The bankrupt Toys R Us is back under new owners, WHP Global which had acquired a controlling interest in Tru Kids, the parent company of the Toys R Us, Babies R Us and Geoffrey the Giraffe brands. But don’t look for the iconic toy retailer at locations they were at before they went under or even in new retail locations. Instead, you will find them at more than 400 Macy’s stores.
“Our partnership with Macy’s marks the greatly anticipated return of Toys” R” Us in the U.S.A. and changes the retail landscape by combining two beloved retail brands together for consumers across the nation in a completely innovative way,” Yehuda Shmidman, chairman and CEO of WHP Global and Toys R Us, said in a statement.
For Macy’s this development couldn’t have come soon enough. The struggling department store chain needed a boost and a widely known brand like Toys R Us could help turn things around. Macy’s Inc. Chairman and CEO Jeff Gennette said the toy category is a growth area, and with the partnership, he expects it’ll “quintuple” the size of the department store chain’s toy business. “Quintuple?” That would be quite a feat for Macy’s.
The concept of having a major brand open a “concession,” as some call it, in a well-known retail brand store is not new. Bloomingdale’s had such arrangements with Ralph Lauren, Calvin Klein, DKNY and Kenneth Cole. Neiman Marcus, has had them with Armani and Gucci. Macy’s , which also runs Bloomingdale’s and Bluemercury, announced its last round of store closures and identified 36 namesake stores and one Bloomingdale’s that shuttered early this year. The string of closures was part of Macy’s three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced in February 2020 before the pandemic hit. About 30 stores closed in 2020 as part of the plan.
The Toys R Us-Macy’s arrangement came at a time when Amazon announced that it was opening retail stores akin to department stores, a step to help the tech company extend its reach in sales of clothing, household items, electronics and other areas. One has to wonder why Amazon, being so successful in e-commerce and really being responsible in many ways for the decline of conventional retail would opt to expand via brick and mortar, when so many are looking to get out.
Large kosher supermarkets have in recent years adopted this model of retail. In the large kosher independent stores like Evergreen, Gourmet Glatt and Season’s, you are likely to see such brands as Ossie’, the Nuttery, and Oh Nuts. The concept of having a store within a store or a major brand within a store works, certainly from the point of view of the customer who covets the “one-stop shopping experience.”
Founded in 1994 as an online bookseller, Amazon has gradually gained a foothold in physical retail through the opening of book stores, grocery outlets and other physical spaces. The company bought the grocer Whole Foods Market in 2017. Perhaps Amazon is counting on a big resurgence in retail shopping. As for Macy’s, it is set to open Toys R Us toy shops in more than 400 department stores nationwide starting in 2022, in what both brands feel will be a win-win.
As of July 31, Macy’s Inc. had 726 total locations, including 512 Macy’s locations, 54 Bloomingdale’s locations, including outlet stores, and 160 Bluemercury stores. But Macy’s was a victim of the shift away from shopping retail, especially when the pandemic hit. Neil Saunders, managing director of consultancy Global Data Retail, told USA TODAY he thought the addition of Toys R Us would give families more of a reason to visit Macy’s. But he said the department store needs to make sure the concept looks good. “
In Europe, this whole concept is called “concession retailing.” The store-within-store or concession model has a lot in common with the tried-and-true boutique approach of the department store. Traditionally, sections of the store feature branded merchandise, and, hopefully, reflect the look and feel of that brand’s boutique area while maintaining the store’s own brand. You can visit any major department store nowadays and find these concessions everywhere.
For a long time, concession retailing was an upscale phenomenon, pioneered by the likes of Louis Vuitton. Apple is continuing that tradition in Europe by using the store-within-store approach to sell its upcoming Apple Watch in upscale department stores.
In many ways, retailers that are featuring branded stores-within-stores are replicating the malls that they anchor. Last year, for example, Best Buy expanded its store-within-store program, undertaking a vast renovation of stores to carve out retail space for Sony, Samsung, Microsoft, Pacific Kitchen, and Magnolia within most of its stores. Ideally, the partnership of a brand within a larger store is a win for both the specialty brand and the retailer where it’s operating.
In many such arrangements, the brand pays for the space, the employees, and even the interior design and the fixtures. The host retailer gets the benefit of an alluring brand that brings customers into the store; the brand gets the benefit of the retailer’s shoppers passing by. Dick’s Sporting Goods stores, for example, feature “Nike Field House” and “Under Armour All-American” concept stores within them.
The short-term pop-ins feature merchandise by often high-end but edgier-than-Nordstrom brands that is specially curated and offered for a limited time. In fact, the “Pop in” events tend to garner “hurry up and go” attention from fashion magazines and blogs. Even Target got into the act a few years ago selling high-end Nordstrom goods.
It is quite puzzling why Amazon is turning back the pages of history and venturing into an area that has struggled in recent years. Department stores as we once knew them have been struggling with hundreds closing. They lost out to discounters and online players like Amazon. Department stores used to make up 10% of retail sales. So far this year, they account for less than 1%. If things weren’t bad enough for them the pandemic made things worse. J.C. Penney, Neiman Marcus, Lord & Taylor and Stage Stores filed for bankruptcy. J.C. Penney and Neiman Marcus emerged from court protection under new owners. Lord & Taylor now sells only online, and Stage Stores liquidated.
In the meantime, foot traffic is slowly recovering, although it remains below 2019 levels, according to ShopperTrak, which uses cameras to count traffic in U.S. retail stores. Amazon is already somewhat in retail. It operates more than 20 bookstores throughout the country, as well as more than two dozen Amazon 4-star stores, outlets that sell gadgets from electronics to kitchen products. The company’s technological innovations have been particularly present in its line of grocery stores, which began with its purchase of Whole Foods. Those now include its cashierless Amazon Go convenience stores in Chicago, New York, San Francisco and Seattle and its more conventional Amazon Fresh stores across several states. It is unclear if Amazon is planning to introduce any store features such as cashierless technology at the new retail locations
But don’t be surprised if some day soon Amazon starts showing up in the retail stores it pushed aside. Stranger things have happened since Amazon turned retail on its head. One thing is for sure the new models are not a fluke; they are here to stay and even expand.