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Home / Business / Does a Market Exist for Its Revival? – The Motley Fool

Does a Market Exist for Its Revival? – The Motley Fool



Never count a good giraffe down?

After going bankrupt and closing all its stores in the United States, Toys R Us / Babies R Us has emerged under new ownership with a plan to not only grow its remaining international locations but to make a comeback in its home US market as well. The new company, Tru Brands, will be led by the chain's chief executive chief executive Richard Barry who will now serve as CEO. Tru Brands is not a traditional start-up. It controls global assets that delivered over $ 3 trillion in sales in 2018 through more than 900 stores and e-commerce efforts in 30 plus countries across Asia Europe Africa, and the Middle East . The chain has a much lower profile in the US, which was limited to some grocery-store kiosks during the last holiday season. The company does have high name recognition among parents and has more than 9.5 million followers across social media channels, according to a press release.

 A joint Toys R Us and Babies R Us store

Toys R Us has a new owner that wants to make a US comeback. Image source: Tru Kids Brands.

The death of Toys R Us puts about 19% of the U.S. roughly $ 4 billion a year. That's a significant market opportunity and a number of players have to fill the void during the holiday season. Most notably, Target (NYSE: TGT) and Walmart (NYSE: WMT) Amazon ] (NASDAQ: AMZN) created a digital toy circular to promote its offerings.

Barry believes that there is still space in the market for brands dedicated to toys and baby products.

"Despite unprecedented efforts to capture the US market share this past holiday season, there are still significant gap and huge consumer demand for the trusted experience that Toys R Us and Babies R Us delivers," he said in the press release. "We have a once-in-a-lifetime opportunity to write the next chapter of Toys R Us at launching a newly imagined retail experience for our major brands here in the US. operating teams that are 100% focused on growth. "

That sounds nice but the revived brand enters a market that has largely compensated for is absence. Mattel for example, saw sales fall by 5% in the fourth quarter and the company claimed an 8% negative impact from the loss of Toys R Us. Rival Hasbro 's numbers were worse than sales fell 13% in Q4, some of which the company blamed on Toys R Us liquidation sales. Is there a need?

It's fair to the sale of a new one Star Wars movie as hurting its sales. say that some of the market share has Rs once commanded has gone to Walmart, Target, and Amazon. Winning that back with a new chain of stores is easier than done when all three major rivals will enjoy a pricing advantage and, in the case of Walmart and Target, toys can be low-margin sales or even loss leaders that make it easier for parents to get their kids to go shopping with them.

Overall toy sales were down 2% during the holiday season, according to CNBC. That suggests that most of the Toys R has gone elsewhere – mostly to Walmart, Target, and Amazon most likely. That means this new version of Toys R Us a market where there's limited need.

Understand that new stores need more interactive, giving consumers a better reason to visit than "we have toys." Barry clearly understands how epic the task is to bring the brand back in a meaningful. He has made it clear that everything – stores, pop-ups, even partnering with Amazon – remains on the table.

That's a smart acknowledgment, but Toys R Us bankruptcy left a hole that was quickly filled by retail's brightest stars . Competing with Walmart, Target, and Amazon when Toys R Us had an entrenched network of stores was a challenge. Starting from scratch – may be an impossible task

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Cline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Hasbro. The Motley Fool is short shares of Hasbro. The Motley Fool has a disclosure policy


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