In the zombie shopping universe that includes fabled names such as Montgomery Ward, Linens’n’Things, Lord & Taylor, and Forever 21, there was every indication that, yet another once-glorious name would be joining them. But Toys’R’Us—which practically invented the category killer business model of retailing only to succumb to too much debt and too little smart management—has defied the odds and continues to live to see another day.
This holiday season it will open 120 new locations, bringing its store count back up to 160. Some will be just seasonal pop-ups, but others are expected to remain open all year around. That’s in addition to shop-in-shops in approximately 400 Macy’s stores and the occasional airport boutique location. In the world of the living-dead-retail-brands, this is practically unheard of.
How did Toys’R’Us make a comeback? And the answer is: Yehuda Shmidman, CEO of WHP, is a genius at saving brands and resurrecting them for success.
Good Times, Bad Times at Toys
When Washington, DC juvenile products retailer Charlie Lazarus decided to expand his little store and get into the toy business in the 1950s, he came up with a concept nobody had ever tried before. Opening in 1957 under the Toys’R’Us banner, the store was a giant warehouse that carried nothing but toys and seemed to carry every toy that existed. And it wasn’t just bulked up at Christmas time.
The store caught on fast with consumers who wanted to do all their toy shopping in one single place, unlike a department store or neighborhood toy shop that had limited assortments. The buying power that came with the TRU scale also helped give it prices nobody could match.
At its peak (it went public in 1978 and was a Wall Street darling), Toys controlled an estimated 25 percent of the toy market with more than 1,800 SKUs in its 1,400 cavernous stores. It did nearly $14 billion in annual sales in 2011, and spawned a wave of wannabe giant-sized, single-category retailers, including Bed Bath & Beyond, Barnes & Noble, and arguably, Home Depot and Lowe’s.
The slide down after 2011 was almost as powerful as the climb up. Lazarus, the true merchant operating in an environment increasingly ruled by finances and suits, retired. TRU shifted it strategy and began focusing on a more limited assortment based on best sellers to compete better with big boxes like Walmart and Target. And then along came this thing called Amazon that had just as many different products as Toys did. Actually, more. Eventually TRU went private to save itself, as many retailers do. But it was loaded down with far more debt than virtually any retail business could support. It filed bankruptcy in 2017 and was liquidated the following year.
WHP to the Rescue
After a few fits and starts, WHP Global bought the brand in 2021. At the time, TRU looked like it was following the standard zombie-retailer playbook. WHP, led by Yehuda Shmidman, is a brand management company that owns 15 retail brands including
Marc Jacobs, Vera Wang, rag & bone, Lands’ End, and Express, and makes $9.5 billion in annual global sales. Like Iconix and Authentic Brands, it is in the business of buying up losing brands and licensing them out, sometimes to suppliers who wholesale them or retailers who operate them as private labels.
But Shmidman had other ideas about TRU. He started by opening a few stores; modest endeavors that were more boutiques compared to anything even close to the ginormous original TRU footprint. The Macy’s deal he made was a standard tie-in. Last year, he opened about 40 new stores, partnering with Go! Retail Group, an Austin, Texas-based company that specializes in operating seasonal pop-up shops. Now we’re looking at 120 new stores. It’s a gutsy move but what makes it doable is that the toy business right now is doing well. Even Walmart, Target, and Amazon are heavily invested in the category, and the idea of an actual toy store has a certain sentimental appeal to many shoppers. That nostalgia hook is real since many millennial parents were once “Toys’R’Us kids.” That said, the new stores bear little resemblance to the places their parents took them to, way back when.
Not Child’s Play
You have to give WHP and Shmidman credit for not simply milking this brand online and in Macy’s. “This is something customers been asking for more of; standalone Toys ‘R’Us stores with a wider assortment and more experiential elements,” Jamie Uitdenhowen, executive vice president of Toys ‘R’Us at WHP Global told Forbes in an interview.
WHP has not pursued a standalone physical store model with many of its other brands. though rag & bone, Land’s End, and Express all have stores. But what’s different here is the scale with hundreds of stores. Let’s be honest, no brand resonates in a single category the way TRU does in toys. Which means this model may not work for other born-again names trying to re-establish themselves on the retail landscape. But it’s unlikely we’ll see anything like those 1,400 Toys stores come back to life.
A good store brand is hard to build. It’s hard to kill too, but it happens all too often. Let’s see how difficult it is to bring TRU truly back to life. That would be fitting with its founder, Lazarus.
