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Toys R Us Is Finding It Profitable to Play by the Book : Retail: The world's largest seller of toys will continue to add book departments to its stores.

August 11, 1994|From Reuters

NEW YORK — Toys R Us Corp., which has won the hearts of children at play, is seeking to win more of their minds in learning, with a massive expansion of its successful Books R Us departments.

The Paramus, N.J.-based retailer said Wednesday that it plans to open 140 more of the book sections in its toy stores by fall. This brings Books R Us departments to more than 300 of the company's 620 stores.

Toys R Us, the world's largest toy retailer, said it may also take the concept overseas, where it has 234 stores in 15 countries.

Analysts say the retailer's latest gambit could transform children's book sales the same way the company expanded the toy market.

"They have created a larger market for toys than before. They were responsible for creating a year-round market," said Dorothy Lakner, senior vice president at Oppenheimer & Co.

"Ten to 15 years ago, 75% of toy sales were during the Christmas season. Now there's much more in the first three quarters," she said.

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Starting with two stores in 1991, Books R Us has drawn curious kids and grateful parents with its books for infants to teen-agers. In addition to racks of books, the homey departments feature tables and chairs to nestle young readers and people who will read to them.

"Children enjoy the concept of reading more when they can associate purchases of books with a toy store, which is fun for them," said Robert Schweich, managing director at Wertheim Schroder & Co.

Stores with Books R Us departments sell three times as many books as those without the special sections, and they attract more repeat customers, the company said.

"With the children's book market currently undergoing a period of rapid change, we are quite pleased with the strong growth and sales performance that our Books R Us segment has experienced over the past year," said Michael Goldstein, vice chairman and chief executive of Toys R Us.

Goldstein expects Books R Us to account for 3% of the company's total sales once the departments go nationwide.

The company has tried the same concept with Parties R Us and other departments that group related products such as video games and computer software. But none has been as successful.

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The expansion of Books R Us has some small bookstores concerned.

Sales have steadily declined as huge retailers such as Barnes & Noble, Border and now Toys R Us opened outlets within a few minutes' drive from Balaban Books in Teaneck, N.J., said owner Mukund Mehta.

"This is probably our worst year," said Mehta, who has owned the community bookstore for 16 years.

"If we were doing $1,200 a day (in sales) last year, we're not doing $500 today. I'm at a point of desperation," Mehta said.

Toys R Us stock closed 50 cents lower at $33 on the New York Stock Exchange.

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