Toys "R" Us leaps on retail-tainment - Company Profile

Discount Store News, Oct 2, 1995 by Laura Liebeck

PARAMUS, N.J. - Toys "R" Us has joined the retail-tainment bandwagon.

The nation's largest toy retailer has revealed aggressive plans to invigorate and diversify itself beyond the confines of its toy stores and children's apparel outlets. The common thread through all the new initiatives is the chain's embracing of the concept that "retail is theater."

Last month, Toys "R" Us took the wraps off a six-store test with Warner Bros. for a licensed department called Warner Kids and introduced its first co-branded store credit card. Still to come are a baby products superstore called Babies "R" Us, its entry into the burgeoning baby superstore arena, and two mega-size stores that combine all three retail formats in one, served up with lots of interactive displays.

"We are going to take a new prototype Toys `R' Us, which is more customer-friendly, fun and festive, and a Babies `R' Us and Kids `R' Us and put them together into one large store that offers one-stop shopping," said Michael Goldstein, vice chairman and ceo, noting a new name will be assigned to the store. Roger Goddu, executive vp, gmm, is overseeing this project. Richard Markee, president of Kids "R" Us, is in charge of the Babies "R" Us prototype.

Like other superstore retailers, such as The Incredible Universe and The Sports Authority, the new larger-size TRU units will utilize more interactive displays to make the stores destination spots for fun and shopping.

The megastores will have plenty of room to work with since the units will be 80,000 sq. ft. to 85,000 sq. ft.

TRU is the first retailer to house a Warner Bros. shop within its stores and the first toys chain to offer a co-branded credit card that rewards shoppers with gifts and prizes for frequent use.

In addition, TRU's expertise in toys and children's apparel, coupled with excellent vendor partners, win make it a formidable competitor in the baby superstore sector. Goldstein said TRU plans to open at least five Babies "R" Us stores next year.

The retailer is currently working with a design firm on the look of the store. Goldstein said Babies "R" Us will satisfy the needs of newborns to 4-year-olds.

The Warner Bros. shop-within-a-shop concept was unveiled in six stores last month - three stores in California, including the city of Torrence, and three stores in Florida, including the Orlando Mall - and so far the program is "doing great," said Goldstein.

"It's been fantastic. We're going to do more things like that [Warner department]," said Goldstein.

He noted that the 1,100-sq.-ft. department features some merchandise exclusive to Toys "R" Us. Warner Kids occupies the space formerly reserved for children's apparel, which is located at the front of the store near checkout. The new department includes a healthy offering of Warner Bros. licensed apparel, plus such items as lunch boxes, stationery, pillows and sleeping bags.

While the fixturing and sign program for the department are uniquely Warner Bros., Goldstein said the department is not a mini version of a studio store. There are four TV monitors in the department but no interactive activities commonly found in a studio store such as video painting and climbing activities for kids.

So far, no expansion is slated through the end of the year as the retailer digests this test and immerses itself in the critical fourth quarter Holiday season. "Certainly we expect to expand [the concept]," said Lee Richardson, vp of advertising for Toys "R" Us. "It's a matter of how much and when."

TRU's interest in a program such as Warner Kids illustrates the chain's commitment to shaking up its merchandise mix in order to veer away from its roots as a toy supermarket and into the realm of retail as theater, both Goldstein and Richardson acknowledged.

Goldstein noted, without providing any details. that more announcements concerning innovative merchandise and service programs are coming.

The new credit card program, officially launched with advertising support Sept. 18, is another indication of TRU's thoughts about branded programs and greater consumer participation in its stores.

"With the Holiday season approaching, we thought this was a great time to debut the card," said Goldstein, noting that "it offers consumers a great value. What other card offers free toys and free clothes?"

The new credit card, a VISA card issued by The Bank of New York, Delaware, carries no annual fee and a low six-month introductory rate. For signing up, new card holders receive a $10 coupon redeemable at Toys "R" Us or Kids "R" Us stores anywhere in the United States.

Credit card users are further rewarded for using the card. They earn a 3% rebate on merchandise purchased at TRU and KRU and 1% on items purchased anywhere else. The rebates are earned in the form of "Geoffrey (the company mascot) dollars" automatically subtracted from the bill monthly. Also, TRU/VISA awards shoppers with three points for each $1 spent on the card and one point elsewhere, which can be applied toward travel, restaurant and lodging costs.