Fighting For Survival: Sears & Toys R Us

The recent developments around two once-iconic American retail brands: Sears and Toys R Us, have been in the news this week with their attempts to reinvent themselves amid a changing retail sector.

The two brands have similar, but different paths that have led to their current dire predicaments. The attempts now to innovate or reinvigorate the business could still be measured as a “too little, too late” type of scenario.

The Toys R Us retail chain as we all once knew it is gone, the company declared bankruptcy, and this was the first holiday season in several decades without that retailer being in existence. The consumer feedback was that, because of that toy retailer being out of the mix, prices on toys were dramatically increased as well as difficult to find.

The Midwest had a slightly different experience as the owners of some of the intellectual property leftover from the Toys R Us era launched a “pop-up” concept called Geoffrey’s Toy Box which was featured in Kroger stores. The idea was to have a small area of the store featuring toys for the Christmas holiday season from brands which the former Toys R Us owned the rights to, since their other vendor relationships have moved on.

The results, unfortunately, were underwhelming. The consumer sentiment overall was mixed to negative in response to the concept. The cause of those reactions varied from price, to limited selection, and it will most likely not be replicated within another retailer such as Kroger, Giant Eagle, or another regional player of similar scale.

The rumor mill is spinning that the “Toy Box” concept is going to relaunch like a spin-off of Toys R Us into smaller retail spaces. The other potential scenario being discussed is to roll out Babies R Us again. Some within the media have speculated whether the Toy Box and Babies R Us could be merged in one location and smaller in size than the original spaces that they occupied in the prior iteration of the company.

In my local area, some people with knowledge of the commercial real estate developments have told me that Geoffrey’s Toy Box spin-off store is going to be built across the highway from a former Toys R Us store that is now vacant. The validity of that claim is still speculation as nothing has been confirmed by the township or the commercial real estate developer.

The group that owns the rights to Geoffrey, the mainstay giraffe character that we all loved as kids, is not confirming any definitive plans for the branding of the character or the expansion of the “pop-up” concept from the holidays. In prior articles, I have covered the demise of Toys R Us and the attempts to revive it prior to full liquidation. The idea of a smaller scale brick and mortar toy store certainly fills a void, but it has to be executed properly.

The “knock” on the Toy Chest concept was that it seemed like a half-baked idea to keep consumers from forgetting about the brand, in essence, they rushed it out into the market and it backfired.

The one situation that those involved with the Toy Chest concept have confirmed is that they are exploring ways to revamp and relaunch Toys R Us in some form. They would be wise to reestablish vendor relationships and have a comprehensive marketing plan in place before they make that sort of attempt.

In the case of Sears, my recent piece was on their most likely demise as the company is in the final stages of bankruptcy proceeding with creditors seeking to begin the full liquidation process. The court did give their chairman, Eddie Lampert, time to present a new offer to avoid the liquidation of the company.

The news media has widely reported that his bid was accepted to keep 245 store locations open and save some of the jobs that would have been lost had the chain gone completely out of existence. The plan Lampert put together has his private equity firm taking on more risk from the floundering retailer.

However, others feel it is just a ploy and that Lampert is trying to save the company only to sell off what is left of the brands, assets, and real estate holdings to benefit his own self-interest. There are still others who feel that Sears is too close to “circling the drain” to make it back to solid footing.

Some retail industry analysts maintain that Sears might be living on borrowed time for only a short period before it falls apart. It stands as a reminder that the Lampert plan to save those stores and keep some version of Sears alive has to be approved by a judge, or else the liquidation process will begin officially in the next few weeks.

Moreover, there are still others in the retail industry that believe that Sears could live on if it narrowed the focus to strictly “hard goods” such as tools and appliances and eliminated “soft goods” such as clothing and shoes. Mr. Lampert has been reticent to make this type of shift in the past, it remains to be seen if that sentiment will change in this potential “reboot” version of Sears.

The name of the game today, not only in retail but in everything: customization and niche marketing. Sears could potentially survive in a niche where they would have certain brands of tools, tires, lawn mowers, and appliances. It would require a concerted marketing plan and advertising to remind the consumer that Sears has not closed and reinforce the value proposition it provides to the customer. If those elements are not executed flawlessly, then Sears has a very slim chance of survival.

These two American brands: Sears and Toys R Us were once dominant players in the retail landscape and are now either on their last legs, or determining how to reboot themselves not to succeed, but at this point, just survive in a changing world. It remains to be seen if either of these brands can be salvaged, or if they are headed for the inevitable end that so many other retail brands have been met with in the past. Stay tuned.