Special Feature - Toys R Us

Look who's back!

Toys R Us has arrived back in the UK, courtesy of the launch of its new eCommerce website last month – the first step on its much-anticipated comeback to the marketplace it left a little over four years ago. Just shy of a year after Toys R Us announced its UK resurrection, John Baulch and Rachael Simpson-Jones spoke with the man behind the retailer’s return, Dr Louis Mittoni, CEO and managing director of Toys R Us ANZ, to find out how the initial soft launch went, what the plans are for a physical retail presence and what comes next.

Dr Louis Mittoni

Toys R Us closed the doors of its remaining UK stores in April 2018, at the end of a drawn-out, much-discussed battle to save itself from bankruptcy. The retailer had been a household name for decades, its jaunty jingle and Geoffrey the giraffe mascot known to countless kids (and parents), and its stores essentially playgrounds for shoppers both little and large that drew huge crowds to out of town retail parks. And then, rather suddenly, it was gone.

That is until October last year, when Toys R Us ANZ Limited and WHP Global - the parent company of Toys R Us and Babies R Us - announced that they’d signed a long-term exclusive licence agreement for Toys R Us ANZ to run digital and physical retail commerce for Toys R Us and Babies R Us in the UK, tailoring the model it had used to successfully relaunch Toys R Us Australia to the UK market. A new buying team was formed, boasting over 120 years of combined experience: Sarah Harding, James Ford, Diane Lee, Katie Ellis, Lukasz Jasinski and Mike Coogan are all on board, appointments those in the industry felt reflected the seriousness behind the intention to bring Toys R Us UK back, while Toys R Us marketing veteran Hayley McDowell has also returned to the fray.

Slightly later than planned, out of respect for the funeral of Her Majesty Queen Elizabeth, the retailer’s new website was soft launched at the end of September, initially to a modest but nonetheless positive reception. However, within days of word getting out – helped in no small part by Toy World’s coverage of the story – visitor numbers to the site were so high that the servers were straining under the load. As anyone who’s launched an eCommerce site will appreciate, getting to launch stage is no mean feat, especially when starting from scratch, and even more so when you’re doing it for such a big brand.

“It’s been a challenge matching up all of the data,” said Dr Louis Mittoni, CEO and managing director of Toys R Us ANZ. “In Australia, where we’ve also relaunched Toys R Us, there’s a much simpler consumption-based tax system of a flat 10%, which is quite different to the UK’s. We’ve also been working with an unanticipated level of shipping disruption. We thought we could air freight equipment from Australia; however, it took a great deal longer than anticipated.”

Louis says he’s been delighted at the level of support offered by suppliers. The retailer’s disappearance from the UK shopping landscape proved problematic for a number of toy companies; indeed, MGA Entertainment’s Isaac Larian tried to buy Toys R Us himself, so strongly did he feel about the impact of its loss. But it would appear the trade has been reassured by Louis’ pragmatic approach to the relaunch, the experience of his buying team and Toys R Us’ vision and beliefs this time around. Over 100 suppliers are on board, resulting in some 4,500 toys - and counting - available across the Toys R Us site, and an additional 1,300 products on Babies R Us.

The company has invested heavily into its website to make it as user-friendly as possible. Shoppers can choose to browse via category, brand, property and age range, or be guided by handy additional sections designed to shine a spotlight on toys, games and kids’ products they may not otherwise have thought of.

The Toys R Us concept ‘Pillars of Play’, for example, showcases a selection of carefully curated toys that support child development across a wide range of ages and stages, while the new ‘Demo Zone’ sees toys put through their paces. The ‘Buyers’ Picks‘ section is where Sarah Harding and James Ford have compiled their favourite toys and games. ‘Have You Tried?‘, meanwhile, champions smaller brands including Orange Tree Toys, Paper Engine and Fabula Toys. This is something the Toys R Us of old was well-known and respected for doing, as Louis explains.

“Just as it always has, Toys R Us really wants to support smaller suppliers,” he says. “The retailer has long been proud to give less mainstream toys, and the toys of the future, a fair shot. We’ve had to be selective initially about which suppliers we could launch with. When we first put out the call for interest in November 2021 we were absolutely inundated with enquiries, and as we work through the launch, we’ve had to be mindful of keeping things manageable for all parties. We are, however, intending to circle back to quite a few that we didn’t onboard for the launch, which will grow our supplier base across all categories over the coming months. We’ve got a great team, as you know. All of our buyers have really taken time and care to assess what brands we could launch with, including big and small vendors. It's largely thanks to our buyers, in conjunction with our support teams that we’ve seen such positive interest from consumers.”

Shoppers can benefit from free delivery on orders over £20 as well as next-day delivery on all orders placed before 6pm, a very strong launch offer indeed, and one which consumers have clearly responded to. The new Toys R Us UK Warwickshire warehouse operation and Enterprise Resource Planning (ERP) system are behind the speed of delivery: Louis tells us the time between order receipt and product arriving in the warehouse, ready to ship, takes around 30 minutes – and potentially half that, when we’re ready to up the pace.

Toys R Us ANZ has invested heavily into the relaunch of Toys and Babies R Us UK, which over the following 12-24 months will hopefully pay off: the goal is for the retailer to either break even or achieve profit at some point in 2023. In the meantime, the focus is far more on continuing to lay the foundations of a solid, well-run and scaleable business model. Toys R Us has returned to the market at an interesting time. It’s peak season, the Golden Quarter, and shoppers are already turning their attention to the toys and gifts they’ll be buying this year.

It’s also a time of economic and financial uncertainty, with the pound remaining on shaky ground following a disastrous Tory mini-budget and talk of a recession dominating the headlines. There are also ongoing issues with shipping and stock availability – but for Louis, who says the UK Toys R Us operation is ‘starting from zero’, any performance over the festive season is better than no performance at all. The retailer has fresh stock, isn’t coming into the period overstocked like some retailers may be, and is kicking things off with a blank, clean canvas. Louis also says that whilst plenty of investment has gone into its systems, inventory and processes, the retailer’s capital expenditure remains ‘relatively low’, and that there are incredible opportunities out there for the taking. Interestingly enough, the slump in sterling that took place at the start of October has actually helped to mitigate the overall cost of setting up the new business. Local pricing might be affected, but investment comes at a lower cost – something of an advantage to a ‘newcomer’.

When Toys R Us left the British retail scene, other retailers, including toy specialists such as Smyths and The Entertainer, moved to fill the void it left. Four years later, is the door still open for the retailer to come back to the marketplace? And do consumers actually want it to return?

“I’ve spoken with hundreds of people and numerous media outlets about the love that still exists for Toys R Us,” Louis told us. “There’s a great deal of trust and heritage within that brand, and brand awareness in the UK is much higher than it is in other countries, even when compared with the US. But it’s not just about the brand: it’s about our approach to buying, the products we offer, the range of play patterns they provide and the low level of overlap between brands.”

Louis also tells us that the level of love and nostalgia for Toys R Us is reflected in how the website has been designed and in the retailer’s new mission statement. Visitors to the website will see that it states: ‘At Toys R Us and Babies R Us, our vision is to work together with parents and families to build a relationship that you can trust and provide you with the products you want, at the best prices, and with outstanding customer support…. Our mission is to encourage kids of all ages to engage with as many forms of play as we possibly can because we believe that play has the power to change lives and build magical memories that will last a lifetime.’

Readers will know that the return of dedicated, physical Toys R Us stores has been part of the return roadmap from the beginning, and although there are no solid plans in the pipeline for those just yet, Louis did tell us that a few things were ‘being considered’. In the meantime, just 24 hours before this issue went to print, Toys R Us announced that it has signed an exclusive sub-licence agreement with WHSmith High Street Limited to trial nine Toys R Us store-instore concessions in the United Kingdom. These are scheduled to open in the first calendar half of 2023.

For the present, however, Toys R Us will have its eye firmly on Christmas and getting off to a strong start in 2023. When Toy World covered the demise of the retailer back when it first hit the rocks, it’s fair to say we didn’t expect to penning news stories and articles about its comeback quite so soon – or that its comeback would be so convincing. It’ll be interesting to see how things pan out over the coming months: although there aren’t yet millions of toys, and no roofs to speak of, there’s once again a magical place for British shoppers to explore – and it’s called Toys R Us (…Toys R Us, Toys R Us).