Toys `R' Us taking entertainment road

Philosophy: In opening its Times Square flagship, the world's largest toy store, the chain is changing its warehouse image and ushering in an era of marketing fun.

November 16, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

NEW YORK - Swinging in the cab of the Ferris wheel, flanked by Geoffrey the Toys `R' Us giraffe and E.T. the extraterrestrial, Gregory R. Staley surveyed three levels of a huge toy store in Times Square that tomorrow ushers in a new era for a tired toy retailer.

Taking a test ride on a 60-foot-tall, neon-soaked wheel might not fit in a typical day of most company executives. But for Staley, president of Toys `R' Us USA, it's all part of overhauling a toy chain once known more for crammed, warehouse-style aisles than for fun and excitement.

At the revamped Toys `R' Us, which is opening the world's largest toy store as its new flagship and is remodeling all of its U.S. stores, "We want to bring products to life, so they're not just a box on a shelf," Staley said.

The 110,000-square-foot flagship at Broadway and 44th Street - part glitzy toy emporium, part amusement park - is designed to entertain, to showcase new products, to highlight brands such as Lego and Barbie and to add luster to the Toys `R' Us brand.

Besides the Ferris wheel, which soars to the building's full three stories, shoppers will find a roaring, 20-foot-tall, T-Rex dinosaur from Jurassic Park, a two-story contemporary Barbie townhouse smelling slightly of bubble gum and Babyland General Hospital, where "delivery assistants" retrieve newly born Cabbage Patch babies from, well, a cabbage patch.

"This really stands as an example for our brand worldwide, not just here," said Elliott Wahle, a Toys `R' Us vice president and the store's general manager. "There will be a sense of glee when kids walk in."

Executives have been working for 18 months to recast the chain's image. Shoppers weary of unimaginative stores with poor help will instead find a more focused and exclusive selection in entertaining, easier-to-shop stores, with better-trained, better-paid help, company officials say.

Under the leadership of Chief Executive Officer John H. Eyler, the former CEO of FAO Schwarz who joined Toys `R' Us in January last year, the chain has remodeled 433 stores with racetrack-style floor plans. It plans to complete all 700, at a cost of about $600,000 a store, by the holiday season of next year.

"They certainly have been ... trying to do things to differentiate themselves from the competition, and hopefully it will drive sales," said Sally H. Wallick, a retail analyst at Legg Mason Wood Walker in Baltimore. "The economy is very difficult right now. It will be a competitive holiday season. It will be more important than ever that they've done these things."

In the past, said Sheldon Grodsky, director of research for Grodsky Associates Inc. in South Orange, N.J., "the stores I've been in haven't been fun places for kids to shop. What you need is a kid's sensibility, to know what's going to appeal to a child. ... They're trying to execute better and trying to be a destination where people go to get their toys."

Analysts said the company is on the right course, despite reporting last month that it expects a wider third-quarter loss than originally projected, in the wake of terrorism attacks of Sept. 11 and the weakened economy. The company expects to lose 22 cents per share, more than double the originally projected 10 cents per share.

"It shouldn't be of worry to anyone investing in Toys `R' Us for the long term," said T.K. MacKay, a stock analyst at Morningstar Inc. in Chicago. "Revenues have slowed down, so the company needs to focus on what's going to increase profits to levels they saw in the past."

The store remodeling, more vigorous employee training and a new ad campaign have been spurred by the failure of the old formula. By the mid-1990s, the larger mass discounters were moving in on Toys `R' Us turf, also promoting big selection and low prices. Wal-Mart Stores Inc. surpassed Toys `R' Us as the largest toy retailer.

Toys `R' Us offers up its new flagship as the ultimate extension of its new philosophy.

The store, which the chain is billing as "the center of the toy universe," takes selling toys to a new, more interactive level. On three levels of selling space, the store is organized into a series of feature shops and attractions, each with its own theme, theatrical lighting and soundtrack.

Shoppers will be greeted by the Ferris wheel with 14 cars, each with a toy or candy maker's icon sitting atop the back of the cab - Mr. Potato Head, the Cabbage Patch kids, a Tonka Truck, M&M's, Pokemon and, of course, Geoffrey, the mascot. Toys `R' Us has brought Geoffrey back to full "animatronic" life in a new television ad campaign that shows the "spokes-giraffe" galloping cross-country to the new Times Square store. Children (and their parents) can ride the Ferris wheel for $2.50, and proceeds will be donated to a children's charity.

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