Amid a crowded programming schedule at the San Diego Convention Center on July 21, something a bit different was happening upstairs at Comic-Con International. In a panel moderated by Daniel Pickett (founder, Action Figure Insider), I took the stage alongside Richard Gottlieb (principal and founder, Global Toy Group), Jason Labowitz (co-founder, Entertainment Earth and Bif Bang Pow!) and Steven Anne (category manager, toys/licensing at Walgreens) to discuss the future of toy retail in a world without Toys “R” Us (TRU) in the U.S.
Daniel invited me to take part due to my year-long (so far) deep-dive into the collapse of America’s iconic toy retailer. At this point, we know enough of the “how” and “why” it happened, and no—it wasn’t Amazon or millennials that sent Geoffrey packing. For those in the toy industry, the opinions are varied—from those who mourn the loss of a great partner to those who remember a time when Toys “R” Us may have bullied their vendors for more favorable terms. While we did talk a bit about the demise of TRU to lead off the hour-long panel, the real purpose of our discussion was less about reflection, and more about taking a look at what’s ahead…
Comic-Con may well have been the finest example of two very distinct shopper groups that Toys “R” Us once catered to and that anyone stepping into the ring must be prepared for: parents and collectors—and that means a balancing act for retailers.
Of the panelists on stage, I was the one who is most engaged in the business of reaching families, so a large part of my interest is on keeping abreast of how retailers are connecting with their customers in selection and price. While I do enjoy the collectibles market, that’s an area where Labowitz and Pickett specialize in the online space, and where Anne has managed to attract shoppers with major exclusives by putting “a toy department on every corner.” Gottlieb is a wealth of data, having tracked industry trends for decades.
The overwhelming sentiment is that the toy industry will weather this storm just fine, and as the recent numbers from The NPD Group show, that’s just what’s happening. Still, there’s a lot of business up for grabs, so we’re seeing a diverse array of retailers of all sizes gearing up for a fourth quarter battle, with Walmart, Target, Amazon, JC Penny, Ace Hardware, Kohl’s, and many others expanding their toy offerings. This is in addition to the thousands of independent specialty retailers who have been doing an absolutely phenomenal job of reacting to the changing times and connecting with their communities to build loyal, local followings.
Taking questions from the crowd (sadly, the line was capped and we weren’t able to get to everyone during the panel, though we did field questions in the hallway afterward), many wondered about the much-discussed return of KB Toys and the arrival of Party City’s “Toy City” pop-up locations.
On the KB note, little has been heard since Gottlieb went one-on-one with Ellia Kassoff of Strategic Marks LLC in front of a crowd of industry players at PlayCon in San Francisco back in May. Despite the promise of “400-600 pop-up stores for holiday 2018,” very few concrete answers to audience questions were provided. The overall consensus is that the sudden and unexpected liquidation of Toys “R” Us in March prompted Kassoff’s premature announcement. Having spoken to him myself, I believe that he’s well-intentioned and that his heart is in the right place… but the back-channel talk is that KB Toys likely doesn’t have the funding and infrastructure in place to pull off a 2018 resurrection. Even more concerning is that the name might not hold much value outside of nostalgia. If I called up Peter Panda and asked him to dust off the roller skates, would kids in 2018 care about Child World coming back? Not at all.
The Toy City pop-ups have been met with industry and consumer enthusiasm, bringing toys into the mix alongside Party City’s existing Halloween City locations. On November 1, they’ll flip into full-blown toy store mode and see what happens. My concern is that Spirit Halloween already tried this back in 2009 and didn’t fare well—few even remember the short-lived ToyZam! experiment, in which Spirit became a toy store. I do, and their stores were about as disappointing as Go! Calendars’ Go! Toys & Games seasonal locations. As a parent, what I see in those stores is the experience of a dirty, cluttered mess of dated and overpriced product. While Go! is said to be successful, I feel that their pricing is predatory based on the “convenience” factor of snagging parents and grandparents who might already be at the mall. Should Toy City offer a bright, fairly-priced, well-merchandised experience with great customer service, they could easily mop the floor with the seasonal competition.
FAO Schwarz is also mounting a comeback, and while they haven’t returned to the retail scene just yet, we discussed the March announcement that they’ve partnered with Hudson Group to open toy and candy shops across the U.S. That’s picked-up steam as the location of their first new FAO Schwarz store has been revealed to be at LaGuardia Airport’s new Terminal B.
Personally, the most exciting thing I’ve seen is happening among the 1,000 or so stores that Target is in the process of not just remodeling—but “reimagining.” Two of those locations (one a Super Target, the other a former Target Greatland) are near me, and the toy departments are impressive. They’ve got a bigger selection, a lower visual profile and ditch the traditional aisle layouts for something more open and diverse. There’s statues of giant LEGO Minifigures and features like you might find in a children’s museum, such as pipes where kids can talk into in one section and kids down the aisle can listen and talk back. It’s bright and engaging and feels fun.
Labowitz has a unique perspective, coming from someone who was not only competing with Toys “R” Us, but also a partner with them on shared exclusives for events such as Comic-Con. He feels that part of filling the void is by going to where the collectors and families are, and that means a more robust presence at live events and conventions across the country. It’s a bit like a traveling circus, but a novel approach that could prove fruitful. His company, Entertainment Earth, became a savior for certain exclusives originally intended for TRU, and their new E.E. Toys line seeks to connect parents and kids through new offerings for kids as young as four.
While the volume of toys sold should continue to rebound, there is still a major void that isn’t in sales. There’s a void in that there is no longer a national toy store in the U.S. There is no place where kids across the country can have that experience of finding more than they could ever dream of under one roof. Where this especially hurts is with smaller companies that may not find the space that TRU once could provide, or for those selling larger merchandise that can’t be merchandised due to a lack of floor space, such as outdoor playsets, bikes, ride-ons. Who will take the risks to fill those gaps? That’s something that no one seems to have an answer for just yet.
Still, the future is bright and the industry is resilient. The Toy Association is already seeing a massive spike in retailer and buyer attendance for this year’s Fall Toy Preview and when all is done, they believe they will see over 300 retail outlets in attendance—a 65% increase over 2017. Kids won’t stop playing, and there will be plenty of places for toys to be bought and sold.