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How To Energize A Stale Toy Store

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By MARY SHEDDEN, The Tampa Tribune

Published: November 14, 2007

WESLEY CHAPEL - Look no farther than Pasco County to see the future of Toys R Us.

Last week, the company opened a super store that blends the popular Babies R Us store with a division that has lost its spot as the nation's dominant toy seller. The idea: expose customers loyal to the thriving baby store to an updated version of the classic toy store.

Customers driving up to the store at The Grove shopping plaza will see both Toys R Us and Babies R Us entrances and signs outside the 64,000-square-foot structure. Inside, Toys R Us employees in red shirts work half of the building lined with toys and electronics; Babies R Us workers in purple shirts handle the cribs, formula, clothes and registry.

Chief Executive Officer Jerry Storch hopes the "side-by-side" store concept can revive the 585-store Toys R Us chain. Storch - a former Target discount store top executive - took over Toys R Us shortly after it was purchased by a private equity firm.

He visited the new Wesley Chapel store Tuesday, and spoke with The Tampa Tribune about the new store concept, the company's attempts to retake its spot as the nation's top toy retailer and how it's responding to parents' concerns over recent safety recalls.

Eleven years ago, Toys R Us created Babies R Us as an independent chain. Its success came as the toy division lost its place as the nation's biggest toy retailer to Wal-Mart. How are you tackling those results today?
Babies R Us has a very clearly defined place and is very differentiated from the competition. Toys R Us over the years became a little shop-worn as we all know. I'm proud that over the last year, we have cleaned up the toy stores to straighten out the aisles and make them easier to shop. But a lot of the stores are still older stores. And what the new model superstore gave us an opportunity to do was to design a new toy store and say how could Toys R Us have the same authority and dominance in the toy space that Babies R Us has in the baby space.

Although the 257 Babies R Us locations will not change, how will physical upgrades help the Toys R Us chain long-term?

It's a much better experience now than it was a year or two ago at Toys R Us. Beyond building the superstores, which we will build dozens of them every year, we are building and expanding and accelerating the pace at which we grow our side-by-side program ... where you take an existing store and add a Babies R Us. What we do is add a second door, which has a Babies R Us logo on it, and we put in an edited baby assortment. ... We put in a sort-of "best of" Babies R Us with a separate entrance. By the end of the year they will have 30 of those stores done.

Sometimes we will relocate stores as every retailer does. I'm not aware of any retailer that doesn't. In fact, if you can fault Toys R Us historically for anything, it's that stores were not closed and relocated to the new growth areas. That's a reason why the chain looks so old. Over the next decade, we will reposition every store in the chain. Obviously, we're trying to do a lot as quickly as possible.

You say you want Toys R Us to grow aggressively. How so?

The motto I'm using at the company is "We're playing to win." And people in the history of the company had gotten too defensive about the position of Toys R Us to the discount chains in particular. The discount chains, Wal-Mart and Target in particular, had been gaining market share at Toys R Us' expense. And honestly, the experience we were providing was not acceptable to consumers, so we needed to change that. ... Now the point is very clear. We are the authority in toys and babies. We have more toys and we have better, higher end products.

Last year, Toys R Us saw same-store sales increase during the holidays by 4.1 percent. But annual sales still need improvement. How will this new strategic direction help?

For two months of the year, for November and December, toys are one of the strongest retail categories in the planet, and we have incredible sales per square feet for November and December. It's the other 10 months of the year when the toy store isn't very productive. So this addition of Babies R Us should build traffic 12 months of the year.

How will the changes in store design and sales strategy help improve profits, which in fiscal 2007 reached $109 million?

Take this all in total, and we will reassume what I call our Manifest Destiny as the authority in toys and babies. And we will grow the top line and bottom line so that our financials reflect the kind of financials investors have seen in other successful specialty stores.

Millions of toys have been the target of safety recalls in recent months. You have testified before Congress about increasing the Consumer Product Safety Commission's ability to conduct more tests. What is Toys R Us doing to improve consumer confidence and toy safety?

We know there are a lot of questions out there, and we're working hard to make sure we're answering those questions. We have a toy safety micro Web site, and we direct people there whenever we can. We know that some parents will still be uncomfortable buying toys made in China, and I've heard that discussion quite a bit. Most parents buy products based on which product is best, not country of origin. And our objective is to make sure all the toys are safe, regardless of whatever country they come from. For those parents who simply do not want to buy a product made in China, we have plenty of alternatives.

Reporter Mary Shedden can be reached at mshedden@tampatrib.com or (813) 259-7365.

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