Toys R Us liquidation sales have been in full swing for more than a week, attracting customers to hundreds of U.S. stores -- including locations in Little Rock, North Little Rock and Fayetteville -- to purchase items before the retailer closes its doors for good.
The demise of the once mighty toy store chain is expected to be finalized later this year, opening a $7 billion hole in an industry it once dominated. The departure will drive competition among retailers trying to fill the void and absorb lost toy sales, according to toy industry experts and retail consultants.
Jim Silver, chief executive officer of toy-industry review website TTPM.com, said it's too early to know exactly where those sales will flow as shoppers grab heavily discounted toys at Toys R Us liquidation sales. But he and other experts believe retailers who played a role in the demise of Toys R Us -- Walmart Inc., Amazon.com and Target Corp -- will benefit from the chain's closing as customers search for alternative places to shop.
"Without a doubt, those three are going to pick up market share," Silver said. "But what the whole toy industry is trying to do is figure out exactly how much."
Amazon, Target and Walmart will battle for dominance in the toy retail market, according to a recent consumer survey conducted by Coresight Research. But the research firm's findings indicate Walmart and Target may be best positioned among the three to enjoy the most sizable jump in toy and game sales after surveying Toys R Us customers.
According to the survey, those Toys R Us customers were much more likely to have also shopped for toys and games at Walmart and Target than average toy shoppers over the previous 12 months.
Carol Spieckerman, a retail consultant and president of Spieckerman Retail, said Walmart has a "golden opportunity" in the toy department with one major competitor removed. The company caused pain for Toys R Us because of its aggressiveness and those efforts must continue even as the retailer signs off.
Walmart, long known for offering lower prices on products, said before the Christmas shopping season that it had added more than 1,000 new toys to its selection and about 25 percent of its items were exclusive products.
Spieckerman said Walmart, which also has benefited from efforts to clean up its stores, could become more attractive for toy shoppers by making sure its toy aisles are easy to browse and clutter free.
"Toys R Us bills itself as the toy authority and Walmart would be wise to focus on that aspect, not just price," Spieckerman said. "Presenting a clear point of view regarding which toys are hot and appropriate for various age ranges will be key. Articulating this authority both online and in-store, and ensuring message consistency across all shopper touch points will make a big difference."
But the Coresight Research report showed several other players -- including dollar stores and department stores -- stand to benefit from Toys R Us closing. Silver pointed to a number of retailers that have decided to expand their toy offerings of late, including J.C. Penney and Kohl's. FAO Schwarz and KB Toys also are plotting potential comebacks.
Richard Gottlieb, chief executive of consulting group Global Toy Experts, believes the industry is ripe for another toy-specific retailer to step into the space.
While retailers like Walmart should see more sales after Toys R Us leaves the market, Gottlieb said those aren't toy stores. They run toy departments, which don't offer the same experience for shoppers.
"Walmart is going to pick up an appreciable amount of business, but they're going to lose some of it when serious players come into the market and provide a true toy store experience," Gottlieb said. "They'll retain some, the casual shopper, but not someone who really wants to go to a toy store."
Retailers who succeed will be "great merchants" who love products, according to Gottlieb. He said they must be able to understand how to effectively present, display and curate their selection.
Silver, meanwhile, said smart retailers will successfully publicize their departments as Toys R Us customers look for new places to shop. If Walmart or Target, for example, plan to expand their toy departments and add additional products then it is critical to "get the word out" to consumers.
Sales gains aren't likely to be noticed soon. One reason: The majority of toy sales occur during the fourth quarter of the year. There's also a chance for a negative impact during the Christmas shopping season because of the chance shoppers are loading up on discounted items now during the liquidation sales and putting them away until the holidays.
But Silver said Toys R Us' demise is setting the stage for a big battle.
"This is going to be one of the most interesting years in the toy business because it's such a large volume and you really don't know where it's going," Silver said.
SundayMonday Business on 04/01/2018