As it turns out, reports of Toys ‘R’ Us’ death may have been greatly exaggerated. The iconic toy retailer—which filed for bankruptcy in 2017 after piling up more than $5 billion in debt—closed its more than 800 U.S. doors and seemed destined for the retail graveyard.
Yet last week, Toys ‘R’ Us’ new parent company (Tru Kids Brands) announced that two new stores—one in Houston, the other in Paramus, New Jersey—would open in time for the holidays. But unlike the Toys ‘R’ Us of old, these new locations will be smaller, re-designed and fundamentally different in their operating model. Rather than stacking it high in the hopes of watching it fly, reports suggest that the merchandise offering will be highly edited and the presentation will be far more experiential and interactive. Most notably, the new concept stores will powered in partnership with b8ta, the Silicon Valley startup that has been a pioneer in the concept of “retail as a service.”
In addition to its own stores, b8ta has worked with Macy’s and Lowe’s to develop in-store concepts which are more akin to showrooms than traditional retail shops within a store. By leveraging data to better serve customers, the b8ta model leans into the need to rethink the idea of stores as mini-warehouses where people go to pick out and walk out with their stuff. While that can be an important role for brick-and-mortar locations, it’s also true that stores can serve as powerful advertisements for the brands they carry.
This store as media notion is hardly new. After all, brands that started as mail order catalogs (think Williams-Sonoma, REI, et al) surely understood this as they opened stores decades ago and saw their catalog business grow in trade areas where new stores were located. Some leading “omnichannel”brands have long recognized that digital drives physical and vice versa, and that store metrics need to evolve. A huge driver of the hundreds of brick-and-mortar locations that are being opened by digitally-native (and previously online only) brands like Warby Parker and Casper is the recognition that physical stores serve as great marketing for their brands regardless of where the customer ultimately transacts.
What’s fundamentally different about the b8ta model is that typically the revenue generated comes from vendor brands paying for in-store and online real estate. In the case of Toys ‘R’ Us’ resurrection, this fundamentally changes their underlying economics and shifts the role of the store from a place to buy things to a place to try things. Regardless of whether this works for Toys ‘R’ Us, there is an underlying trend exhibited not only by b8ta but by new concepts like Neighborhood Goods that see physical retail more as brand advertising and are using advanced in-store analytic techniques to better quantify the impact of brick and mortar beyond simply being a traditional direct sales channel.
Of course, even with a significantly re-engineered format, the long-term promise of Toys ‘R’ Us’ rise from the dead remains to be seen. Even if the two new stores work well, a lot has to happen for the once storied retailer to return to a leading position in the industry. Two successful stores cannot automatically be extrapolated to a workable national strategy. Competition remains intense and many retailers have already stepped up and stepped in to fill the void left by Toys ‘R’ Us’ seeming demise. And it’s likely that many of the key toy vendors that got burned during the bankruptcy won’t be terribly eager to jump right back in. So it won’t be easy.
Nevertheless, this new iteration reminds us again that physical retail isn’t dead; boring retail is. And, with a little bit of creativity—combined with a willingness to experiment—there are many ways for brands, old and new, to reimagine themselves
A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts here.
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