Shopping Centers Today

OCT 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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44 S C T / O C T O B E R 2 0 1 8 etail, like nature, abhors a vacuum. And it has not taken long for a slew of toy retail- ers — joined by some merchants that have never before dabbled in the category — to rush to fill a $7 billion market void left by the Toys 'R' Us closures of its last 800 stores, in June, after 60 years in business. In addition to toy-category expansion at big-box names JCPenney, Kmart, Sears, Target and Walmart, other siz- able chains announcing toy-department growth are Ace Hardware, Barnes & Noble, Belk, Buy Buy Baby, Dillard's, Five Below, HobbyTown and Walgreens. "That's a total of 24,879 doors," said Richard Gottlieb, principal and found- er of Global Toy Experts, a toy consultant firmšin Chica- go;šNew York City; and Tampa, Fla.š Target is expanding its toy aisles in someš500 stores this holiday season. The company alsošwill add several new toy categories and is augmenting its online selection. Walmart, for its part, has identified 800 stores within a five- or 10-mile drive of closed Toys 'R'šUs stores that will carry extra toy inventory. "Toy volume is up for grabs," said Steve Bratspies, Walmart's executive vice president of general merchandise,šat the company'sšshareholderšmeeting. Meanwhile, Kohl's, which hadšcarried a modest toy line before,šhas now entered the market in earnest, adding a vari- ety of Lego and FAO Schwarz branded products this year. Party City says it willšopenšroughly 50 pop-ups this season, measuringšabout 4,000 square feetšeach and hous- ingšthe company's new concept, Toy City, which will oper- ate in tandem with the Halloween City pop-ups. The new conceptš"will allow us to leverage our existing pop-up store capabilities and capitalize on the category whitespace that has recently been created," said Party City CEO James Har- rison in a written statement. Party City isšexpanding its toy assortment online as well. For the first time in its existence, is mailing out a physical toy catalog this year that the com- panyšwill distribute also at Whole Foods stores, reports Bloomberg News. Amazon accounts for roughly $1 out of every $6šspent on toys in the U.S., posting some $4.5 bil- lion in toy sales in 2017, up 12 percent from 2016, accord- ing to analytics firm One Click Retail. With Toys 'R' Us out of the way, KB Toys, which went belly up a decade ago, has come back to life. Strategic Marks, which acquired the KB trademark in 2016, says it will open as many as 1,000 KB pop-ups this year in shoppingšcenters across the U.S.šSome of those, the firm says, will become per- manent units, depending on lease terms and performance. Thisšrush to fill the void notwithstanding, Jefferies analyst Stephanie Wissink says she thinks that 10 to 15 percent of the former Toys 'R' Us sales volume in the U.S. — particular- ly thešimpulse purchases — will disappear forever. Wissink and other analysts concuršthat Toys 'R'šUs had too few pro- prietary products, was unable to compete against Amazon or to make the generational transition from toys to video games, and, most important, struggled to reinvest in itself because of the massive debt it assumed in its $6.6 billion lev- eraged buyout in 2005. Indeed, Toys 'R' Us was paying some $400 million annually to service that debt.š In the U.S.,šToys 'R' Us had not had any big-box toy competitor since Child WorldšChildren's Palace, a 182-store chain that ceased operations in 1992. On the global scene,šToys 'R' Us Canada will continue operatingšits roughly 80 physical storesšunder the owner- ship of Toronto-based Fairfax Financial Holdings. By con- trast, all 93 Austrian, German and Swiss Toys 'R' Us stores were sold off to Ireland-based Smyths Toys, which says it will rebrand them. In Aprilšthe U.K.'s 75 Toys 'R' Us and Babies 'R' Us stores closed down permanently. The demise of Toys 'R' Us could lead to a revenue increase ofšas much as 20 percentšfor local toy retailers this year, according to the American Specialty Toy Retailing Association, which serves some 1,800 independent toy retailers and manufacturers. The association's president, R Game on Retailers compete to fill the Toys 'R' Us vacuum By Steve McLinden

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