Toys R Us CEO Interviewed by Bloomberg Markets; Important Information

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David Brandon, CEO Toys R Us

The only area that I think Mr. Brandon missed in his interview is the importance of carrying products that are so unexpected that excited children will shout to their friends: "Guess what I saw at Toys R Us?"

Matthew Townsend of Bloomberg Markets secured an interview with David Brandon, CEO of Toys R Us. His article, "Saving the Big Box: Inside the Plan to Revive Toys ‘R’ Us", details some comments from Mr. Brandon which I found to be highly informed and realistic. He has visited 200 Toys R Us stores since taking over 14 months ago and it shows in his floor level awareness of what is wrong and what needs to be done.

Before I get into the detail; the question might be asked: "Why should the industry care about Toys R Us?" "Aren't there other retailers selling toys?"

How important is Toys R Us to the toy and play industry? Extremely; Toys R Us is the only major, mass market retailer that specializes in and presents a broad spectrum of toys. Its reason for being is not lowest price but broadest assortment. Without Toys R Us, the toy and play industry would feel enormous downward pressure from Walmart and Target on prices. This plus a sharp reductions in slots for a variety of toys would make it harder for smaller manufacturers to secure distribution. Yes, it might be helpful to small, local toy stores if Toys R Us ceased to exist but the overall impact on the industry would be highly damaging.

Fortunately, Mr. Brandon is a realist. It is clear from the article that he is concerned about operations. He is seeing too many empty shelves and feels the company needs to do a much better job of filling them.

He is also concerned about how the company presents itself. I found it very interesting that his reaction to the up front, disheveled display of $1 items was that it made the company look, in his words,  like "…a garage sale…”

I was very impressed with this statement: "The big-box advantages of selection and price that made the format so successful have been obliterated by the web. There needs to be more reasons for people to go to a store." He wants to do that by making Toys R Us a fun place to visit. You will be able to fly a drone or  practice with a Nerf Blaster.  As he puts it: “I want kids to be dragging their parents to our stores because they want to see what’s going on at Toys ‘R’ Us this weekend.” 

 

Brandon is very aware of the Millennial shopper and notes that they are abandoning the suburbs and moving back to the cities. He therefore wants open more Toys R Us stores in major urban areas. He acknowledges is that urban rents are high but is willing to move to smaller footprints (10 thousand square feet) to make that happen. 

The only area that I think Mr. Brandon missed in his interview is the importance of carrying products that are so unexpected that excited children will shout to their friends: "Guess what I saw at Toys R Us?"  If you want to make your retail store entertaining, provide shoppers with such an array of products that there will be a surprise around every corner. It is that "Aha", "Oh My", "Wow" moment that will bring kids and their parents on the hunt for the new and unexpected.

All in all, Brandon is seeing clearly and moving in the right direction. Good news. 

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