The Current Retail Toy Landscape Is Inadequate

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What will not recover anytime soon is the sheer joy and magic that comes from shopping in a store devoted strictly to the joys of play.

2018 is over and, after completing this Christmas season, it is obvious that the truncated U.S. toy industry is dramatically under-indexed in terms of retail stores, retail square footage and most importantly unique toys.

BMO Capital's Gerrick Johnson states, in his Toy Scout Report, that the loss of Toys R Us meant the loss of an astounding, 10 million square feet of retail space dedicated to selling toys. How did that loss impact consumers?

Here is how Gerrick puts it: "…The physical space at retailers attempting to capture the Toys "R" Us (TRU) market share is inadequate. …Aisles are congested resulting in a poor shopping experience, sell-outs, and limited opportunity for clerks to pack out new products". He goes on to say: "Parents actually WANT to shop in stores for toys. …They know how to shop online, and will do so, but usually as a last resort. This is where they desperately miss TRU."

What they are also missing is variety. Target and Wal-Mart, two retailers that have inherited the bulk of Toys R Us's consumers, simply cannot and will not dedicate the space or the manpower to meet the needs of Americans who consume play.

Revenue, however, is not the biggest concern. Toy retail sales will recover, and they will do so sooner than later.

What will not recover anytime soon is the sheer joy and magic that comes from shopping in a store devoted strictly to the joys of play. A store that offers a shopping experience that is unencumbered by the mundane (milk and eggs) and the utilitarian (shampoo and small appliances). Yes, there are some great independent toy retailers out there but there is simply not enough of them. They can and will grow but they lack the capital to do so at a rate that will fill the current void anytime soon.

As importantly, we are now short of space and marketing dedicated to start up toy companies. Toys R Us provided a launch pad for smaller and newer toy companies. How many now successful toy companies owe their existence to the support they received from Toys R Us when they were getting started?  Target and Wal-Mart, with the best of intentions, simply do not have the space or the interest in helping create a Spin Master or Moose Toys of the future.

The US toy market is now a less joyful and less hopeful place than it was a few years ago. I am going to bet, however, that somewhere out there is an entrepreneur, another Charles Lazarus, who loves toys and sees the opportunity at hand. And, oh yes, has the capital to make it all happen. He or she can arrive none-to-soon.

 

One thought

  1. Well stated and agreed. The void needs to be filled by a new strategy with a two-tired approach that includes a full retail store that sells lots of product the two months before Christmas and a different and innovative experience the other ten months of the year. Perhaps that can include a combination of an exclusive launch pad for new toys and an interactive toy experience that capitalizes on the rise of STEM/STEAM products?

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