Toys “R” Us is angling for a comeback, but in order to do so, it will have to win over vendors who may be skeptical of working with a brand that’s fresh out of bankruptcy.
On Thursday, Tru Kids Brands — the new parent company of Toys “R” Us — announced that it would be opening up two stores, one in Texas and one in New Jersey, in time for the holidays. Tru Kids will be partnering on the new stores with b8ta, a startup that’s built both its own physical storefronts as well as a software platform to help retailers build experiential concepts. The two companies hope to open more stores in 2020. There are also plans to relaunching the Toys “R'”Us website, though an exact launch date has not been given.
The partnership with b8ta is being positioned as a selling point as Tru Kids looks to win back the trust of vendors who were burned by Toys “R” Us’s decline. Toys “R” Us first filed for bankruptcy in September 2017. The next year, group of vendors, led by Crayola, filed a claim that they were still owed hundreds of millions of dollars by Toys “R” Us. The two parties later came to a settlement agreement. With a new partner in b8ta, which is known for experiential product displays and giving startups access to more in-store analytics, Toys “R” Us is trying to convince brands that it has a model to help both of them survive in retail’s new landscape.
So far in the retailer’s revival, Tru Kids CEO and president Richard Barry said that Tru Kids has signed on a couple dozen vendors to sell in the two new stores, and that the two companies will be going on roadshows over the next few weeks to sign on more. Tru Kids and b8ta are currently tasked with convincing vendors that the new shops will be different than the dusty, downtrodden facilities that Toys “R” Us stores turned into as the retailer fell further into debt. They’re also pitching vendors more control this time around over how products will be displayed.
Barry — the former chief merchandising officer of Toys “R” Us — said that the company wanted to work with b8ta because “the experiential retail model that b8ta has looked to perfect is one that we thought we could apply in the toy space as well.”
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Phillip Raub, b8ta’s co-founder and president, said that the company was born out of frustration over how long it took big-box retailers to carry electronics and hardware products from startups. B8ta’s co-founders previously worked at companies like Nest and Nintendo.
“If it’s going to take you six months to a year to put product on the shelf of a retailer, but you can just go directly online, you’re going to go directly online,” Raub said. b8ta can usually get brands signed up and ready to sell within weeks, according to Raub. At traditional retailers, that process can take months.
B8ta currently has 17 stores that mostly sell electronics and tech gadgets. Hands-on demos are a key part of the b8ta experience, and Barry said that they will be as well at the new Toys “R” Us stores. The software that b8ta’s developed to power its own stores allows vendors to access more granular data than just how many people buy their products, but to anonymously measure things like product engagement. B8ta also discusses with vendors how to train in-store employees to do demos of or sell a particular product.
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“We are going to work closely with our brand partners and we are going to give them a very significant say over how those experiences are executed,” Barry said.
Toys “R” Us’ new store design will also get a facelift from the partnership with b8ta. Barry said that that the new stores will look to hold more events, and have set aside spaces for families to rent out for birthday parties or other celebrations. The new stores will be about 6,500 square feet, thought the company hopes to open stores that are a bit larger, about 10,000 square feet, next year. The old Toys “R” Us stores used to take up around 40,000 square feet. They’ll also be powered by the software b8ta has developed to process purchases, manage inventory and keep track of employees’ schedules within its stores.
Richard Gottlieb, CEO of consultancy firm Global Toy Experts, said that vendors will likely be skeptical of working with Tru Kids and b8ta not because of any bitterness towards Toys “R” Us, but because that the companies are only opening a few stores for now.
“It’s two 10,000 square-foot stores, and that is a pebble in the ocean,” Gottlieb said. ‘This was a chain at one time that had hundreds of stores.”