Macy’s is taking aim at Walmart, Target and Amazon by working to make itself a toy destination for holiday shoppers and beyond.
The department store company will open 11 new Toys “R” Us shop-in-shops by Oct. 15 and said it could flex the 1,000- to 10,000-square-foot spaces by 500 to 3,000 square feet to add more product during the year-end peak season.
The move marks a significant expansion of Macy’s relationship with Toys “R” Us parent WHP Global, which it announced in August with plans to “quintuple” the department store chain’s toy business and address millennial and Gen Z shoppers. It features 446 Toys “R” Us shop-in-shops as of April 30 and sells the brand’s products on its website.
Toys offer “pretty decent margins,” Macy’s Inc. Jeff Gennette told investors on a second-quarter conference call. First-quarter toy sales were 15 times higher than the comparable period prior to the Toys “R” Us partnership, Macy’s said.
“Macy’s cannot wait to bring the Toys ‘R’ Us experience to life in our stores, Nata Dvir, Macy’s chief merchandising officer, said. “We hope Toys ”R” Us kids of all ages discover the joy of exploration and play within our shops and families create special memories together. The customer response to our partnership with Toys “R” Us has been incredible and our toy business has seen tremendous growth.”
Macy’s will set up demonstration tables for customers to interact with Toys “R” Us products, and feature a life-size “Geoffrey on a Bench” photo opportunity. It will also host in-store events from Oct. 15-23 including family-focused activities and daily giveaways from Barbie, Lego and other in-demand brands.
Competitors have been eyeing toys as a way to draw customers in, particularly after the original Toys “R” Us store liquidation in 2019 created a “white space” in the category.
Target began rolling out Disney in-store shops in October 2019, averaging 750 square feet mostly adjacent to where people shop for kids’ apparel and toys, with plans to expand to over 160 Target locations by the end of last year. And Amazon and Walmart have long offered a broad selection of toys to compete for shoppers’ wallet share.
The expansion of the toy category could be an important move for Macy’s, particularly for the holidays. Toys are seen as a fairly stable growth category, unlike another high-margin areas such as apparel that could see cuts in purchases if consumers decide to tap the brakes on spending.
Macy’s plans to bring new Toys “R” Us shop-in-shops to new Lenox Square in Atlanta; State Street in Chicago; Ala Moana, Honolulu; Memorial City, Houston; South Coast Plaza, Los Angeles; Aventura and Dadeland, Miami; Herald Square and Roosevelt Field, New York; Union Square, San Francisco and Valley Fair, San Jose.