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Toys R Us Elements Team Up

May 01, 2003|From Reuters

NEW YORK — Toys R Us Inc. is experimenting with stores that combine toys with groceries, haircuts, photo studios and party rooms, hoping to lure more shoppers year-round, not just during the holiday shopping season.

Toys R Us opened four Geoffrey stores in 2002, named after the company's giraffe mascot, the No. 2 U.S. toy retailer said in its annual filing with the Securities and Exchange Commission. The 40,000 to 45,000-square-foot stores combine elements of Toys R Us, Babies R Us and Kids R Us. They also include party rooms, activity centers, haircut and styling salons, photo studios and play areas.

Toys R Us, based in Paramus, N.J., said it was pleased with results and planned to test some of the new concepts in various Toys R Us stores in 2003.

"The Geoffrey stores remind me of what Wal-Mart did," said Jim Silver, publisher of Toy Wishes magazine. "They went into areas where there are a lot of people and not a lot of shopping opportunities, created a one-stop shopping experience.... But this is geared for a child."

Toy retailers do most of their business in the fourth quarter, when consumers stock up for the holidays, but struggle the rest of the year.

"The Geoffrey stores create traffic for the first nine months of the year," Silver said. "Come Christmas, parents go to where they're accustomed to shopping, and Toys R Us would still have the largest selection."

Discounters such as Target Corp. and Wal-Mart Stores Inc. can offer lower toy prices than specialty retailers such as Toys R Us, and make up the profits with sales of other merchandise.

In 2001, Toys R Us began testing a concept called Toys R Us Toybox, which involves putting small toy departments in grocery stores. The spaces, typically an aisle of about 200 to 500 square feet within the store, sell toys for $25 and under.

The company also renovated its U.S. stores to a format called Mission Possible, which features themed areas and a circular layout.

"It's smart, they are experimenting with new formats while retail is in the doldrums," said Thom McKay, vice president with retail designer RTKL Associates Inc. "They're doing it cautiously, and doing a lot of it."

Shares of Toys R Us closed Wednesday at $10.25, up 6 cents on the New York Stock Exchange.

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