Toys ‘R’ Us returns to Australia

Toys ‘R’ Us has re-entered the Australian market and is preparing to trade in New Zealand for the first time.

The news comes 14 months after the retailer entered voluntary administration and shut 44 stores putting about 700 people out of work.

Under the control of new owner, New Jersey-based TRU Kids Brands, Toys ‘R’ Us and ‘Babies ‘R’ Us online stores launched on eBay Australia’s Marketplace late last month.

It is also reported exclusively in this Inside Retail item that Toys ‘R’ Us will partner with Hobby Warehouse – Australia’s largest hobby shop – to open small-format stores in Australian city centres.

Large format “experiential” bricks-and-mortar stores – likened to Hamleys in London, FAO Schwartz in New York and Bass Pro, also in the US, will follow, with metropolitan areas on Australia’s eastern seaboard target locations.

“We knew that eventually we wanted to get that experience back, because a lot of toys, and certainly high-end toys, are experiential,” a TRU Kids Brands spokesperson told Inside Retail.

Within 24 to 30 months, it will open “retail-lite” outlets – which the company described as “smaller footprint stores”.

In these shops, “all stock is on the floor, there’s no storage space out the back,” the spokesperson said.

“It’s impulse items under $30 for sale there, and anything over $30 is buy-in-store, ship-to-home”.

This video has been posted on the relaunched Toys R Us website

The company added that by the time the retail-lite stores open, 80 per cent of Australian postcodes will be set-up for same-day delivery”.

Like many other retailers linking bricks-and-mortar stores to a digital backbone, a logistics partnership will need to be put into place.

TRU Kids Brands points to Big W, which we reported in April announced it would shut 30 Australian stores and two distribution outlets, as an example of a retail model it wants to avoid.

“The biggest liability on their balance sheet isn’t their employees, or the long service leave or holiday leave, or inventory. It’s liabilities for their rent to landlords,” the spokesperson told Inside Retail.

“Every time you open a store, you’ve got to have a very clear mindset to say we’re going to commit five years of rent as a liability on the balance sheet, which will prevent me using my working capital for other things – buying new products, advertising, employing people.

“You have to be very clear as to why you’re going to open stores. They must have an absolute purpose,” the company said.

“For most major retailers who have got their head in the game, who are both physical and very sophisticated online, marketplaces and their own online can represent 40 per cent of their sales.

“In the case of eBay or Amazon, there are nine million working Australians, and I’m going to guess they have significant reach into the smartphones and PCs of half of the working population”.

TRU Kids also confirmed it will launch in New Zealand for the first time.

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Marc Pallisco

Marc Pallisco

A freelance property writer and analyst, Marc is a co-founder of realestatesource.com.au.

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