RIP Toys R Us: Why Grocery Stores Could Be the Salvation of Toy Makers

(The Washington Post) —

A Barbie by the broccoli? Hot Wheels by the hot sauce?

Some toy experts say that stocking toys at supermarkets is a recipe to boost the industry as Toys R Us begins to close all 800 of its U.S. stores.

Toymakers could see a bump in sales by targeting grocery stores — and their customers prone to impulse purchases with fidgety kids in tow. That’s the argument of industry experts who say that as the iconic toy behemoth fades away, the country’s more than 38,000 supermarkets may present a bright path forward.

“In a summer display, they might put swim toys by the sunscreen or next to beer coolers,” said Tim Hall, CEO of the analytics startup Simporter and a former Hasbro executive. “There’s opportunity for both the toy companies and for the supermarkets to figure out new ways to do that. It’ll take a little bit of creativity.”

Hall said toy companies often struggle to engage customers in the “off season” — for example, beyond the weeks leading up to the end of year. But parents needs to buy groceries — and their kids want the latest new toy — all year-round.

Toy sales in the United States — the world’s largest toy market — grew by 1 percent in 2017, according to The NPD Group, totaling $20.7 billion in 2017. Hall said sales are likely to dip this year because of the end of Toys R Us, but there’s reason to expect a rebound in 2019.

Online outlets like Amazon, as well as big-box stores like Walmart and Target, aren’t going anywhere as major toy retailers. In fact, online toy sales accounted for about 22 percent of the market share in 2016, according to The NPD Group. Those figures are expected to be higher for 2017.

“The industry will rebound,” Hall said. “It’s just a question of where the volume will shift.”

Toy sales in unconventional places are nothing new. Last holiday season, high-end department stores like Bloomingdales and Bergdorf Goodman sold toys by FAO Schwarz. Bass Pro Shops, a more common go-to for fishing tackle, opened mini Build-A-Bear shops.

Nor do people only look to supermarkets for strawberries, steak and shampoo. Food industry analyst Phil Lempert said supermarkets have increasingly made room for dry cleaners, clothing sections and small clinics and restaurants.

But Lempert doesn’t see supermarkets designating major shelf space to toys. He thinks they would be more likely to set up in-store lockers from which shoppers can pick up toys they ordered online. That might especially appeal to shoppers who don’t like to wait for home grocery services or don’t want packages ordered online sitting on their doorsteps.

David J. Livingston, a supermarket research analyst, said he doubted grocery stores would “go overboard” with toy displays. Moreover, he thinks parents would quickly grow irritated by toys and the distractions they bring. Some parents don’t bring young kids grocery shopping to avoid the begging and the hassle, Livingston said.

And for the parents who do bring their kids along, they’re more likely to be swayed by a free cookie from the bakery or a free piece of fruit at check-out, Livingston said.

“Being annoyed by toys is going to turn parents off,” Livingston said. “Experts from any industry will say a grocery store is the place to put their product.”

There’s risk for toymakers too. In a column, Hall noted that they could opt for guaranteed sales programs through which they agree that if products don’t fully sell at supermarkets by a certain date, the toy company will take the products back.

Still, millennials think of supermarkets as a one-stop shop where they can buy cosmetics and other products while fitting in a grocery run, said Steve Pasierb, president and CEO of the trade group The Toy Association. In the wake of Toys R Us downfall, toy makers will be on the hunt for new places to find customers.

“Toys R Us is a very significant place for that business,” Pasierb said. “But that business isn’t going away. That business is going to move.”

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