Keep an eye on what offi- cials at toys“R”us are trying to do in terms of righting their ship. The beleaguered company announced in late August that
even as sales declined, its profit picture improved a little bit. While the
growth in earnings was not much
to write home about—just a $3 million increase on sales of about $2.3
billion—many industry observers
say that it may show that the giant
toy retailer has finally figured out a
way to make money from a category
many think is all but dead.
Dead you say? Yes,
the toy category, once
the staple of just about
every mass merchandiser—and even some
death’s door. Just look
at the things your kids
do these days and you
will quickly realize that
playing with toys, after
about the age of five, is
not one of them, if you
exclude the booming
video gaming industry.
Toys”R”Us was the primary bene-
factor of the toy boom in the 1980s,
and over the last decade or so, a big
loser in the slowdown in traditional
toy sales. Unlike some other retail
formats, it is pretty hard to re-invent
the wheel when you are known as
the nation’s toy store.
The company did not help itself
either. Its decision to separate the
Babies”R”Us brand into a separate
retail division—with its own stores—
cost the toy store a large amount
of foot-traffic from moms needing
to purchase everything from diapers to formula and food. Suddenly
these moms were no longer going
to Toys”R”Us for their baby needs,
often with an older sibling of the
baby along for the ride, who wanted
something out of the trip. That hurt.
So Toys”R”Us has been trying to
reinvent itself for nearly 20 years.
Now, the private equity groups that
have owned the chain for about a
decade are trying to say that all is
good since profits are growing, even
if sales are not. Important note to
Wall Street experts, especially private
equity groups that probably should
not have gotten involved in this business in the first place: No one has
ever returned to prosperity by just
Advocates for Toys”R”Us can say
all they want about how this chain
has turned the corner. I am not sure
that is going to happen until they get
a total grip on what has happened
with the toy industry and start to
downsize the size of their stores, cut
inventory and focus on what remains
of the once-golden toy business.
Sometimes the toy business is not
much fun at all.
what is the hottest, yet most confusing categoRy in the beauty caRe
aRea? The answer is the rapidly
evolving hair care market.
The hair care business was once
as staid as any in the HBC section.
Now suppliers are quickly churning out new items and more expensive line extensions in this category,
sensing the opportunity to capture
more consumer dollars from shoppers who are eager for unique items
and who are willing to spend more
on products that they perceive have
The strategy is working well, and
will continue as long as retailers
devote the space and commitment to
the category, while taking appropriate measures that ensure consumers
are aware that their store has a large
sampling of products. The big question, of course, will be whether retailers want to devote the real estate to
this suddenly hot segment.
NO JOYS IN TOYS
Stagnant toy sales, with the exception of video games, have forced retailers to rethink their category strategy.
By Seth Mendelson
Seth Mendelson is publisher
and editorial director of Grocery
Toys”R”Us was the primary benefactor of the toy
boom in the 1980s, and over the last decade or so, a
big loser in the slowdown in traditional toy sales.