Toys R Us was once a staple of the British high street as the go-to shop for all things games, clothes and, of course, toys.
The children’s retailer was dubbed a “category killer” and at its peak it had a portfolio of 105 stores in the UK, more than 1,400 across the world and had 25% of the global toys market in the mid-1990s.
But the rise of Amazon and other online merchants meant that Toys R Us started to struggle in the changing market, and its bricks-and-mortar demise came in 2018 after falling into administration.
While Toys R Us has been operating online in the UK following a soft launch in September, it has been given another shot on the high street with WHSmith planning on opening nine shop-in-shops across the country – with the first launching this weekend in York, followed by Canterbury, Chelmsford, Cheltenham, Cwmbran, Oxford, Poole, Reading and Solihull.
But why has WHSmith decided to revive this once much-loved retailer and what can these new concessions bring to both companies?
High street proposition
A source close to WHSmith says that while the group’s core focus remains its burgeoning travel business, its new venture with Toys R Us is “very much in line” with its wider strategy.
“One of the things which sustains the high street over a long period of time is making better use of the space,” he says. “Part of that is using surplus space for other offers, and this is a complementary offering with a well-known brand that’s loved by many customers in the UK.”
The opening of the shop-in-shops will be on a trial basis, which is reportedly expected to last a year, but this could be extended and expanded depending on its success.
GlobalData associate retail analyst Tash Van Boxel believes this is a good business venture for WHSmith as it has also added Holland & Barrett concessions into three of its travel stores.
“It will be interesting to see whether the Holland & Barrett concession or Toys R Us partnership will prove to be the most fruitful, and if both or either of these ventures will turn into permanent partnerships”
Tash Van Boxel, GlobalData
“WHSmith already has a toys and games offer in many of its stores, however this concession will help it to expand here,” she says. “This will enable WHSmith to attract a different audience for its high street shops, enticing shoppers with younger children to come into the store to browse the Toys R Us products, and picking up any stationery and books while there.”
As the retailer focuses more on travel and less on its high street stores, introducing a well-known and nostalgic brand could elevate the in-store experience.
Van Boxel believes these trial concessions show WHSmith’s willingness to “explore the potential of expanding its offer” into a range of sectors before making a commitment to add them into its portfolio in the long term.
“It will be interesting to see whether the Holland & Barrett concession or Toys R Us partnership will prove to be the most fruitful, and if both or either of these ventures will turn into permanent partnerships,” she adds.
The locations chosen for the new shop-in-shops will be across towns and small cities where there is more space and more opportunity to bring something exciting to the high street.
The source close to WHSmith says that this is the best choice as the retailer doesn’t have many high street stores in major cities such as London any more.
“Every WHSmith store in London, certainly central London, would be travel stores in railway stations. It’s very much about the local markets where there is a gap.”
In terms of what the floor space of the new concessions within WHSmith stores, the shop-in-shops vary in size from around 500 sq ft to 2,000 sq ft.
The largest of those stores will stock a range of approximately 1,500 items from Toys R Us, with each unit offering demonstration areas, interactive experiences, and all featuring the brand’s iconic Geoffrey the Giraffe mascot.
Potential opportunities
Van Boxel thinks this venture will not only bolster WHSmith’s dwindling high street presence, but is the best way for Toys R Us to re-emerge as a key player in a relatively unsaturated toys market.
“Shop-in-shops are the best plan of action for Toys R Us as even big players in the market such as Smyths and The Entertainer have seen their sales decline in 2022, suggesting that it is not the right time for Toys R Us to venture out on its own,” she says.
“As the UK toys and games market is forecast to grow in the next five years, there is an opportunity for Toys R Us to continue to expand in the physical market – but this expansion must be taken slowly”
Tash Van Boxel, GlobalData
“If the concessions prove fruitful, and demand for Toys R Us products is high, the toys and games specialist could consider opening standalone stores.
“As the UK toys and games market is forecast to grow in the next five years, there is an opportunity for Toys R Us to continue to expand in the physical market – but this expansion must be taken slowly, starting with smaller spaces in areas with high footfall, such as supermalls.”
With the global toy market struggling recently, stores in particular owing to effects of the pandemic and the rise in online players, it seems there is ample opportunity for Toys R Us to reinvent itself to win over new customers as well as the more nostalgic ones.
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