The Toys ‘R’ Us bankruptcy filing last year sent shivers down spines of toy makers and has sent other retailers scrambling to grab the longtime toy purveyor’s market share. We can expect most toy retailers to attempt to step in where Toys ‘R’ Us left off, yet the smartest ones of the bunch will use a variety of data analysis and insights to determine the best ways to take advantage of this new opportunity, whether they are retailers planning to boost toy offerings on store shelves or toy makers diversifying where they sell their products.
No matter what, it will be a challenge. According to a March 2018 CNBC article, even though Toys ‘R’ Us accounted for between 15 and 20 percent of toy sales in the U.S. last year, Jefferies analyst Stephanie Wissink estimated that about 10 to 15 percent of the store’s total sales volume will disappear for good once the retailer is gone, which could mean toy retailers will be fighting over slices of a smaller pie.
Mobile location data gives us clues
After Toys ‘R’ Us announced their intentions to file for bankruptcy, my company wanted to learn what sort of effect this might have on the toy retail ecosystem. Using our platform, which incorporates mobile user data to provide insights about retail shoppers and other audiences, we conducted a location affinity analysis to predict where Toys ‘R’ Us visitors might shop once the store’s locations were to close.
First, we evaluated the impact on big box retailers like Target and Walmart and found that Target comes out the winner here. Although Toys ‘R’ Us shoppers are more likely to visit both Target and Walmart than the average American consumer, they are 1.7x more likely to visit Target over Walmart. We also found those Toys ‘R’ Us shoppers were more likely to visit Costco, Kmart and Sam’s Club than Walmart.
But toy shopping has become more interchangeable than ever. If you look at toy makers such as Hasbro, Lego and Mattel, whose products are already sold by retailers like Amazon, Kmart, Target and Walmart, consumers can today can easily purchase Hasbro’s Monopoly board game on Amazon, or just as easily pick it up at a Target brick-and mortar-location.
Chances are a lot of people will continue shopping for toys from these well-known manufacturers at their local big box stores, and there’s no reason why these retailers can’t add toy shelf space or promote themselves as the go-to place for a wide selection of toys. Even better, when it comes to reinforcing strategic decisions in the board room, they can use ground-level data showing affinities shared by their customers and Toys ‘R’ Us shoppers.
Toy innovators diversify
However, innovative toy makers are not waiting around to figure out who wins the Toys ‘R’ Us market share battle. They have already begun looking for alternative homes for their products. Today, some toy brands have branched out to sell their toys in drugstores, grocery stores and dollar stores. Hasbro now sells its toys and games at discount chains including Dollar General and Dollar Tree and even offers a subscription box service called Hasbro Gaming Crate.
My team also wanted to get a better sense of how the Toys ‘R’ Us fallout could affect other toy-centric retailers. So, we evaluated mobile user location data to determine the likelihood of Toys ‘R’ Us shoppers visiting five other toy retailers: Build-a-Bear Workshop, Buy Buy Baby, The Children’s Place, The Disney Store and Once Upon a Child. We found that Toys ‘R’ Us shoppers were about 2x more likely to visit Build-a-Bear Workshop and Once Upon a Child, a used toy and kids clothing retailer, than they were to visit The Disney Store. Toys ‘R’ Us shoppers were even more likely to go to Buy Buy Baby or The Children’s Place.
How might this sort of information be used? Retailers whose shoppers also showed a strong affinity to Toys ‘R’ Us might think about opening a location where some former Toys ‘R’ Us locations were, or nearby. They might affirm the best decisions using added information tying location data to demographics, shopping behavior and product interests associated with people who visit stores in the area.
And who says The Disney Store can’t build its brand among former Toys ‘R’ Us shoppers? The brand could capture some of them by offering a discount to Toys ‘R’ Us card holders or rewards program members, for instance.
Like Hasbro, Build-a-Bear Workshop has begun to find interesting new arenas to spotlight its brand, too, such as setting up kiosks in AMC movie theaters and on Carnival cruise ships. “Our overall business strategy is to kind of diversify,” Mike Early, senior managing director and head of information technology at Build-A-Bear Workshop told Total Retail during the National Retail Federation’s Big Show in January. “We’re looking to become not just a retailer who has a great brand but a brand who has lots of other business streams.”
As they redefine what the post-Toys ‘R’ Us landscape looks like for toy makers and retailers, innovators such as Hasbro, Build-a-Bear and others will find a wealth of insights from shopper data, location-based foot traffic data and more.