Amazon’s New Toy Story

We admit, it may seem a strange time to declare toys sizzling — since, about a week ago, the nation’s largest purveyor of toys, Toys R Us, switched off the lights and closed its doors for the last time at locations nationwide. Geoffrey the Giraffe is, sadly, no more. Though millennial parents were hit with nostalgia, when it comes to the world of toy sales going forward, market watchers of all kinds have been asking themselves the same question for weeks: Now what?

Toys R Us, despite its myriad of struggles with expensive debt and slipping sales over the last decade or so, was nonetheless something of an American institution. Even in its declining days, Toys R Us represented some 12 percent of the U.S. toy market and its sudden disappearance left toy brands — large and small — quaking, as they now find themselves competing for shelf space that is vastly diminished.

“A lot of the smaller niche brands that you’d buy, because you’d seen [them] while browsing in Toys R Us, are going to be hit very hard,” said Jackie Breyer, editor-in-chief of industry magazine The Toy Book, according to Reuters.

Larger toy brands, it should be noted, weren’t feeling much better about the situation — as big names in toys like Lego, Hasbro and Mattel were already feeling the sting when it came to sales figures — and the assumption was that the Toys R Us closure would mean harder times. But will it? As it turns out, retail like nature abhors a vacuum, and it seems that no one wants to let the perfectly good one that Toys R Us leaves in its wake go to waste. Toys R Us may be done but, as it turns out, lots of other retailers would be happy to serve customers’ toy needs, particularly this Christmas.

Pop-Up Toy Stores

Party City — the retail brand behind the Halloween City that will begin popping up in strip malls across America in about two months — has decided that, this Christmas, it is going into the toy business. Getting out a few days ahead of Toys R Us signing off for good, Party City announced it will be opening about 50 pop-up stores this year to be called, inventively enough, Toy City.

Not much more is known about the plans for the pop-ups — Party City, thus far, has only announced that the shops will be launched in “optimal” markets with “attractive leasing opportunities.”

Party City CEO James Harrison said in a statement, “The creation of a Toy City concept to complement our temporary seasonal retail strategy is a logical extension of our brand, one that will allow us to leverage our existing pop-up store capabilities and capitalize on the category whitespace that has recently been created.”

The pop-up shops will open alongside the Halloween City chops this September and run through the holiday season.

Party City, though, will not be the only the only toy stores popping up for the holiday season. Strategic Marks, a firm that buys and repurposes defunct brands, owns the KB name and plans to open 1,000 pop-up KB Toys stores this holiday season. They are starting later — Black Friday — and, like Toy City, they will run through the holiday season.

“My assumption is that there’s about half a billion dollars’ worth of toys that have been produced for Toys R Us with no place to go,” said Strategic Marks President Ellia Kassoff, according to CNNMoney. “That’s a big, big void that we’re hoping to fill up.”

Kassoff noted that he is already in talks with Hasbro, Mattel and around 200 smaller toy suppliers that are looking for new brick-and-mortar retailers. The time is right for KB, he noted, since the fall of Toys R Us means there are a lot of toy manufacturers “that have inventory but no place to sell it.” Of course, “no place” is a bit of an understatement, since KB won’t be the only pop-up game in town — or the only fallen Toys R Us rival making a comeback this holiday season.

FAO Schwarz Returns To Manhattan

Almost three years ago (on July 15, 2015), the world said goodbye to a different iconic retailer: FAO Schwarz shut its doors in Manhattan for what seemed to be the last time. After operating for 150 years in the city at several locations over time, its then-owner Toys R Us opted to close the iconic store, citing rising rent costs. However, as David Conn — CEO at ThreeSixty Group (the current owner of the FAO Schwarz) — told Karen Webster in a recent conversation that FAO Schwarz will be back for holiday 2018 with a brand new store in a New York City.

Unlike KB, this isn’t a quick stop in the market for the holidays — the new FAO is back full-time in the city.

Moreover, Conn told Webster that toys are far from dead. The ThreeSixty Group also owns Sharper Image and Conn noted that toys are consistently among its biggest sellers. Though, he noted, perhaps a bit more complicated than the Barbie’s and Hot Wheels of old, customers like drones, electronics and a host of things that provide more than just a play experience. They want a “wow factor.”

As for opening a retail store — a toy store no less — just as the biggest toy store in America is going down? Conn is unconcerned. Customers like to shop, he said, and they even like to shop in stores. They are just looking for a fuller, better and more enriching experience. That, he notes, is what FAO Schwarz is being designed to provide in it latest iteration.

“This is going to be a flagship store that will be experiential and theatrical,” Conn said. “We are bringing toy demonstrations, magic shows and special product opportunities to this location. When it comes to toys, it is all about playing — and delivering that ‘wow’ experience to kids and their parents that is very different than what Amazon could ever provide.”

Oh, and speaking of Amazon…

Amazon’s Getting Into The Toy Catalog Business … For Real

Sure, Amazon may have taken a lot of the blame for Toys R Us closing — fairly and not. Toys R Us was hurt by the switch in online shopping, particularly among younger parents, but the brand was having troubles back when Amazon was mostly interested in selling books. Competition from big-box retailers were the beginning of the end, and Walmart had displaced it as the nation’s largest seller of toys nearly a decade ago.

However, even during those struggles, Toys R Us’ “Big Book” toy catalog was a staple of fall for families nationwide, as it was the comprehensive list of what was new and exciting on the market for toys in the upcoming holiday season. And just because Amazon was one of the key forces to the demise of Geoffrey the Giraffe, that doesn’t mean the retailer desires for parents to not be in the know when it comes to filling their children’s Christmas coffers. No, it wants to help parents to be in the know — and preferably shopping on Amazon.

For the holiday in 2018, to step in and fill the void Toys R Us left, Amazon will print a holiday catalog of its own. On paper.

The new Christmas toy catalog will reportedly be handed out at Whole Foods locations and will be sent out in the mail to customers. According to reports, it will be about 100 pages long, and will arrive toward the end of October — plenty of time for children nationwide to build a thorough and comprehensive wish list.

Toys R Us certainly left a hole in the market, but how big a hole remains to be seen.

“Throughout the retail reporting cycle, we’ve heard from a number of large and mid-sized retail chains that they expect to step in to compete in toys in a more meaningful way,” said Jefferies Analyst Stephanie Wissink in a recent note to clients.

Though one store has failed, toys continue to appeal to both kids — and the kid that lives inside every adult. That means toys are sizzling and look primed to sizzle louder during the 2018 holiday season.