The return of the king

The Toys RUs-branded shops are opening in Macy’s full-line stores after nearly a year of preparation.

In August, Macy’s announced a partnership with WHP Global, the newly acquired owner of Toys R Us. In 2022, Macy’s will open Toys R Us stores in over 400 of its stores.

The first Toys R Us stores are set to open by the end of the month, according to Macy’s announcement on Monday. Toys R Us will be in every one of Macy’s 446 full-line stores by the middle of October.

With inflation and other economic concerns pinching consumers’ discretionary spending, this initiative is more relevant than ever.

Before its partnership with Toys R Us, Macy’s sold toys, but it was essentially an afterthought. Almost overnight, Macy’s became a credible player in the toy business through its partnership with WHP Global.

Macy’s began selling an extensive collection of toys on its website immediately after partnering with Toys R Us last summer. The Toys R Us website has also been converted into a marketing funnel for Macy’s, with links to purchase products via macys.com. In addition, Macy added temporary Toys R Us branding to its in-store toy offerings last year.

Early efforts have proven successful. Thanks to the new partnership with Toys R Us, Macy’s toy sales grew more than fifteenfold in the first quarter of fiscal 2022.

And he is here to stay

Over the next three months, Macy’s will open permanent Toys R Us stores. A typical store will be 1,000 square feet, but 11 flagship stores will be up to 10,000 square feet in key markets. For the holidays, Macy’s is also preparing to be able to add 500 to 3,000 square feet of space to its toy department.

Toys R Us stores are an important part of Macy’s strategy to drive sales in the second half of fiscal 2022. Macy’s faces much tougher comparisons for the remainder of the year despite reporting a 12.4% comparable sales increase last quarter.

Since Macy’s hasn’t had an enormous toy assortment in its stores for several years, adding Toys R Us stores should drive incremental revenue. Even with reduced spending, consumers will still purchase a lot of toys, especially around the holidays.