Macy’s Partnership Signals A Brand New Future For Toys R Us

No, the old Toys R Us isn’t back. But the new Toys R Us has the potential to bring back some of the old magic – both for Toys R Us and Macy’s.

The Toys R Us partnership with Macy’s could help the department store chain regain its “Miracle On 34th Street”-era status as an essential holiday shopping destination for families.

Macy’s has installed 451 Toys R Us branded toy shops in its stores, and it kicked off the launch of the shops with the unveiling of the largest Toys R Us shop, at Macy’s Herald Square in New York city, at a media event Oct. 13. Macy’s has scheduled events all week at stores throughout the country to promote the toy shops, including celebrations today of the birthday of the beloved Toys R Us mascot, Geoffrey the giraffe.

Toys R Us now is primarily a licensed property, rather than a merchant, and Macy’s has made a smart strategic decision to attach the iconic Toys R Us brand, along with its marketing images, and Geoffrey, to toy shops in its department stores.

The Macy’s partnership will be a test of whether the Toys R Us name sells, even if Toys R Us isn’t operating the stores.

The new toy shops are stocked and staffed by Macy’s, while Toys R Us’ role is more of a licensor, making sure that the brand image is protected, and presented effectively.

In early 2021, WHP Global, a brand acquisition, investment, and management firm, acquired a majority stake in TRU Kids, the company that retained the brand rights to the Toys R Us name and intellectual properties, after the Toys R Us bankruptcy.

WHP Global Chairman and CEO Yehuda Shmidman, a self-described “Toys R Us kid”, said at the time of the acquisition he saw great opportunity in being able to leverage the Toys R Us name, a name that still evoked warm memories, and that was viewed as a trusted toy authority, despite the bankruptcy. WHP Global also owns a number of fashion brands, including Anne Klein, Joseph Abboud, and Isaac Mizrahi.

WHP and Macy’s in the summer of 2021 began working together to sell toys online under the Toys R Us name, with Macy’s handling the fulfillment. The partners also announced plans then to open Toys R Us shops in Macy’s stores in time for the 2022 holiday season.

The results from the initial online partnership were encouraging enough to convince Macy’s CEO Jeff Gennette and his team to go all in on the plan to open in-store toy shops.

In the fourth quarter of 2021, 25% of Macy’s online customers who bought toys under the Toys R Us partnership were new to the Macy’s site. In the first quarter of 2022, 87% of toy customers also cross-shopped other Macy’s categories.

While the official launch of the in-store shops didn’t take place until last week, Macy’s has been setting up the toy displays for several months, and the cross-shopping boost also appears to be occurring in stores in the same way it has been happening online.

James Zahn, editor-in-chief of The Toy Book, said he has been hearing that the stores that opened the new toy departments earlier are already seeing a lift in sales in adjacent departments, such as kids clothing.

Gennette has said repeatedly since embarking on the Toys R Us partnership that Macy’s believes that although a lot of toy sales shifted to the big three toy sellers – WalmartWMT
, Target, and AmazonAMZN
– after the demise of the old Toys R Us, that there still is a billion dollar’s worth of toy opportunity up for grabs.

The Herald Square Toys R Us is one of 11 flagship toy shops at Macy’s stores. The Herald Square location is the largest of the shops, at 14,000 square feet, and has photo-opp features like a New York City taxi with a Geoffrey statue as a passenger, and a replica of the Macy’s Thanksgiving parade made out of Legos. It also has various tables stocked with toys kids can play with, and spaces for special activities.

Outside of the flagship locations, however, the Toys R Us shops could be as small as 1,000 square feet. All of the Toys R Us branded locations will have Toys R Us signage and images, and a bench with a Geoffrey figure sitting on it for photos.

“The flagship stores look very, very good,” Zahn said, and “give a hint of what the partnership could become.” However, he said, “the consumer experience varies widely at the different Macy’s stores.”

Visitors to non-flagship locations could be disappointed if they find only a small assortment of toys located in an out-of-the way, dimly-lit corner of the store.

Macy’s however, appears to be going all out to make the stores, not just the flagships, a success. At Herald Square, several of the display windows on 34th Street are promoting the shops, and there is signage throughout the store and on the elevators directing shoppers the the Toys R Us shop on the seventh floor.

At two suburban Macy’s, at the Westfield Garden State Plaza and Paramus Park malls in Paramus, N.J., the toy shops were still being set up as of Friday, and were smaller with fewer play areas and interactive features. The shops, however, were promoted prominently with displays near the main entrances.

The true test of the shops this year, said Jim Silver, CEO of toy review site TTPM, and of TTPM Influencer Talent Management, will be how well they will meet the demands of holiday shoppers.

“The question that needs to be answered is how much commitment they made from an inventory/ordering standpoint. Can they replenish quickly enough and will they have the hotter items come December? We won’t have these answers until we’re closer to the holiday season,” Silver said.

The Macy’s and Toys R Us partnership was praised by toy manufacturers at the grand opening event.

The shops, said Sydney Wiseman, vice-president of brand development and creative strategy at the Wowwee toy company, give families something they can’t get when shopping online – a place where kids can play and see and touch the toys.

Wiseman, who was at the Herald Square grand opening, said she was impressed with how the shop looked and how it captured the excitement of the Toys R Us brand. “Toys R Us is the reason I’m in this industry, because every Sunday my grandfather would take me to Toys R Us and let me pick out a toy,” she said.

Wiseman also said she was impressed by the effort Macy’s has put into working with toy manufacturers to stock the shops with the right bestsellers. Wowwee gave Macy’s a one month exclusive on one of the newest items in its popular My Avastars fashion doll line.

Jim Silver doesn’t expect the Macy’s shops to steal significant market share from the big three toy sellers – Walmart, Target, and Amazon – but said they will benefit Macy’s beyond toy sales.

“What these toy shops accomplish is they provide the Macy’s shopper and mall shopper a toy department to make in-store purchases while they are visiting these locations,” Silver said. “They aren’t destination stores like the large, free-standing Toys R Us locations which attracted shoppers to strictly shop there.”

The Toy Books’ Zahn sees the shops as a sign that Macy’s could be returning to the days when a trip to Herald Square, or other legacy department store (such as Marshall Field – now owned by Macy’s) was a holiday must.

Before the original Toys R Us superstores and big box merchants, “holiday shopping at the grand, classy department store was an American tradition” and the toy departments in those stores were a big part of what drew families and shoppers, Zahn said.

If the Macy’s Toys R Us shops are able to provide a great experience for shoppers this season, it could help revive that department store shopping tradition, he said.