October 30, 2018

Retail - Retailers Angling to Gain From Toys-R-Us Closure

AMZN, JCP, KSS, TGT, WMT
By Sabrina Bullock
Four months after the closure of Toys-"R"-Us stores, including Babies-"R"-Us, suppliers discussed the changing landscape of the toy and baby business.

Ahead of the holidays, retailers are clamoring to capture business left by Toys-"R"-Us Inc., which closed its final stores in June. “Toys and baby goods are the opportunity. Retailers are focused on it,” said one home supplier. For the toy category, suppliers said Walmart Inc. and Target Corp. were boosting inventory levels. One supplier said Walmart had also recently prioritized shipping of toys and electronics ahead of some other categories, such as home, partly because of truck driver shortages. He also said Target recently reset stores to emphasize toys and juvenile, hoping to capture holiday business.

In the baby category, two suppliers said Bed Bath and Beyond Inc.’s Buy Buy Baby reportedly had an uptick in orders and said sell-through was reported as stronger yy, with a higher average-unit-retail. “We are seeing fewer promotions because Babies-'R'-Us is gone. They were heavy into promotions. Having them out of the picture has helped,” said one. Another said Buy Buy Baby was able to carry higher-end brands than most retailers, which also gave the retailer an advantage.

J.C. Penney Co. Inc. recently rolled out new section with more baby items in nearly 500 stores and the new program has been gaining some traction. “J.C. Penney is filling the void left by Babies-'R'-Us,” said one supplier.

Sources said Amazon.com Inc. has also experienced an increase in customers’ baby purchases since the closure. Other retailers, like Target and Kohl’s Corp. have had somewhat steady increases in the category. “All the retailers thought they were going to get a pretty big lift from Babies-'R'-Us closures, but the reality is that while it's better year to year for everyone, it’s only been a small lift. Outside of Buy Buy Baby, most retailers only captured some business,” said one children’s supplier.

Additional Quotes
“Without the heavy promotions of Babies-'R'-Us, our average-unit-retail is up and we don’t have to fund as many promotions.”

“Target is very front facing now with their juvenile sections.”

“Walmart wants to make sure they have enough toys and electronics and have prioritized that over some items such as home goods.”

“Target ordered a bit more baby to stock stores, but really since they are a one-stop shop, they don’t have room to expand more.”

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