Target Quick To Seize Toys R Us Opportunity

Target

Now that Toys R Us has left a huge void in the toy industry, Target is quick to respond to the business opportunity.

Now that Toys R Us has left a gaping hole in the toy industry, Target is quick to seize the opportunity. Everyone is wondering where to buy Christmas toys in the wake of Toys R Us’s closure. Consumers have many options from Walmart, Target, KB Toys, and Toy City pop-up stores to Kohls and JCPenney to name a few. Of course, online everyone knows Amazon is the biggest online retailer that sells toys.

Coming off one of its best quarters in recent memory, Target is seeking to step up its game prior to the pivotal holiday season. Toys R Us closed nearly 800 stores, including some Babies R Us stores, and now that presents a huge opportunity for Target.

Analysis found that Target stands to benefit most in the kids-merchandise space from the Toys R Us closures, as many of their stores are within close proximity to Toys R Us stores. In fact, research has shown that ninety percent of Toys R Us stores and ninety-six percent of Babies R Us stores are within five miles of a Target store.

According to reports, baby clothing and shoe sales have increased by almost twenty percent in the last quarter. And toy category sales saw “high single-digit growth”.

Target CEO Brian Cornell stated: “We’re picking up sales that would have gone to Babies R Us and Toys R Us. We’re certainly benefitting from new toy buyers, baby buyers that are coming to Target more frequently.”

Cornell mentioned that Target is poised to capture market share in the baby and toys categories. Reportedly, Target is ramping up inventory to be well-prepared for the surge that is already apparent in stores as well as the upcoming holiday season.

Cornell told CNBC in an interview: “We are investing in categories like toy and baby where we know we have this big opportunity ahead of us. We are going to make sure we are taking more than our fair share of that market share.” Cornell has been focusing on developing its baby products offering since 2015, revamping offerings in baby goods, furniture, and fashion.

However, not everyone is sold on the idea of Target focusing on toys. Earlier this year, several Target investors noted Target should ease off in its attempts to boost toy sales. Their underlying rationale was that the capital would be a waste, as Target competes against a growing threat from online juggernaut Amazon.com.

Senior analyst from Edward Jones, Brian Yarbrough, cautions that toys can be a lower margin business as well as a competitive one, as Walmart and Kohls make significant investments in toys. But he also points out that Target’s toy momentum will very likely carry on beyond the holiday season into August 2019. Yarbrough stated, “The hope is that these customers will be new to Target, and this will get them to shop at other categories.”

Market share is not the only thing Target is interested in pursuing. In fact, earlier this year it considered some of Toys R Us’s real estate, bidding on a former Toys R Us location in Florida in March. Earlier this year, we also reported that Amazon also expressed interest in some of Toys R Us vacant properties.

Source: CNBC

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