The Future of Play: Can Toys R Us get the magic back?
People are buying toys, just not at Toys R Us. The US market indicates solid growth, with a 8.9% CAGR in 2017, so the retailers troubles hit a nerve. If Geoffrey the giraffe can’t connect with kids, who can?
In this mini-report we look to understand the most interesting trends shaping the future of play, and why the brand is no longer a magnet for families. What does the future hold for Toys R Us?
Highlights and data
- Getting play right is vital. For society, the economy and for the well being of our children. Fred Rogers describes play as ‘the real work of childhood.’
- Good toys provide challenge and encourage inquiry, experimentation and social interaction.
- Yet playtime has declined: Kids spend 50% less time in unstructured outdoor activities than children in the 1970s.
- The average age a kid gets their first smartphone is 10 years old. Hhalf of all UK children have access to up to 10 multimedia devices.
- Parents feel under intense stress over the time (quality and quantity) they spend with their children. Children want more time with mum and dad.
- In 2017, there was a growing interest in innovative toys that encouraged physical play and interaction with parents.
- Annual smart-toy sales are expected to grow from about $2.8bn in 2015 to $11.3bn by 2020 worldwide, with 38% of toy purchases in the UK made online.
- The market for adult toys, for example, collectibles, is now worth £300m — growing three times faster than the children’s toy market.
- 61% of Christmas toys were chosen by the giver. Quartz reported that toy retailers particularly places like Toys R Us are ‘the worst place to buy toys’.
- In 2016, Amazon recorded sales of over 2.1 bn USD. Toys “R” Us was way behind with 912 million USD.
- In 2017, Toys R Us declared bankruptcy citing debt issues as reasons for its lack of investment in critical infrastructure.
Scope and scale
With 65 years in the business, how did the Toys R Us go from a market leader, driving children into a frenzy with its infamous jingle, to a cliche? And where does Toys R Us go from here?
Analysts say the company’s demise can be summed up in two words: tech, and Amazon. Toys R Us cite excessive debt, and its warehouse outlets as ‘too big and expensive.’
The real problem is far more deep rooted: Toys R Us is stuck in the 90s. Its traditional business strategy and short-termism meant it missed the boat on every major consumer, digital and retail trend in the last two decades. Some examples:
In the early 00s Toys R Us outsourced their eCommerce business to Amazon. It later came back in-house.
In 2014 when problems started to emerge, the main course of action was fixing their product assortment, pricing and inventory, — true change, we suspect, was limited due to the debt burden — rather than responding to changing market and retail dynamics.
In 2017, Toys R Us does not speak to the digital and visual culture of today.
Ironically, the brand’s mascot Geoffrey the giraffe, with his long neck reaching into the sky, cannot look to the future.
Under the new leadership of Dave Brandon, formerly of Dominos, he is building a new team aiming to put the magic back in the brand(finally!) and repositioning the retailer as the ‘Champions of Play.’ But for Toys R Us to succeed, it needs to reinvent both its business and the toy retail experience. Token gestures are too little, too late.
Modern family. Modern play.
Although parenting frameworks and structures have developed, the principal function of family has not changed. More than a third of families say they haven’t got enough time or money to spend on their families, according to the 2017 UK Modern Family Index Report. One way that toy companies are helping parents avoid going bankrupt whilst trying to keep up with the latest craze, is creating new ownership models. A good example is Toy Superman, currently trialed in Beijing, allowing parents to rent out toys.
Stuart Brown, from the National Institute for Play, believes kids need real, authentic play for personal development.
Kids see opportunities to play everywhere. Imaginative play, which empowers the child, is optimal. Furthermore, encouraging the development of joint-attention skills where both the parent and child ‘get on the floor’ are key, in an age where it is tempting to use mobile phones as ‘babysitters.’
The Kaboom! organisation projects a future where community play areas are redesigned to be both social and multigenerational, where a single swing can fit multiple children and even parents. in Pierre, South Dakota, a city where nearly two thirds of children are overweight or obese, a pilot project has installed “play pods” on to local trails to coax more families to join in the fun.
In Germany toy-free kindergartens are based on the belief that this can reduce bad habit forming behaviours like addictions whilst increasing social interaction and communication skills. The jury is out on whether this approach is conducive to child development, but it does raise a bigger question: How can society cultivate the right forms of play, with the right sort of toys, that enhance the natural abilities of the child and bring families together?
Picking the right toy
In recent years the focus has been on what the toy can do, rather than what the child can do with the toy, but this is changing Parents are having more say in which toys get made, thanks to crowdfunding sites and digital communities, such as Mumsnet, anticipating an increase of innovative playthings that can revolutionise toy stores and play.
A good example of this is UK based company Technology Will Save Us, who launched a design kit called The Mover. Amazon has also introduced a subscription service aimed at parents called STEM Club, which delivers educational toys for $19.99 per month to support parental interest in learning aids.
New factors will also emerge on how parents assess toys, due to the lack of consistency.
Claire Green, president of the Parents’ Choice Foundation, believes the answer is to give parents a tool, akin to a nutrition label: a “Playability Scale,” a consistent method to assess toys and games, physical or digital.
Kidfluencers and Adultainment
Today, new value markers influence both the context and the patterns of play. Gen Y and Z are the creator generation, far more likely to produce their own toys. With an expectation of involvement in the creation process, they are poised to be serious competitors unless they have a vested interest.
Decorating your bedroom is now seen as the second most important milestone for kids to achieve, yet 75% of parents don’t involve their little ones in the design process. Sian Zeng, a former St Martins student, has created magnetic wallpaper which lets kids change the look of their room — with no paint involved.
Social is critical if toys are to get on the most wanted list. According to JWT Thompson, new generational cohort, Gen Alpha is predicted to have more control and ‘rewrite the playback on social strategy.’ They cite the example of Youtube channel ‘KidToyTesters’. The father of the five siblings in Omaha who created the channel told Bloomberg Businessweek they will earn $140,000 from sponsorship in 2017 alone, with twice the number of the followers as Toys R Us USA.
Another interesting phenomena is the £300 million ‘kidult’ toy market, growing three times faster than the toy sector, and serving a community of adults looking for escapism or nostalgia, and potentially investment. Fun doesn’t get old. What’s increasingly clear is the need for Toys R Us to be attractive to multiple generations, from the adult collecting the latest Star Wars memorabilia, to grandparents taking their grandchildren for a treat. The retailer needs to grow with its audience, providing lifelong learning and an intergenerational experience.
Technology applied responsibly
73% of parents think computer games impact their child’s development. 21% of parents feel that modern playing habits , such as digital technologies , have led to families spending less time together.
The Toy Association has reported that demand for classic toys and retro brands has grown steadily because it encourages intergenerational play. In 2016, board games and puzzles were the fasting growing category. In 17/18 demand is for toys that encourage learning e.g. STREAM (Science, Technology, Robotics, Engineering, and art and math), teach critical skills and get kids up and active. Technology must be more integrated to enhance the play experience. BeatMoovz lets kids create music through dancing using wearable wristbands.
The public demand for companies to ‘do better’ has risen and a evaluation of the effects of tech on society . Even Steve Jobs was vocal about his kids’ use of technology. Two Apple shareholders recently announced they want the company to research the effects of smartphone addiction on young people. Their belief is that Apple can be a better corporate citizen, creating good will in the long term — and offsetting the initial fall in the stock price upon this news.
Smaller box. Bigger change.
The experience is everything. Toys R US promises a magical world and delivers a soulless warehouse. Mums and dads wants to be the hero, but when faced with time pressures and the prospect of screaming kids, it’s no wonder they choose a website. Toys R Us’s main competitor, Amazon, has cracked the ultimate retail operating system, with efficient warehouse logistics and a one click way of purchasing play.
Competing head-on with Amazon head is a zero-sum game. Toys R Us needs to take a leading specialist position, that shows depth of expertise cherry picking the best toys that fuel great play for the child but also across the generations. They can’t give more time but they can make it better spent.
Toys R Us must become exciting places that provide critical products and services across the generations. Adidas new flagship store in NYC has everything from real-time fitness consultations, healthy juices to a concierge desk. Toys R Us stores must re-emerge as the magical and exciting world it promises, with expert staff, like Disney characters, helping the consumer to their next purchase.
The retailer must also define what its currency of ‘new’, to keep people coming back. This could be through the creation of concierge and store services such as crèches, or workshops that unite children and adults.
The ecommerce site must be exciting and part of a healthy retail strategy — be through delivery or in store collection. It needs to build a strong community — adults and children — who guide the next wave of toys. That same community could also form a ‘mini-board’ that report back to the Toys R Us on their performance.
As a big box retailer, there is real potential to differentiate through the unboxing experience and build momentum and has sustainability built in from the start. A showcase example of this is Nintendos Labo, whose boxes come with paint, stickers and can be transformed into new objects.
Facing the future
By becoming a leading specialist and a true omni channel retailer, the brand can cultivate a business and brand experience that speaks to modern day trends, exceeds customer needs and be a force for play. In addition to the above, here are a few of our recommendations to make true change.
- Create a business and platform for play
‘Champions of Play’ is powerful but it can not afford to be another ad campaign. It needs to drive the business and inspire collaborators, parents and children, staff and creators to build on it.
Furthermore, if venture capitalists are serious about turning the business around, it needs to give Dave Brandon and his team the capital to make bold investments, freeing them up from bad debt and past habits. - Build a magical world
Amazon and Walmart deliver mega stores. Toys R Us deliver emotional journeys of fun and magic delivering the unexpected, moving away from the traditional standards of big box retail, and transforming the way people shop. Potentially this could be a re-categorisation of the store by senses, by emotion and or even flavour.
If children see an opportunity to play everywhere, so must Toys R Us. - Be a moral compass on play (end-to-end)
Take a stand on what’s important, i.e. be the the first to not categorise by gender and or the blue and pink cliche. Pick the right products that cultivates great play, supported by a cutting edge brand and retail experience and the infrastructure to deliver effectively.
Data is an important growth area for Toys R Us, not just transforming the product inventory, but showcasing how brand efforts can lead to better play. - Build new alliances
Parents and children are more vocal in what toys they want. This could well be the time the brand takes bold bets, investing their own toy innovation by teaming up with existing manufacturers or alternatively building a private label offering?
A city/region specific strategy will give impetus, not just in creating new propositions for their stores, but champion play by working with parents and town planners, making cities more child friendly places, such as well designed community areas and innovative playspace design. - Invest wisely in Technology
In 2018, AR — as well as voice and blockchain technology — is expected to have its break-through year. However, simply installing AR in stores without fixing the core experience has limited value, primarily benefiting the toy manufacturers. Personally, we think creating a messaging service, using Whatsapp Business, where parents can talk to a Toys R Us expert has more value.
Sustainability is another example where the brand could lead efforts on environmental issues, such as cutting back on plastics, recycling and use of block chain technology to demonstrate transparency.
What’s on the gift list for Christmas 2018? Will Toys R Us make it? We shall soon find out. Good luck!
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Melissa Clark is the co-founder at and jump. She is a strategy and creativity specialist who finds new and magical ways to make true change.
and jump is a creative change collective helping people and organisations face the future, head on. We’d love to hear what you think of this piece and or if you have any suggestions on what themes/topics we should explore next. Find out more at www.andjump.com
