As Toys R Us inches closer to bankruptcy oblivion, Denver-area independent toy store owners aren’t licking their chops, awaiting hordes of new customers. They’re not placing big orders for Barbies or the latest superhero movie action figures in an attempt to woo shoppers.
They’re selecting items from specialty and local suppliers; scheduling game nights and other in-store events; and studying their merchandise so they can provide informed recommendations to shoppers. In short, doing the things that differentiated them from the home of Geoffrey the giraffe in the first place.
And, industry veterans and analysts say, it’s that thoughtful, experience-oriented approach that has set independent toys stores up for stability and success as larger retailers die out or lose market share to online sellers.
“Frankly, there is no change,” Rohit Meher, the owner of Wonderland Toys in Highlands Ranch, said last week when asked whether he has noticed any differences in traffic or customer behavior this year as Toys R Us’ situation worsened. “We are different from them. The people who shop at Toys R Us are migrating to Amazon.”
There are 10 Toys R Us or Babies R Us stores in Colorado, according to the company’s website, including one just a few miles from Wonderland.
Store liquidations began last month.
Meher, who opened Wonderland two years ago, says it’s too early for him to determine whether his business has been boosted by Toys R Us’ collapse. But he is employing a playbook that has benefited other independent shops in Denver and around the country: Stock unique. higher-quality merchandise — such as $50 kites — and focus on attentive, knowledgeable service for neighborhood customers.
“We’re tying to be unique — offer unique, high-quality products from all different sources,” he said. “Other than Legos, we don’t carry any products that they sell at Toys R Us. This is about people who want to shop local.”
The Wizard’s Chest knows a thing or two about being unique. Beyond being a rare combination toy store and costume shop, it’s housed in a red-and-purple building dressed up as a castle on Broadway in Denver. Its previous location, in Cherry Creek, was similarly medieval.
Co-owner Kevin Pohle said he learned about the importance of offering a fun, immersive experience from the store’s original owners, who sold him the business 15 years ago.
“You try to focus on creating an experience as opposed to creating a place for people to come buy stuff,” he said.
Almost nightly, the shop provides in-store programming, including game nights and model painting tutorials. There is some overlap in the selection at his store and at a Toys R Us, particularly on board games, Pohle said. But he stocks plenty of things you’d never see there or in a mass-market competitor such as Target or Walmart, including novelty cooking utensils and irreverent, not-safe-for-work socks.
The approach is paying off, Pohle said. Without revealing numbers, he said his sales have grown every year since 2010. The Wizard’s Chest doubled its size — to 16,000 square feet — when it moved to 451 Broadway. The company bought its building in January.
“They can all compete on price, because that’s what they do because they have the buying power to do that. We can’t compete on price, so we don’t,” he said. “So, yeah, Monopoly games are cheaper at Target. But if you’re coming in for a high-quality game or a game you haven’t heard of because it’s not at Target, you come to us.”
Toy sales grew in the U.S. in 2017. Sharing data from the NPD Group market research firm, the Toy Association trade group estimated that toys generated $27 billion in sales last year, up 1 percent over 2016. The research did not break down where those dollars were spent, so its unclear how much went to big boxes and online companies and how much ended up in the registers of places such as The Wizard’s Chest.
The American Specialty Toy Retailing Association, or ASTRA, circulated a survey among its member retailers last spring. The 138 companies that responded, representing 180 stores across the country, reported an average sales growth of 2.6 percent in 2016 over 2015, part of a steady growth trend dating to 2011. As of last month, ASTRA has eight member retailers in Colorado, including Wonderland and The Wizard’s Chest, and 932 nationwide.
“Consumers have more options and more ways to fulfill their wants and wishes than ever, but we believe that local, independent retailing is here to stay,” said ASTRA president Kimberly Mosley. “It’s been through the growth of mass market, the growth of catalog sales and online sales and it will continue to be here.”
NPD emphasized that being quick to market with in-demand products will be key for retailers seeking a slice of the growing toy-sale pie. Amazon and other e-commerce companies have a clear advantage over independent shops when it comes to that. But Pohle views e-commerce as more of a threat to big-box retailers than to his shop because the business model is the same: Sell mass-market products cheap.
“It might kill big-box retail because the thing that you buy on Amazon is the same thing you’d buy at Target, and they’re going to do it cheaper,” he said.
University of Denver marketing professor Theresa Meier Conley thinks there’s a different reason that brick-and-mortar stores will survive — even thrive — alongside e-commerce: human nature. Conley, whose background is in high-tech services development, including on-demand video, said research has proven that people crave connecting face to face and gathering together. This creates opportunities for such retailers, particularly innovative ones willing to do things such as market to customers online and offer them deals if they visit their stores in person.
“Retail from a brick-and-mortar perspective is going to go through a resurgence, which is going to be good for the specialty and unique retailers and not necessarily bad from an online perspective,” she said. “Toys R Us was one of a lot of larger retailers that was’t able to adjust and deal with the changes.”
Online marketing — particularly reaching shoppers through trend-driving powerhouse Facebook — is occupying the mind of Sallie Kashiwa. The owner of Timbuk Toys said she is seeking someone now to help her improve her business’ reach on the social media site. Its Facebook page has fewer than 2,000 likes right now.
It’s one of many challenges that the 25-year toy-industry veteran and operator of four metro-area stores is pondering. Other concerns include the potential impact that tariffs on metals and a trade dispute with China could have on the cost of merchandise she carries, and an across-the-board rise in the cost of doing business. Without the purchasing power of a big box, Kashiwa said she has to keep a close eye on her margins amid the rise of rent, employee wages and taxes continue.
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“There cannot be a penny of waste,” she said.
Whatever the impact of e-commerce and mass-market competition, Timbuk Toys (also an ASTRA member) has grown over the past decade. Kashiwa opened her third location, in Highlands Ranch, in the middle of the recession in 2009, choosing to invest in expansion rather than lay off staff amid stagnant sales. A fourth store, in Lakewood, came in 2012.
Kashiwa echoed Conley’s view that there is value in the connections people make shopping in person. She recalls many times when friends and neighbors ran into one another at her stores when shopping for their children.
She is bullish on the future.
“I think that if you’re innovative and courageous and a really great all-around business person, it’s a fantastic time to be in the toy business because we’re always going to need toys,” she said. “Kids need great toys. They are going to be part of culture forever, and if you can be the best toy store in town you’re going to have customers coming in your door.”
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