing” in toys. Being the arbiter of “cool” in the toy industry was one of the most important roles Toys “R” Us served. For more than 60 years, Toys “R” Us was more than a toy store. The aisles of Toys “R” Us served as a testing ground for new ideas. Toys “R” Us sold toys not just during the holiday season, but year-round, and had enough scale and brand credibility to be the toy industry’s hit-maker. While mass retailers can step up to fill some of the retail sales gap left behind by Toys “R” Us, they just don’t have the brand foundation to propel the industry forward.
The strategy of licensing the brand globally and exploring options for inventive retail models like a “store-within-a-store” strategy leverages not only the company’s experience and category knowledge but its brand equity to create a win-win-win-win scenario for retailers, toy manufacturers, consumers, and the Toys “R” Us brand itself.
For instance, for a hypothetical struggling department store chain, having its own on-site Toys “R” Us store might help them bring in shoppers they wouldn’t have otherwise been able to attract. The department store might also benefit financially from Toys “R” Us as a rent-paying, employee-handling, inventory-managing entity within their retail outlet, allowing them to access toy buyers with reduced risk. Consumers benefit from the convenience of being able to get everything they need — including toys — all under one roof. Toy manufacturers get an additional channel through which they can access consumers and the goodwill extended by their association with a popular brand, adored by generations of Toys “R” Us kids. And the Toys “R” Us brand lives on.
Today, the internet is abuzz about the news Toys “R” Us is poised for a possible comeback. No matter what form a revived Toys “R” Us might take, the foundation of the Toys “R” Us brand will contribute greatly to the success of any new business model. While it’s unlikely the revived Toys “R” Us brand will be ready to impact the upcoming holiday season, consumers should be thrilled the brand may be coming back to retail, bringing the fun with it.
About The Author
Deb Gabor was born to brand. She is the founder of Sol Marketing, a brand strategy consultancy obsessed with building winning brands. Since 2003, the Sol Marketing team has led brand strategy engagements for organizations ranging from international household names like Dell, Microsoft, and NBC Universal, to digital winners like Allrecipes, Cheezburger, HomeAway, and RetailMeNot, and dozens of early-stage tech and digital media titans.
Through Investorpitches.com, a division of Sol Marketing, hundreds of start-up founders have benefited from Deb’s wizardry for crafting pitches that entice investors to open their wallets to the tune of up to $85 million. Connect with Deb on Twitter, Facebook and LinkedIn.