US retailer Macy’s made the ambitious statement when it reported its second-quarter earnings earlier this week.
Macy’s Toys R Us in Jersey City, New Jersey. Photo by Eugene Gologursky/Getty Images for Macy’s, Inc.
By the middle of October, all 500 Macy’s stores in the US are due to feature Toys R Us in store areas, which will range in size from 1,000 to 10,000 square feet. A life-size Geoffrey the Giraffe, the iconic Toys R Us mascot, will be on display to provide a photo opportunity for parents and kids.
Initially, Macy’s wasn’t intending to introduce Toys R Us areas across its entire chain. However, in July, the retailer announced that it would be opening concessions within all its stores, in addition to its handful of small-format Market by Macy’s locations.
Macy’s CEO Jeff Gennette told Wall Street analysts: “Toys is a huge opportunity for us with a fair-share market opportunity of $1b in annual sales.” Given the fact that total US toy sales came in at just over $38b last year, that could be construed by some as a bold and optiomistic target.
Macy’s also reported a positive knock-on effect from introducing the Toys R Us shops into initial store locations: customers are said to be picking up merchandise in other departments. The retailer reported that 87% of Toys R Us customers cross-shopped categories at its stores, particularly children’s apparel, which is often located near to the toy department.
Like a number of its fellow retailers, the results announcement saw Macy’s lower its guidance for the full year. In the second quarter revenue declined marginally, from $5.65b to $5.6b.
Jeff Gennette admitted: “During the quarter, Macy’s-brand customers across all income tiers slowed and shifted their spend. Persistently high inflation drove higher prices in food and fuel, which in turn led to higher interest rates and a softening market. As a result, overall consumer discretionary spending and sentiment weakened compared to the prior year.”
Given this assessment, you can see why Macy’s is banking on Toys R Us to deliver this holiday season.
