Parent of Toys R Us teams up with Target to power online biz
The Toys R Us chain relaunched online Tuesday with sales routing through the website of Minneapolis-based Target stores.
Target announced the partnership with TRU Kids brands, saying shoppers who visit the new Toys-R-Us website will be directed to Target.com to complete their toy purchases.
Toys R Us filed for bankruptcy in 2017 and closed all of its stores across the U.S. last year, more than 700 locations.
Target says the Toys R Us chain will open "experiential" locations in Houston and New Jersey to allow customers to see and try toys. Target will fulfill some orders made at those stores.
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Target also recently struck a deal with Disney to open mini-shops of Disney merchandise in about two dozen stores.
Retailers including Walmart, Party City, and Target have been competing for sales left on the table after Toys R Us filed for bankruptcy. But Target has been one of the most aggressive. Last October, it devoted extra space at 500 locations near former Toys R Us stores to feature a bigger selection and larger toys like playhouses.
Neil Saunders, managing director at GlobalData Retail, says that the Tru Kids' deal with Target helps the Minneapolis-based discounter bolster its already strong toy sales. But it also helps Toys R Us hand off the complex issues of fulfillment.
Still, he says the deal "raises a lot of questions on Toys R Us's future."
"It's a neat solution but not an ideal solution," said Saunders. "It's ceding control to another competitor."
Jason Goldberg, chief commerce strategy officer of Publicis Communications, agrees.
"If True Brands was truly trying to rebuild a sustainable toys business, they would never want to outsource their e-commerce to a third party and certainly not to a rival," he said. "Sadly this is probably a sign that the current Tru Kids efforts are a shallow effort to monetize a brand they own, rather than an effort to build a serious toy competitor."
He recalled the huge mistake that both Target and Toys R Us made when they outsourced their online operations to Amazon in the early days of e-commerce.
Tru Kids is working with other partners in staging its modest return.
This past summer, Tru Kids struck a deal with a startup called b8ta, an experiential retailer to launch interactive stores. Toymakers will pay for space in the stores but will get all the sales. The tech company will also offer brands access to data that will track traffic patterns and other metrics.
Tru Kids also penned a deal with Candytopia, a maker of candy-based art exhibits, to launch pop up shops this month in Chicago and Atlanta.
After Toys R Us closed its stores, a group of investors in October 2018 won an auction for Toys R Us assets, believing they would do better by potentially reviving the toy chain rather than selling it off for parts. Richard Barry, now CEO of Tru Kids and a former Toys R Us executive, along with other former executives, founded Tru Kids earlier this year and are now managing the Toys R Us, Babies R Us and Geoffrey brands.