As many of you know, Toys R Us have decided to liquidate its US Operations closing down the remaining store and leaving 30,000+ people looking to a future of unemployment. What you might not have heard, and the only good piece of good news to come from this, KB Toys is making a come back. Strategicmarks LLC is a company that picks up the rights to closed down businesses and tries to fix them. They have had some luck with candy companies and have turned their eyes to the struggling toy market. Hoping to fill Toys R Us giraffe sized shoes, Strategicmarks has said that they hope to have stores open before the holidays this year.
Some notes before I start my break down of this and my thoughts, Strategicmarks does not have a lot of information out there, at this time their website is a black domain page. I managed to find some info through articles that I will link down below.
I have broken my thoughts and ideas down into three different categories. First will be Brick & Mortar, looking at what can be done differently to achieve success where TRU (Toys R Us) failed. The second topic will be Online and how they can tackle that front. Lastly we will look at Profits and how they can survive.
First things First, how can they succeed in what seems to be a dying part of the market. Brick & Mortar stores seem to be falling to the wayside. One of the first things to look at is of course, Location. Now there are going to be a lot of different variations but the overall strategy is what I am really looking at. One of the things that contributed to TRU’s demise was the convenience of Walmart and Target. The one stop shopping experience and their growing toy sections are making it harder and harder to stay relevant to the everyday family. Mom & Dad are fine with taking little Jimmy & Sally down a few aisles but it becomes are whole trek when having to go to a specialty store. One way KB can combat this is to position themselves close to these stores, regardless of what size of store they settle on. They are a lot more likely to pull people in next to a Walmart of Target as opposed to being placed next to a Container Store. These spots will likely be more expense which leads to our next sublet of this grouping. What size store should they go for. Many people see this as a choice between two different options, Big Box and small Gamestop like setup. People are overlooking the possibility of a weird middle box sized storefront. For those of you have been through a large ThinkGeek/Gamestop, that is the size I am talking about. Both Big Box and Small shopping center sized store have problems, but a nice meeting in the middle could avoid some of these. This would allow a good amount of stock without the problems of having to stock a big box store. This model allows for more locations than big box but still keeps the store big enough to have a good variety of stock. Lastly one of the major things to bring people in will be exclusives. TRU had several different brand of which provided them exclusive products, Hasbro being one of the biggest. I don’t foresee KB or Hasbro to pass up this opportunity, however I think having as many brands as possible on this type of arrangement is a solid idea.
The next big topic of discussion is the Online portion of their business. Much like TRU before them offering free shipping at some price point is going to be a must. I would say the $35 dollar mark seems to be the sweet spot but maybe look at $25-$30, undercut the competition but then again that might be cost prohibitive. One thing TRU, as well as many other retailers, are bad at is making sure the product doesn’t show up on shelves before its release date, thus frustrating online consumers. They feel like they are behind the curve and forgotten about. As for any website, making sure that the users can traverse is easily is a key component. TRU’s website could be improved upon. This last idea is probably the most unpopular idea of this article. I believe that Online Timed Exclusives can really help push traffic to their website. It would seem that this would cause the opposite problem of what I described above, however many more people will have access to the website as compared to the number of people who live within 30 minutes of a new location. With a timed exclusive it will come out in stores but would be available online, in a predetermined amount, a few days before the release in store, maybe a week or two at max.
The last Topic we will look at today is how KB can turn a profit in the current market. The first thing to do is be very conscious of what they markup. Any item that could be picked up by a kid or a family, should be near to cost if not at cost. For example, Marvel Legends will draw in adult collectors as well as families, Marvel Select/Diamond Select is much less likely to do so. In that case keep the Marvel Legends around $20 if not a little less and keep the Select pieces around $25-35. The adult collector market is a lot more likely to spend $100 on one item than a family is. That being said carrying the items aimed at those adult collectors is necessary. Offering a special membership club or service is always an option, however a little harder to put in with a toy store. One of the only things I could think of would be an early bird pre-order club. Similar to Amazon Prime, it could include free shipping and early access to items before they hit the stores and website. Setting this service up as a yearly or monthly cost would be best. Lastly we have to look at the attitude of the business itself. KB should not think of themselves as competing with Walmart, Amazon or Target but with smaller Specialty stores and large comic book shops. It becomes incredibly frustrating to have your whole business beat by a few aisles in a store that doesn’t really care about the people they are servicing. Unfortunately there is no way to really compete with a one stop shop, by choosing to a lot of the bad habit from those shops make it into your work force. Now I am not saying that every employee needs to be a collector but someone who can appreciate the excitement of a child getting a toy of his favorite hero or an adult collector picking up the newest release. Having people who care can really help draw in the most people.
Here is the video break down of this article: https://youtu.be/VohbG6-H69g
TheSpicerReviews 