Monday, September 13, 2010

Toys R Us Pops Up for the Holidays

Toys R Us Pops Up for the Holidays

Some may view the latest move by Toys R Us as simply taking advantage of the 9% vacancy rate in America's shopping malls. But the chain's plan to open hundreds of "pop-up" stores in time for the holiday season could suggest a whole new way of doing business for major retailers in the future.

Its quick-service "Toys R Us Express" stores will appear in 600 locations (300 of them are already open), adding 10,000 temporary employees during the "hard eight" pre-Christmas selling season and dramatically increasing the toy chain's sales capacity from its 587 full-size stores. Toys R Us used 90 pop-ups during last year's holiday selling season.

The seasonal or campaign-related pop-up store idea is particularly attractive to brands and retailers alike.

Malls have plenty of space available that they're willing to rent on a short-term basis at low rates. If a retailer like Toys R Us can grab 4,000 square feet of space for a few months around the holidays, it could temporarily expand the retailer's presence at just the right time.

The trend towards pop-up stores has been increasing of late, as retailers look at new ways to boost store sales.

Best Buy is opening 1500-square foot locations in malls so it can sell its mobile phone line; it has plans to open as many as 1,000 of the mini-stores. Other retailers, most notably Target, have been opening pop-up stores in key locations where it lacks a bricks-and-mortar presence (such as Manhattan) to take advantage of special sales opportunities, like Target's tie-in with Liberty of London.

Pop-ups are an opportunistic way to get in front of holiday shoppers or pitch special promotions, but increasingly, they may make longer-term economic sense for retailers.

Doug Stephens, president of Retail Prophet Consulting, tells Marketing Daily that the move by Toys R Us "shows the way big retail is beginning to fragment. For 25 to 30 years, we've lived with the idea that we need toy stores that are 125,000 square feet. There is just an absolute recalibration of consumer demand happening right now."

Stephens points out that while the pop-up could present a "different brand message," big retailers will continue to try them on for size because "There's been a change in this period of consumerism, and a big-box model just isn't sustainable."

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