Although it may have been a flagship brand linked to childhood joy and ‘test riding’ bikes around the store, the newest generation of children in the UK will soon be seeing the Toys“R”Us (ASX: TOY) brand for the first time with The Company confirming it will be re-launched in 2022 across the ditch.
The planned expansion of the brand will come four years after Toys“R”Us shut more than 100 stores in 2018 which at the time put more than 3,000 staff out of work. The closures at the time were the result of declining foot traffic as customers moved their preferences towards online platforms. When accounting for the COVID-19 pandemic that would hit the world 12 months later though, the earlier closures may have proved a blessing in disguise.
Similar closures saw Toys“R”Us shut down in Australia in 2018, then relaunching in 2020 as an online only toy retailer before quickly being acquired by Funtastic, along with the brand licence.
Since then, Toys“R”Us ANZ has emerged as a more agile eCommerce business which in FY21 generated $21.8m in sales revenue.
Following the same model as an online retailer, Toys“R”Us ANZ has secured the licensing rights from the brand’s worldwide brand owner, WHP Global, to re-establish the Toys“R”Us and Babies“R”Us brands in the UK.
“Tailoring our successful Australian relaunch plan to the UK echoes the success of other eCommerce ‘platform play’ businesses that have delivered growth and value due to their ability to quickly and cost effectively expand their software, processes, partner relationships and brands into new countries,” said Toys“R”Us ANZ Managing Director, Dr Louis Mittoni.
“Since Toys“R”Us’ return to Australia in June 2019, we have scaled quickly as customers returned to the much-loved brand and our e-commerce model has proven its success.”
In preparation for the UK relaunch, Toys“R”Us will commence sales in the UK which will initially be dispatched from their Australian operations while they establish local teams and logistics facilities.
Over the next two years, the Company will seek to replicate the operations model that has been established at their Australian warehouse which includes a $2m investment in Autonomous Mobile Robot (AMR) technology to increase capacity and efficiency.
What makes the UK such an attractive market to Toys“R”Us ANZ is the advanced eCommerce market where internet sales currently account for 25% of all retail sales. That figure is forecast to reach 33% by 2025.
Unfortunately for the kids of the new generation, however, they won’t be able to ‘test ride’ their scooters and bikes around the store…
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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