TRU jumps ahead to 2000 - Toys "R" Us Inc. rolls out Concept 2000 format

Discount Store News, August 5, 1996 by Dawn Wilensky

RARITAN, N.J. -- Kids already love Toys "R" Us. It's their parents who have been harder to keep in the stores. Toys "R" Us hopes that will change with its new Concept 2000 format, a radical departure from its antiquated warehouse look that is less cluttered, more customer-friendly and much easier to shop.

Parents generally "want to satisfy their kids and then just get the heck out of the store," said president Bob Nakasone during the official unveiling of the Concept 2000 prototype in Raritan, N.J., in mid-July. "But with the new format, they are spending more time, and it's axiomatic that when people spend more time in a store, they spend more money."

"The store is a response to what the customer wants--an easy shopping environment that is different from a supermarket where consumers have to shop each aisle to find what they want," said ceo Michael Goldstein.

Concept 2000 is TRU's most aggressive format to date and the second new concept it has debuted in the last nine weeks. May marked the debut of Babies "R" Us in Westbury, N.Y., a suburb of New York City. Two additional stores have opened since (Atlanta and Eatontown, N.J.), and seven to nine are planned by yearend. These concepts have not cannibalized much business from traditional TRU stores, Goldstein said, possibility because BRU customers are drawn toward that concept's higher-ticket items.

And TRU has one more prototype introduction slated for this year. KidsWorld, set to open in October in Elizabeth, N.J., will lash together Concept 2000, Babies "R" Us and Kids "R" Us.

The 95,000-sq.-ft. store, which is anchored by other family-oriented retailers like The Incredible Universe and IKEA, will lease 15,000 sq. ft. of space to a fast-food restaurant, a candy store, a haircutter, a photographer and other services geared toward families. Two more KidsWorld stores will open by the end of '96, one in Fairfax, Va.

In Concept 2000, TRU has created a format that combines the interactive environment popular in many of the kid-oriented specialty stores, with price points that are more in line with discounters.

Like the 45,000-sq.-ft. Raritan store, upcoming stores in Oxford Valley, Pa., and the Florida Mall in Orlando, Fla., (due Aug. 10 and Aug. 17, respectively) remained opened during their conversion to the new format, which takes roughly four months. TRU will add 10 newly constructed stores in Georgia, California, Pennsylvania, Tennessee and Virginia by yearend. Another 25 will be added in 1997.

The store has a definite element of theater. Its exterior has been transformed into an eye-catching glass grid, and the interior is characterized by interactive displays, colorful signage (with large icons flagging each department), skylights and, in another radical departure from the warehouse format, windows. While Concept 2000 carries much of the merchandise found in warehouse-style TRU units, selections including computer software, Barbie and video games are set in a unique oval racetrack design.

Employees are stationed at computer-equipped information stations to answer questions about product availability or location and enrollment in the company's baby registry.

Walls stacked high with merchandise have been replaced by lower gondolas so that customers can view the entire store from the entrance. Board games snake around the right side of the store, which resembles a Monopoly board. New white fixturing makes the merchandise "pop," and a feature area at the entrance welcomes shoppers into a store that gets behind the hot licenses. At the time of the opening, the feature area was heavily stocked with Hunchback and Independence Day (ID4) merchandise, with endcaps devoted to Toy Story and Dragonheart.

This area will change several times per year, senior vp, marketing and advertising Ernie Speranza told DSN. Star Wars and Space Jam are slated to monopolize the area in the fall.

A Warner Kids shop with everything from apparel to plush to accessories, tested in six stores in August 1995, will be incorporated into all Concept 2000 stores. However, Goldstein reiterated that the chain, which this year has scaled back sku count from 15,000 to 11,000 skus at all 651 of its U.S. stores (except Raritan), will be mindful of not overdoing boutiques.

TRU's image makeover is being heralded by analysts as a step in the right direction as the company seeks to improve its financial standing. Its stock price fell more than 50% during the past two years because of disappointing sales and earnings. Last year, the company took a restructuring charge of $397 million, or $270 million after taxes to cover the costs of inventory reduction, the closing or franchising of 25 U.S. and international stores and the consolidating of its warehouses and offices.

For the fiscal year ended Jan. 31, 1996, TRU reported a profit of $148 million, a 72% decline from a year ago. Though sales were up 8% to $9.4 billion, same store sales were off 2%. Goldstein in a July teleconference declined to comment on second quarter results, but indicated that sales trends are good, and margins are improving.