Toys 'R' Us CEO Talks Interactive Toys, Black Friday Plans
Tis the season to sell a whole bunch of toys.
Toy retailer Toys "R" Us will open its doors at about 850 stores in the U.S. to deal-seeking parents at 5 p.m. on Thanksgiving. Once inside, parents will likely be clamoring for items such as Star Wars action figures, Minions plush toys and flying drones that take to the sky with the push of a button on a remote control.
But Toys "R" Us won't be the only toy retailer trying to grab a slice of the consumer's holiday season spending budget, as the likes of Amazon (AMZN) - Get Report , Target (TGT) - Get Report and Walmart (WMT) - Get Report have also made big bets on toys in the Star Wars and Minions categories, as well board games.
To compete effectively against its larger competitors -- which have driven down toy prices and pressured sales and profits in recent years -- Toys "R" Us's new CEO understands that differentiation will be critical.
"We are an authority of the toy world 365 days a year. It's the business we are in," said Toys "R" Us chairman and CEO David A. Brandon in an interview at the company's flagship location in New York's Times Square.
Brandon, who started at Toys "R" Us in July and is credited with turning around Domino's Pizza (DPZ) - Get Report as its CEO for 11 years, noted that selling more interactive toys will be one way Toys "R" Us stands out from mass merchants this holiday season.
"I think our larger bets are on toys that are interactive. Young people want voice activation; they want robotics. They have short attention spans so they need lots of entertainment with their toys," says Brandon.
Toys "R" Us and other toy retailers enter the holiday season with the wind at their backs. According to research firm NPD, toy industry sales were up 7% overall from January to September across the 11 global markets its tracks. In the U.S., Mattel (MAT) - Get Report has seen solid sales of Hot Wheels, according to NPD. On the other hand, competitor Hasbro (HAS) - Get Report has benefited from strong interest in new Star Wars toys that became available in September ahead of the Dec. 18 new movie release.
Licensing Industry Merchandisers' Association's Marty Brochstein said, "Star Wars has taken shelf space from other toy makers this holiday season."
There will be no rest for Brandon once Christmas has come and gone, as he will be looked upon by Toys "R" Us' owners Kohlberg Kravis Roberts (KKR) - Get Report , Bain Capital and Vornado Realty Trust (VNO) - Get Report to turn around a retailer that has incurred significant losses in the past two and a half years.
"We really have to take a look at our bricks-and-mortar model. Our stores are probably larger than they need to be. We'll be looking at formats that allow us to be in a little smaller space," said Brandon, adding that the company must also reconfigure the back room of its stores to more efficiently handle online orders.
One store that won't be reconfigured in 2016 is the company's Times Square flagship, which is scheduled to close on Dec. 30 as the retailer looks to contain costs. Brandon says the company's real estate team is actively searching for another location in Manhattan, but did not give specifics.