Retailers are doubling down on toys amid a gap in the market left by the bankruptcy of Toys R Us. U.K. toy retailer Hamleys, for instance, is eyeing a potential New York City location for a flagship store. A source close to the matter told CNBC that the retailer is nearing a deal for a space at 2 Herald Square that would encompass approximately 30,000 square feet. The potential store could open its doors in 2020, although such a deal has not been made final.
In the U.K., Hamleys takes an experiential retail approach to its stores: The staff masquerades as fictional characters for entertainment, and children can play with large Lego figures. The atmosphere comes as brick-and-mortar retailers have to differentiate themselves from their eCommerce counterparts. Ripco Real Estate Principal and Chief Operating Officer Mark Kaplan told CNBC that retailers can attract shoppers from online retailers “if the in-store experience offers something more.” (That is, a place that lets consumers try out products.)
Hamleys has been around for centuries in the U.K., having set up shop around 1760. Since then, the retailer has grown to serve several regions including Asia, the Middle East, Africa and North America. According to CNBC, a person with knowledge of the situation said the retailer would eye places such as Chicago, Los Angeles and Miami, noting that it would consider “some of the more profitable malls in the country.” Neither Hamleys nor SL Green Realty, the owner of the Herald Square space, would comment on the report.
In the event that Hamleys’ potential brick-and-mortar store comes to fruition, it wouldn’t be the only large toy store with an experiential focus to take up residence in the Big Apple. The legendary toy retailer FAO Schwarz opened a flagship store in New York City, marking its return to the city last month. Prior to the opening, it was reported that the retailer’s new 30 Rockefeller Plaza location would include multiple experiential retail components. (At its prior Fifth Avenue location, Tom Hanks tapped out “Chopsticks” on a dance-on piano in the 1988 movie “Big.”)
The new space was said to have the iconic dance-on piano, as well as a build-your-own RC race car station. In addition, the store was to offer a kid-focused grocery shopping experience as well as magic shows. And the retailer was planning to extend that experiential approach to partner locations, “offering the world that one-of-a-kind toy retail experience the brand is known for,” according to an announcement from the company in October.
Retailers Step up Toy Selection
Beyond the Big Apple, major retailers are stepping in to fill the void left by Toys R Us. This fall, it was reported that Walmart was looking to grow its selection of toys by 30 percent in its brick-and-mortar stores, as well as 40 percent online. The retailer also planned in-store events that allowed children to play with toys, take home booklets and take pictures. And toy influencers such as Gavin Raygoza were planning to bring reviews, advice and recommendations to Walmart’s website.
In a press release announcing the move in late August, Walmart’s Vice President of Toys Anne Marie Kehoe noted that the retailer has always been a place that shoppers have visited for toys – “but today, we are making even bigger investments in the category to ensure we have the widest selection of toys at the best prices.”
In October, Target also announced that it was revamping its toy shopping experience. At the time, the retailer said it would be dedicating “nearly a quarter-million square feet of new space for toys across more than 500 stores.” It also remodeled its toy departments at over 100 stores. In addition, the retailer deepened its inventory and had 2,500 new and exclusive toys, which it said was almost two times last year’s amount. And on the digital side, the retailer said it had a digitally enabled kids’ gifting catalog, as well as a Target.com gift finder for toys.
Target Executive Vice President and Chief Merchandising Officer Mark Tritton said in the announcement at the time, "Our team has spent months preparing for this season, selecting the assortment, deepening our inventory to offer more of the hottest items and reimagining the experience we have for toys in our stores and online. We're excited to welcome more shoppers to Target this season.”
Yet this month, Gordon Haskett Analyst Chuck Grom noted that almost 59 percent of Toys R Us shoppers from last year’s Black Friday weekend did not choose to buy items from other brick-and-mortar retailers. The void left behind by Toys R Us, then, at least from a brick-and-mortar standpoint, could be far from completely filled.