How toys are surviving the recession

Marketplace Staff Jul 25, 2011

KAI RYSSDAL: Of all the places you might want to be three weeks before Christmas, trying to get a sense of the American economy, the world’s biggest toy store really isn’t a bad choice. At noon on a Wednesday at the Toys”R”Us in Times Square in New York City, the place, well, it’s packed.

Talking dolls, a mini space-age motor cycle that drives up walls, and a big plastic Buzz Lightyear complete with jet pack and perma-grin. Toys”R”Us used to be the number one toy retailer in the country. It pioneered the idea of big box stores selling high volume at low prices. Today WalMart and Target do the same thing — but they do it better. Which leaves Toys”R”Us with the tricky job of stealing back customers from the best in the retail business.

So today on Conversations from the Corner Office, Toys”R”Us CEO Jerry Storch on exactly how he’s gonna do that.

JERRY STORCH: Well we have a lot of respect for our competitors, but principally, they are limited-assortment discount chains. There is no confusion when you ask our customers, ‘why do you come to Toys”R”Us?’ They come because we have more toys and we’re in stock on the toys. That’s why you come to any specialty player in retail.

RYSSDAL: But here’s the thing: this is an amazing store. I mean, it’s got a four-story Ferris wheel, it’s got a roaring dinosaur in the background; it’s got everything you’d want in a toy store. This is not, though, your typical Toys”R”Us. When I go to the one near me in Burbank, it’s disheveled-looking, the staff is less than completely well-trained. It’s not always the most pleasant experience. And you hear those stories over and over again. What do you do with those stores of yours who don’t meet the code?

STORCH: First of all, let me tell you: we have 25 million children a year visit Toys”R”Us. And if you have one or two children, and you need to clean up after them, you might have some idea what it’s like when you have 25 million children visiting your place. We do a lot of work to keep our stores nice, but meanwhile, we’re working to renovate all our stores and we’re about a third of the way through the chain. They still have the reality that you’ve got millions of kids going through these stores.

RYSSDAL: So here’s the cynic in me: nobody needs anything that’s in this store. You don’t have to have anything that’s in this store.

STORCH: To me, I think one of the greatest necessities in life is toys for your children. Certainly fun, in and of itself, is enough of a reason, but there’s study after study after study showing that children learn from their toys. You don’t know how many times I’ll go visit with executives of major American corporations or politicians or doctors and they start talking about the role that toys played in their childhood and in their development. They remember, to a person, the toys they played with and the influence they had on them. A toy is not trousers. A toy is not tomatoes. This is not a commodity.

RYSSDAL: The toy market, though, sales are shrinking, right? Sales are down. Kids have more options these days, there’s electronic this and gadget that. In my house, if I bought an iPad, I would never have to buy another toy. I mean there’s so many distractions for kids. How do you get them to the old-fashioned, sit on the floor play with this toy point?

STORCH: Toys are not shrinking. The toy market has been growing now. Kids love toys. Last year’s hot toy was Ju-Ju Pets. It was a little hamster.

RYSSDAL: You’re the guy to blame for three of those in my house?

STORCH: Well you could get more than that. You know, it wasn’t a computer, it was a hamster. So we sell iPods, but meanwhile, lots of kids want a stuffed animal too. Or a Dance Star Mickey’s one of the great toys we have this year. This is a Mickey Mouse who dances and sings to you. Now, you can’t tell me — as cynical as you are — that you wouldn’t like your own Mickey Mouse that dances and tells stories to you.

RYSSDAL: How are you doing this year over last? Can we just talk sales and recession and economy for a second?

STORCH: You know, toys tend to hold up pretty well in a recession because when it comes to the Christmas season, the last thing parents want to cut back on is that Christmas present for their child.

RYSSDAL: So are you making money now?

STORCH: We’re pleased with how we’re doing. We just came off Black Friday, we’re sitting here in Times Square. There were approximately 1,500 people lined up outside this store, and we opened for Black Friday at 10 P.M. on Thursday night. They stretched out that door, down Broadway, down 45th Street, across 6th Avenue: it took almost two hours to even enter the store. So I invite you to come back here next Black Friday and enjoy the experience.

RYSSDAL: I wouldn’t be caught dead, and I’m going to go back to you thinking I’m a horrible cynic here, but people lining up at 10 o’clock on a Thursday night at a toy store — does that make sense?

STORCH: I think you’re Scrooge. You need to look at the smiles on the faces of the people in the store. I’ve said this before and it’s true: shopping is a form of recreation for people. They enjoy it. It’s an opportunity to take everything they’ve worked for all year long, all that hard work, and the money we generate and turn it into something that provides additional value. So in this case, they’re buying toys for their children.

RYSSDAL: Jerry Storch, chairman and CEO of Toys”R”Us. Thanks a lot for your time.

STORCH: Thank you.

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