Toys "R" Us aims for flexibility and growth in Asia under new structure

Toys "R" Us Asia has shifted its focus towards the development and growth of its operations in the region, after concluding its separation from parent company Toys "R" Us Inc.

In a press conference, Andre Javes, president and CEO of Toys "R“ Us, Asia Pacific said that the company will be renewing its e-commerce platforms and IT systems to facilitate a core system that will allow "better use of data for better business decisions". According to him, Toys "R" Us Asia is now focused on e-commerce and its online platform to deliver consistent growth. He added that the growth from the e-commerce sales for the last few years has been outgrowing on yearly basis, which is more than the sales from its physical stores.

Moving forward, Toys "R" Us will also by opening new stores and refurbishing its existing stores to keep it current.This follows the success of its pop up store. Meanwhile, renovation works at its existing Great World City and City Square stores are currently underway, and the stores are set to reopen in December 2018. Toys "R" Us Asia will also be focusing on bringing in core toys such as dolls and action figures, as well as learning and development toys.

Javes added that Toys "R" Us wants to adapt its brand to ensure it is "flexible in nature" throughout the countries it operates in, be it Singapore, Malaysia or Thailand. "The overall brand attributes are something we preserve in our corporate office [Hong Kong] to ensure the consistency around how we apply our brand. But the marketing execution is something that is unique in each country," he said.

Future of Babies "R" Us

Javes, however, explained that the brand was not "getting the level of performance required" from the Babies "R" Us brand in Asia, as the consumers for baby products are "quite sophisticated". It is currently testing the revival proposition of the Babies "R" Us brand in Japan, having opened a standalone test store five weeks ago, and is looking to eventually open a similar store in Singapore.

"This will allow us to completely target the store environment, the training of the team members and the execution of the brand, so that it has one single function which is to focus on the Babies "R" Us customers and their needs," Javes said.

He also pointed out the different needs of consumers who shop at Babies "R" Us and Toys "R" Us. While stores in the latter brand "can be full of lights and sounds", that is not the environment that expecting mothers would want to contemplate products and services for their new baby, Javes said. Toys "R" Us declined to comment on Marketing's queries on its marketing budget for the store revival and sales figures.

Ops in Asia

Leading the marketing team in Singapore and Brunei is marketing manager Samantha Lee, who explained during the press call that the brand localises its marketing strategy as each region looks to resonate with the customers locally.

Toys "R" Us aims to create special moments and make it a destination store in the markets currently operates in. An upcoming special moment for Singaporean consumers, for example, would be a major funfair that Toys "R" Us has planned next year in line with its 35th anniversary in Singapore. While Toys "R" Us did not comment further on Marketing's queries regarding their upcoming marketing executions for the Singapore market, Lee said creative and media duties are handled both in-house and by its agencies.

Last year, when parent company Toys "R" Us filed for chapter 11 bankruptcy protection, the Toys "R" Us Asia business faced a "contamination effect" as well as well as confusion among the community of partners and customers. Javes clarified during the press call that Toys "R" Us is a separate entity from Toys "R" Us Inc and told Marketing that there will be changes at the shareholding level rather than the operational level of the company.

As Toys "R" Us Asia looks to grow and increase its store count, it will be recruiting more employees, particularly for its regional headquarters in Hong Kong and increasing the talent and resources in the countries.

Meanwhile, Javes cited the size of the store and sales pattern as two differentiating factors that allowed Toys "R" Us Asia to outperform its counterpart in the US. The approximate size of the US store is 45,000 sq feet, compared to an average store size in Singapore of about 10,000 sq feet.

In addition, majority of the US stores are at a standalone location, requiring customers to make a separate trip. On the other hand, the stores in Singapore, for example, are located in shopping malls and are easily accessible as they are 15 to 20 minutes away. Javes said:

The cost of marketing becomes much higher [when] trying to bring people to a standalone location.

Also, majority of the sales from the US stores occurred in the last two or three months of the year during Christmas or holiday season. As such, annual sales depends widely on the company's ability to execute and deliver its holiday season sales profits. This adds on to the operating costs of the business as well as the level of competition during the seasonal peak.

However, the sales pattern in Asia is completely different than in the US, as there are many events in the calendar in Asia that do not exist in US, such as Children's Day, Chinese New Year and China's Golden Week.

"As a toy retailer, we sell toys 365 days a year. We are releasing new toys throughout the course of the year and also participating in these different events that are equally meaningful as Christmas. This means that not all of our results rely on how we perform at Christmas," Javes said.